Five Important Tips to Avoid Reputation Damage Through the Family Office


Family offices pose a serious and often unrecognised reputation risk for high net worth families. Family fortunes rarely survive past the third generation, and while financial loss is sometimes the result of poor investment decisions, more often than not non-investment risks are also a significant factor. Non-investment risk is commonly associated with family members themselves; disputes, divorces and scandals can all threaten a family’s good name. However, many wealthy individuals may not realise that the family office presents a significant reputation risk as well.

When organising a family office, the executive or head of the family is usually most concerned with hiring qualified personal that can advance the family’s investment interests. He or she may be less likely to consider that top-level employees, and even some junior members of staff, can easily become privy to confidential information that would damage the family’s credibility if it became public. In many cases, media organisations, competitors and people with a grudge against the family may be ready to offer significant monetary compensation to anyone willing to divulge these secrets.

Employees don’t have the same incentive to protect confidential family secrets as family members, especially when they find their career prospects enhanced rather than diminished by leaking this information. Some may even apply for the job with the intention of gaining access to lucrative secrets. Beyond this, office staff can hurt the family’s name unintentionally through their own scandals and compromising actions.

Here are five ways to reduce the potential reputation damage and risk associated with a family office:

  1. Perform Due Diligence When Hiring New Staff – Thorough staff screening is the best way to stop an intentional infiltrator or someone who’s likely to cause a reputation issue. A traditional background check can help, but it won’t necessarily provide the kind of detailed information you need to make an accurate character assessment. This will require in-depth interviews and research into previous online activity, social media posts and personal references. As a senior executive, it’s important to keep a close hand on the hiring process yourself, even if it means taking the time to conduct personal pre-employment interviews so you really know who works for you and what their goals and interests are.
  2. Control Access to Confidential Information – Not every junior staff member needs access to family secrets to do their job. Keep a close watch on the office network and make sure confidential information is protected by high level password access. Run regular security checks to ensure data isn’t being hacked or mined. Only share information on a need to know basis, and make sure senior employees have clear guidelines over what they should and should not communicate to other staff.
  3. Run Regular Checks on Existing Staff – Keep track of which positions have access to confidential information and monitor the staff occupying them. Run regular checks to make sure they aren’t using their access in a non-professional manor, regardless of whether or not you personally trust these employees.
  4. Implement a Social Media Policy – Write and enforce clear guidelines on what staff may and may not share on their personal social media pages. This is an important way of regulating how employees post about the workplace and it will give you legal cause to act against staff members that become a problem. Control access to all family social media accounts and make sure the content is vetted before posting. A strong social media policy can help protect against risks from less mature members of the family as well as employees.
  5. Make Sure Employees Leave on Good Terms – As with any company, good employment practices and fair treatment of staff will help to ensure that employees continue to respect the family organisation even after they leave. Try to resolve any issues or grudges with a reasonable severance package. Give clear guidelines for firing as part of the contract and stick to the rules. Even with a family business, it’s important to treat employees fairly and expect the same professional conduct in return.

For more information on how to handle the reputation risk associated with a family office, 


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Posted on 08 January 2018 by Tony McChrystal