More and more single-family offices are being established. This is a function of the increasing number of very wealthy families and the fact that single-family offices are proving to be superior way for them to manage their money as well as address major family concerns. The complication is that an increasing percentage of them are being set up badly.

Angelo Robles, founder and CEO of the Family Office Association, said, “The appeal of single-family offices by the very wealthy is also attracting more professionals. Aside from the inherent fascination of single-family offices, the major attraction is the monies that can be made by advising the very wealthy. Unfortunately, more than a few professionals who supposedly are experts on setting up family office are just not up to the job. Because of their lack of expertise the results can sometimes be pretty calamitous.”

The most pervasive mistake made be these substandard family office experts is not developing a deep understanding of the goals, objectives and agendas of the wealthy family. A single-family office can get optimal results when it is built around the wants and needs of the family. Too often, some professionals are using a cookie-cutter approach to setting them up.

“The most effective single-family offices are focused on getting results based on what the family has determined is important and what they want to accomplish,” said Peter Sasaki, managing member of SDS Family Office and co-author of "Maximiz-ing Your Single-Family Office Leveraging The Power of Outsourcing and Stress Testing." “A family office will only live up to its potential when all aspects of it are about the family. Without a deep understanding of what the family wants, including how they want to operate, even if the family office can access the best products and services, it is unlikely to get family members their desired outcomes.”

With concrete and clear goals established, the single-family office needs to be legally established. “The best single-family offices are very structurally flexible. They need to be able to effectively adjust to many changing circumstances,” said Cliff Oberlin, chairman and CEO Oberlin Wealth Partners. “We repeatedly see wealthy families needing to make significant adjustments and corrections because of business endeavors, personal matters and modifications to the tax code. Knowing that things will change, it is critical to make sure the single-family office can readily adapt.”

One of the great advantages of high-performing single-family offices is that they are designed to the unique requirements of each wealthy family. This means they have to be structurally very flexible.

Russ Alan Prince, president of R.A. Prince & Associates, is a consultant to family offices, the ultra-wealthy and select professionals.