Is the family office ready for the next decision-maker?

Everyone knows whom to call. The founder can explain an old investment, settle a disagreement between advisers and decide whether an unusual request deserves an exception. Much of the office works because that person is available.

A succession document may name the next leader. It may say very little about how that person will acquire the knowledge, relationships and authority needed to do the job.

For the board or relevant governing body, the test is practical: can important decisions continue when the usual decision-maker is away?

Separate inheritance from the work of deciding

Ownership, leadership of the office and authority over investments do not necessarily pass together. Different legal arrangements may govern each. The family needs a clear account of how they connect and who can act at each stage.

A successor may also prefer a different role from the founder. They might want oversight without day-to-day involvement, or shared authority rather than a single point of control.

Discuss this openly. Expecting someone to reproduce a parent's working style is a weak basis for a governance plan. The office needs arrangements that the next decision-makers understand and can actually use.

Make the judgement visible

Investment records usually contain numbers. They may omit why the family accepted a particular risk, why a partner is trusted or why an asset has significance beyond its financial return.

Capture the reasoning that another person will need, while distinguishing personal preferences from binding restrictions. Document open questions and disagreements as well as settled views. A carefully edited history that makes every past decision look obvious teaches very little.

Bring successors into substantive discussions early. Give them access to the right information, time with advisers and opportunities to question recommendations without being judged for asking elementary questions.

Practise the transfer of authority

A gradual handover can start with clearly defined decisions and limits. Agree what the successor can decide, where support is available and when an issue should return to the governing body.

The founder must then respect that delegation. If staff continue seeking private confirmation, authority has not moved, whatever the minutes say.

Review actual decisions together. Focus on the quality of the reasoning and the information used, rather than whether the successor reached the same answer the founder would have chosen.

Test an unexpected absence

Work through an illustrative week in which the founder cannot be contacted. A payment needs approval, an investment deadline approaches and two family members give conflicting instructions.

Check who has lawful authority, appropriate system access and current contact details. Confirm arrangements with banks and advisers through their normal procedures; a family understanding does not automatically create signing powers.

Record gaps, assign owners and test again once they are closed. Keep sensitive information accessible only to those authorised to use it.

A credible succession plan leaves the next generation room to make its own decisions, while ensuring the office can keep working during the handover.

Further reading: IFC Family Business Governance Handbook, on family governance and succession.