Kaajal Prasad, head of family advisory at LGT Wealth Management Australia, part of LGT Group.
According to Matthew Tan, head of asset allocation at LGT Wealth Management Australia, the transition often reflects a profound change in mindset.
“We’re helping families move from a proprietary mindset to an institutional, intergenerational one,” he says.
Entrepreneurs who built successful businesses are often comfortable taking concentrated risks in areas they know intimately. Managing multi-generational wealth, however, requires a more diversified and disciplined approach.
“It tends to be more professional, more institutional and, to be frank, often focused on lower risk and lower returns than the business-building phase.”
This shift can be challenging for founders accustomed to controlling every aspect of their enterprise. That evolution in mindset often leads to a second realisation: there is no single blueprint for how a family office should be structured.
“They may initially hire an internal chief investment officer, chief financial officer and specialist teams,” says Tan. “But after a few years, many realise they are better served by outsourcing highly specialised functions while keeping strategic control.”
Matthew Tan, head of asset allocation at LGT Wealth Management Australia.
That insight challenges another common assumption: that every wealthy family should establish a fully staffed office as soon as they have the means to do so.
Tan argues that many new family offices in Australia are launched too early.
“We are seeing quite a few start-ups in the $100 million to $500 million range,” he says. “In our view, that is often subscale if you want to fully internalise the investment function.”
The challenge is not simply the cost of hiring experienced staff. Families also need access to institutional-quality research, private market opportunities and global manager relationships.
“The world has become much more complicated,” Tan says. “Even if you have an internal CIO, it is difficult to replicate the breadth of expertise and access that larger organisations can provide.”
He suggests that families generally need at least $500 million before it becomes practical to build a fully internal investment capability, while larger family offices with more than $1 billion often adopt a hybrid approach, combining internal teams with specialist external partners.
Yet scale alone is not the decisive factor. Both Prasad and Tan stress that the most important work should occur before a family office is established.
“The ultimate measure of success is whether the family still believes in the family office,” Tan says.
Prasad says that qualitative factors can be just as significant.
“How happy is the family? Have we prepared the next generation? Has the family reputation endured?”
As family offices become more visible, some wealthy families may be tempted to see them as badges of status rather than functional structures. Prasad warns that this approach can backfire.
The conversation is also becoming more prominent as Australia enters a significant period of intergenerational wealth transfer, prompting more families to consider how wealth, governance and decision-making responsibilities will transition across generations.
“If it’s being created as a status symbol, then the family probably hasn’t done the work to understand why it exists in the first place.”
One effective antidote is storytelling. Tan encourages founders to document the history of how the family wealth was created.
“It personalises the story and helps bridge the intergenerational divide,” he says.
Louise McElvogue, a Sydney-based non-executive director and adviser and former interim president of the NSW Council of the Australian Institute of Company Directors, says one of the most important responsibilities in any family office structure is the ability to “look up and look forward”. Major decisions about leadership and succession are rarely straightforward, says McElvogue.
“It is quite emotional and political, but it is also the time when you have to be completely unemotional about your decisions.”
In the end, the most effective family offices are those designed to evolve rather than remain fixed. Governance documents, investment policies and family constitutions should adapt as markets change and family circumstances shift.
“We don’t want to create ‘ruling from the grave’ documents,” Prasad says. “They need to adapt to modern realities while preserving the core values and principles that underpin the family’s wealth.”
For families navigating increasing complexity, the lesson is clear: a family office is not about appearances or asset size alone – at its best, it is a carefully designed structure that aligns wealth with purpose.
To learn more, please visit LGT Wealth Management Australia.
