Building effective governance

Family offices often manage substantial wealth, complex investments and family legacies that span decades. Yet, the cornerstone of every family office is not solely financial expertise; it is effective governance fostered by professionalization.

Governance, in the context of a family office, forms the framework that supports strategy, accountability and long-term sustainability. It is the mechanism through which decisions are made transparently, effectively and with foresight.

In this article, we explore why governance remains one of the most critical and often underestimated pillars of a successful family office.

In its simplest form, governance is the system by which an organization is directed and controlled. In the family office setting, this involves determining the purpose of the entity, defining who makes decisions, how those decisions are made, and how performance and compliance are monitored.

Unlike corporations that are driven primarily by shareholder value, family offices are driven by family or personal wealth and values. Decisions are therefore shaped not only by financial and operational considerations, but also by family priorities, culture and other objectives such as wealth preservation or philanthropic goals. This unique context makes governance both more complex and more vital.

Notably, in the UBS and Agreus Family Enterprise Governance Report 2025, we found that 44% of family offices lack a formal mission, vision or values statement, and a striking 68% have no family office council in place. These findings reveal that many have yet to formalize their values and goals into structured, operational governance.

In a previous report designed to assist family offices embarking on the professionalization journey, we identified five stages of professionalization: Embedded, early stage, developed, professionalized and mature. (See the graph below.) Each stage reflects an evolution in structure, governance and mindset—a gradual transition from informal, relationship-driven management to institutional-level professionalism.

Fig. 1 The five stages of professionalization

Embedded and early stage: Governance is often implicit and mirrors family leadership. Decision-making tends to be centralized, informal and guided more by personal relationships than by structured processes. In the early stage, the family office would begin to become a standalone entity, moving away from the initial embedded structure with clear demarcation.

However, governance and reporting remain largely unprofessionalized in these two stages. Reporting is done in-house and is often inconsistent, with no clear or consolidated financial picture. While this intimacy reflects a high level of trust, it also exposes the family office to risk that can come from a lack of accountability and poor decision-making. These stages represent the most vulnerable points in a family office’s lifecycle.

Developed: This stage marks a turning point. Here, families begin to formalize governance frameworks—creating family charters, establishing advisory boards, or introducing independent professionals who complement family decision-makers. The purpose of governance at this level is to bring clarity and balance: defining roles and responsibilities, as well as aligning operational strategy with family values.

Reporting also improves, supported by more professionalized systems, including external software and outsourced providers that enable consolidated and reliable reports. As a result, performance oversight and transparency become increasingly consistent and embedded in day-to-day management.

Professionalized: This stage represents a significant leap forward. Governance becomes structured and deliberate, guided by formal policies and informed by independent expertise. Investment governance becomes central, with investment committees (ICs) and family councils established to ensure disciplined oversight, each with defined mandates, scopes and accountability mechanisms. Decision-making processes become documented, with risk management, audit trails and performance evaluation embedded into daily operations.

Most importantly, governance at this stage shifts from being reactive to proactive. Reporting reaches a standard comparable to early-stage financial institutions, providing consistency and accuracy. The family office is anticipating challenges, fostering accountability and integrating best practices from the corporate world while remaining true to family culture.

Mature: At this stage, governance transcends administration and becomes an instrument of stewardship. Only very few family offices reach this level of sophistication. At this stage, the family office often operates as a professional institution, with the family’s involvement limited to strategic oversight. Reporting mirrors that of large financial institutions, marked by institutional-grade systems and full transparency. Independent boards and committees ensure that decisions are objective, forward-looking and aligned with multi-generational goals.

By following this journey, families can build governance systems that evolve with them. As governance strengthens, it enables better risk management processes and performance optimization, laying the foundation for long-term sustainability.