A collection of piggy banks in different sizes

Banking on the family

Adam Hoffman and Daniel Trimarchi explain the function and benefits of a family bank

Ownership succession is a key goal of any family wealth strategy or family office (FO) design.[1] Owners growing and diversifying their knowledge and experience is critical to successful ownership succession, and the ‘family bank’ is an excellent governance tool supporting owners’ development. Yet, in the authors’ experience, families of all wealth scales, specifically families utilising the various FO platforms, have been historically slow to adopt the family bank.

A family bank is a policy rather than an entity; it is a pool of funds within a family’s wider wealth that is utilised to support the development of family members towards being good owners. Governance tools like investment policy statements and investment committees are often purely financially focused. Health and education distribution policies are expense policy tools and differ slightly from the family bank. Family members receive capital from these governance tools without the same degree of accountability to personal development.

The family bank differentiates from these governance tools by highlighting the importance of capital deployment for the heirs’ personal development. It is important to note that a family bank capital deployment does not require a financial return on investment; the investment return can be entirely non-financial. Heirs becoming effective owners and wealth stewards is more than sufficient return on investment.


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