Chapter 9 of Running a Family Office Under $100M
Most wealth management advice focuses on the technical side. What to invest in, how to structure things, and what tax strategies work.
But the failures I've seen aren't usually technical. They're governance failures.
A founder with a solid portfolio makes an emotional decision under pressure and locks up $2M in something that doesn't fit the strategy. A couple can't agree on whether to take more risk, so they compromise by doing both—conservative core and aggressive satellites that don't work together. Someone changes their mind every time markets move. Another commits to three PE funds at once, then panics when capital calls pile up.
These aren't knowledge problems. They're decision problems.
Good governance is the system that prevents this. It creates consistency. It separates strategic decisions from emotional ones. It builds family alignment so people who care about the outcome can participate without chaos.
This chapter is about the infrastructure of decisions.
What's Inside
- Most wealth failures are governance problems: Write an Investment Policy Statement before you need it so decisions are made by rules, not emotions
- Create a decision matrix: Purchases over $50K need formal approval, under $10K solo, $10–50K needs one advisor review — clarity prevents both paralysis and recklessness
- Set hard rules for timing: No new commitments during market downturns, no major changes within 90 days of life events, no financial decisions when stressed or euphoric
- Three review rhythms minimum: Quarterly performance check (30 minutes), annual strategy review (2 hours), triennial governance audit to catch drift early
- Document every major decision: Log the reasoning for every commitment — you'll forget why you decided, and pressure to reverse course is strongest when the original logic fades
What Governance Actually Is
Governance isn't bureaucracy. It's not layers of approval that slow things down.
It's the decision framework you build so that when the pressure comes—and it will—you make choices you actually believe in rather than choices you regret.
Some examples of governance:
An investment policy statement that says: Core stays 70% equities, 30% bonds, rebalanced quarterly. Satellites are 10% of the portfolio, deployed over 3–4 years, each decision approved in writing by both co-investors.
A decision matrix that says: purchases over $50K need formal approval, anything under $10K can be approved by you solo, $10–50K needs one advisor review.
An annual review rhythm: quarterly portfolio review (performance only, no decisions), annual strategy review (are we on track, do we need to adjust), annual family meeting (if family is involved, discussing major decisions and concerns).
A rule that says: no new commitments during market downturns, no major changes within 90 days of major life events, no decisions made when you're stressed or emotional.
None of these is complicated. All of them eliminate a huge category of mistakes.
Three Levels of Governance
Your governance structure depends on your complexity.
Simple (single person, $5–20M, straightforward situation):
A written investment policy statement. One page is fine. 'Here's what I own, here's what I'm trying to do, here's my review process.' This forces clarity. It's a reference when you're tempted to deviate.
A decision log. When you make a major investment or structural decision, write it down: what you decided, why, and what circumstances would make you reconsider it. This isn't analysis paralysis—it's a 5-minute note. Three months later, when someone (probably you) suggests reversing course, you can refer back to why you decided this was the right move.
An annual review with your advisor. Not endless meetings. One meeting: 'Here's what we own, here's how it's performed, here's what's working, here's what we might adjust next year.'
Medium (married couple or involved family, $20–50M, some complexity):
All of the above, plus:
A formal decision matrix. What decisions require joint approval? What can one person decide alone? What needs advisor input? What needs both?
A quarterly touch-point. Not formal. Coffee with your partner and advisor. 'What's going on in the portfolio, what's coming up, are there decisions we need to make?'
An annual family meeting if the family is involved. Not a business meeting. A conversation where everyone understands the strategy, the reasoning, and upcoming decisions.
Documentation of what you're trying to achieve. Beyond the number. Are you trying to generate income? Build wealth? Support a family? Achieve specific goals, such as buying property or funding a foundation? Write it down. It's your reference when you're tempted to chase returns or take unnecessary risks.
Complex (multi-generational, large advisory team, significant family involvement, $50M+):
Formal governance structure. This probably means:
A family office governance committee or equivalent. For some founders, this is three people (you, your partner, a trusted advisor). For others, it's larger.
Defined decision authorities. Who approves what? Where are the escalation paths? What requires consensus?
Documented policies covering major categories. Investment policy, spending policy, risk management, advisors and compensation, family communication.
Regular governance reviews. Quarterly operations meeting, annual strategy review, triennial full governance audit.
Documentation and institutional knowledge. The system should work even if one person is unavailable.
Most founders in the $100M-or-less range are in the medium category. Not complex enough to need a formal structure, but complex enough that writing things down prevents chaos.
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Investment Policy Statement
If you do one governance document, do this one.
