Family offices have seen their profile and influence skyrocket in recent years. As they become more visible and influential in public and private markets, they need to take control of their own narrative. If they don’t tell their own stories, others will.
Families are borrowing from the playbook of asset managers, investment banks and corporates to deploy sophisticated communications strategies to better access investment opportunities, attract talent and manage reputation.
Many of today’s family offices were established in the last 10-15 years by first-generation entrepreneurs. These principals are well aware that successful communications can help them achieve their business objectives. They want to apply the same communications rigour and best practice to their family offices.
This trend will accelerate as family offices increase their direct investment allocations, engage with investment banking and capital markets intermediaries, and compete with private equity, venture capital and corporate investors for assets and talent.
Indeed, family office communications are following a similar trajectory to private equity communications in the 1990s and 2000s. Private market investors began to transform their communications approach at that time in response to growing competition, regulation and public scrutiny. Family offices are now doing the same.
As in private equity, family offices should tell their story through their portfolio companies. By communicating the positive impacts of their investments in operating businesses, family offices can craft a reputation as desirable investors and responsible community members, improve access to deals and talent, and mitigate negative attention.
To do this successfully, family offices need to identify relevant journalists and help them tell their stories. But they must build media relationships before they need them. They can offer to explain their investment approach, serve as a go-to source for topics related to family offices or act as a sounding board for stories.
The media’s understanding of the family office sector is at a nascent stage so family offices have a window of opportunity to shape their reputations, and that of their sector, before perceptions solidify.
Family offices should double down on creating their own content to complement the information they share through the media. They should showcase news, insights and case studies on their own website and social media channels.
This could include content about their investment approach, specialism or sector focus, information about their investment portfolio, and stories about the business, philanthropic or personal interests of the principals.
Some family offices are doing this in ever-more distinctive and self-assured ways. For example, Yamauchi No.10, the family office of Nintendo heir Banjo Yamauchi, clearly articulates its purpose as supporting creative businesses and tackling social issues.
It has shared this message through the media and with a bold and playful video game-inspired website, honouring the legacy of Nintendo, that is truly distinctive in the sector. The family office has credited its communications approach for organisational successes including attracting high-profile talent from Schroders, Deutsche Bank and Goldman Sachs.
Another way to get the message out is by building communities of shared interest. Working with other families and investors, family offices can establish investment communities that support their particular investment thesis.
This enables them to broaden their network, source co-investment opportunities and coordinate with like-minded stakeholders to achieve their goals. For example, Ferd, the family office of the Andresen family in Norway, has invested in Antler, one of the world’s largest early-stage investment platforms, and partnered with Arkwright X Investment Family, a club deal structure that invests in B2B technology companies that support the UN sustainable development goals.
Like Ferd, many family offices now seek to combine capital preservation with supporting broader societal value and solutions to pressing global problems. Next generation heirs are particularly keen to steer family office investments to purpose-led, ESG and sustainability themes.
However, this increased desire to do good within family offices contrasts with a growing disquiet among lawmakers and regulators about the closely held and lightly regulated sector. Following the collapse of Archegos, legislators are considering greater disclosure rules for family office sizes and positions.
Family offices are ill-prepared for the demands of greater transparency, public scrutiny and crises. Most family offices do not have a crisis management plan. Their default position is to hire communications and legal advisors after a crisis strikes. But advisors may struggle to mount an organised and effective response without a crisis management plan already in place.
Families should engage advisors before a crisis occurs and develop a plan that assesses potential risks to the key person and the wider family, anticipates future issues and sets out the operating principles and practices for a variety of possible scenarios.
Growing expectations of transparency, impending regulation and increased competition for assets and resources may compel family offices to adopt a culture of greater engagement with their stakeholders. Families that step up the scale and sophistication of their communications efforts will be better positioned to manage the risks and opportunities of twenty-first century family offices.
Kamyar Naficy is the founder and principal of KNECTCOMMS