Challenges Of Family Offices' CFOs - Citi Private Bank White Paper

Editorial Staff

4 February 2019

A family office’s chief financial officer has to master a far wider range of tasks than CFOs used to working in private companies or accounting firms, so these C-suite figures must be clear about what they are getting into, according to a white paper from Citi Private Bank.

The CFO role can be “especially challenging” as the affairs of ultra-high net worth families are complex and typically get more Byzantine over time, putting a premium on people who are able to take the initiative, Edward Marshall, director, Global Family Office Group at the US bank, said in a note.

“The chief financial officer in a family office is the controller of the family’s finances. However, this should not be confused as simply accounting, cash management, and tax reporting. The CFO plays an integral part in all of a family’s affairs – including buying houses or businesses, hiring staff, investment and philanthropy,” Marshall said.

The commentaries are part of a series of papers issued by the private bank on family office issues, such as managing aviation resources, environmental, social and governance-themed investing, and defeating cyber-threats. The bank took part in Family Wealth Report's conference late last year in which these topics came up.

“CFOs with experience from private companies or accounting firms can often find the transition to a family office incredibly challenging because they are no longer specialists focused solely on accounting and reporting, but become ‘generalists’ with oversight in all financial decisions a family makes,” Marshall writes. “On top of this, as the CFO role is often the first C-suite position hired by a family, the expectations and responsibilities may not be clear-cut. As a family’s needs grow in complexity, everyone pitches in and takes on more than they may have expected – with CFOs getting involved in investment management and wealth planning.”

The Citi Private Bank paper delves into its experiences which it says are gleaned from working with more than 1,200 family offices around the world.

“Family offices tend to be resourced lightly but are asked to manage the complex and ever-evolving requirements for families of significant wealth. This affects CFOs in particular because they often do not have access to the technology they require, which means they may have to develop their own ad hoc systems, tools, and processes for various responsibilities including financial reporting, tax work, and bill payment,” the report said.

The white paper is called Organizational Design, Strategic Leadership, and Governance Insights for Family Offices.