Family Governance
Expert-defined terms from the Certificate in Private Wealth Management and Family Offices course at London School of Planning and Management. Free to read, free to share, paired with a globally recognised certification pathway.
**Assets Under Management (AUM) #
** The total market value of assets that an investment company or individual manager manages on behalf of their clients. In the context of family governance, AUM often refers to the total wealth of the family that is being managed and overseen by the family office.
**Beneficiary #
** An individual who is entitled to receive benefits from a trust, estate, or other financial vehicle. In family governance, beneficiaries are often the family members who will inherit the family's wealth and assets.
**Board of Directors #
** A group of individuals elected by shareholders to oversee the management and direction of a company. In a family business, the board of directors may include both family and non-family members, and is responsible for ensuring that the business is being run in the best interests of the family and its stakeholders.
**Constitution #
** A document that outlines the rules and regulations that govern a family's business and wealth. A constitution can help to establish clear guidelines for decision-making, communication, and conflict resolution within the family.
**Decision #
Making Framework:** A structured approach to making decisions that takes into account the values, goals, and perspectives of all family members. A decision-making framework can help to ensure that decisions are made in a fair and transparent manner, and that all voices are heard.
**Family Assembly #
** A meeting of all family members, often held on an annual basis, to discuss the family's business and wealth, and to make decisions about the future. Family assemblies can help to foster communication, collaboration, and a sense of shared purpose within the family.
**Family Charter #
** A document that outlines the roles, responsibilities, and expectations of family members in relation to the family's business and wealth. A family charter can help to establish clear guidelines for decision-making, communication, and conflict resolution within the family.
**Family Council #
** A committee of family members who are responsible for overseeing the family's business and wealth. A family council may be responsible for making decisions about the family's investments, setting strategic direction for the family's business, and resolving conflicts within the family.
**Family Office #
** A private company that manages the financial and administrative affairs of a wealthy family. A family office may provide services such as investment management, tax planning, estate planning, and philanthropy.
**Family Values #
** The shared beliefs, principles, and ideals that define a family's culture and identity. Family values can help to guide decision-making, communication, and behavior within the family, and can provide a foundation for the family's business and wealth strategies.
**Family Vision #
** A statement of the family's long-term goals and aspirations for its business and wealth. A family vision can help to provide direction and purpose for the family, and can serve as a guide for decision-making and planning.
**Governance #
** The systems and structures that are in place to oversee and manage a family's business and wealth. Good governance involves clear roles and responsibilities, effective communication, and accountability.
**Investment Policy Statement (IPS) #
** A document that outlines the investment objectives, strategies, and guidelines for a family's investment portfolio. An IPS can help to ensure that the family's investments are aligned with its goals and risk tolerance, and can provide a framework for making investment decisions.
**Next Generation #
** The children and grandchildren of the current generation of family members. In family governance, it is important to involve the next generation in decision-making and planning, and to provide them with the knowledge, skills, and support they need to become responsible stewards of the family's wealth.
**Philanthropy #
** The practice of giving money, time, or resources to support charitable causes. Philanthropy can be an important part of a family's wealth strategy, and can provide a way for family members to make a positive impact on the world.
**Private Trust Company (PTC) #
** A trust company that is owned and controlled by a single family, and that provides trust and estate administration services to the family and its related entities. A PTC can provide a high level of customization and flexibility, and can help to ensure that the family's wealth is managed in accordance with its values and goals.
**Succession Planning #
** The process of preparing for the transfer of leadership and management responsibilities within a family business from one generation to the next. Succession planning involves identifying and grooming potential successors, establishing clear roles and responsibilities, and creating a plan for the transition of power.
**Trust #
** A legal arrangement in which one party (the trustor) transfers assets to another party (the trustee) to manage for the benefit of a third party (the beneficiary). Trusts can be used to manage and protect the family's wealth, provide for the needs of family members, and minimize taxes.
**Values #
Based Investing:** An investment approach that takes into account the social, environmental, and ethical impact of the companies and investments in which the family invests. Values-based investing can help to align the family's investments with its values and principles, and can provide a sense of purpose and fulfillment for family members.
In conclusion, family governance involves a wide range of concepts, terms, and a… #
By understanding these terms and how they relate to each other, families can establish clear governance structures, make informed decisions, and ensure the long-term success and sustainability of their business and wealth.