An Investment Policy Statement (IPS) is your decision-making framework in writing. It's typically 3–5 pages. It covers:
What you're trying to achieve (return target, income needs, time horizon, risk tolerance).
How you'll allocate assets (core/satellite split, what's in each, rebalancing rules).
What you will and won't do (no Bitcoin, no penny stocks, no personal loans to friends, whatever your boundaries are).
How you'll evaluate performance (benchmark, review frequency, what triggers a change).
Decision process (who approves what, when you'll revisit it).
The IPS isn't a financial plan. You don't need an advisor to write it. Sit down for an hour and write your version. Show it to your advisor if you want feedback. But it's your document.
Why do this?
It forces clarity. Writing forces you to think through what you're actually trying to do, which most founders haven't done.
It eliminates decisions. When you're tempted to chase something new, you check the IPS. Does it fit? No? Then you don't do it. Eliminates weeks of internal debate.
It provides cover when emotions run high. Market crashes 30%. Someone suggests abandoning the plan. You point to the IPS. You already decided how to handle downturns. You stick to it.
It's a reference for advisors. They can't push you toward things that don't fit because you've already documented what fits.
Update it annually. Don't rewrite it constantly. An annual review is enough. Most years, nothing changes. Sometimes you do need to adjust, and that's fine. Documented change is different from emotional drift.
Decision Rules
Beyond the IPS, some decision rules that eliminate mistakes:
Never make investment decisions in the first 72 hours of major news (market crash, business crisis, personal emergency). Wait a few days. Give your brain time to process.
No new commitments during market downturns. This one is painless because you're usually scared anyway. But it prevents the common pattern: markets drop, you panic, you commit to alternatives hoping they stabilise things. Bad move.
No major structural changes within 90 days of major life events (births, deaths, divorces, exits). Give yourself time.
If you're considering reversing a decision you made less than a year ago, write down why and send it to your advisor before you act. If it still makes sense after they've reviewed it, fine. But often you'll see the original reasoning and realise you're reacting, not deciding.
No decisions are made when you're stressed, angry, or sleep-deprived. Sounds obvious. Remarkably rare.
Family Governance
If family is involved, governance becomes harder and more important.
The most common failure pattern: one person (usually the wealth creator) makes all decisions. The other people affected (usually spouses and adult children) are informed after the fact or presented with decisions as though they were fait accompli.
This creates resentment. It prevents buy-in. If something goes wrong or circumstances change, people feel excluded and blame the decision-maker.
Better approach:
Separate decisions into categories. Some are personal decisions (you can make alone). Some are joint decisions (require agreement if you're married or family is involved). Some are informational (you'll decide, but you'll explain the reasoning).
For joint decisions, build a process. Not consensus on everything (that's paralysis). But clarity on what requires agreement. Usually, it's the big ones: major asset allocation changes, structural changes, and spending decisions when resources are limited.
For decisions being made, document the reasoning. Not analysis paralysis. But a one-paragraph note: 'We're increasing equity allocation because our time horizon is long, our income is stable, and our portfolio is small enough that volatility won't force us to sell.' If you have to explain it to someone, you'll often discover whether it's sound.
For family meetings, mix information and input. 'Here's where we are financially. Here's what we did this year and why. Here are the decisions we're facing next year. What do you think? What concerns do you have?'
Not every family member needs to understand the details. But the people who are affected—spouses especially—need to understand the big picture and have input on the direction.
Review Rhythms
Build a sustainable review process. Most founders either never review or review constantly.
Quarterly: Lightweight portfolio review. Performance only. Are we up or down? Why? Are we on track to our target? Do we need to rebalance? This is administrative. Thirty minutes.
Annual: Strategy review. Are we still trying to achieve the same thing? Has our situation changed? Do we need to adjust our strategy? Do we need to adjust our advisor team? This is thinking. Two hours.
Triennial: Full governance review. Is our structure still optimal? Are our policies still working? Should we adjust decision authorities or governance approach as circumstances have changed? This is once every three years, maybe with an outside perspective.
Missing either of the first two is common. Doing all three constantly is busywork.
Pick the rhythm that fits your style. If you're a detailed person, quarterly might be weekly. If you're hands-off, annual might be your minimum.
The key is consistency. Whatever rhythm you pick, stick to it. It's easier to make good decisions when you're reviewing on schedule than when you're making ad hoc decisions under pressure.
When Governance Breaks Down
It often does.
Sometimes, because life gets busy, you stop reviewing. Sometimes, a change in circumstances makes the old structure feel wrong. Sometimes, because family circumstances change—a divorce, a child reaching adulthood, a major decision looming.
When you notice governance slipping:
Admit it. 'We haven't reviewed this in two years. The original rules don't work anymore.' That's information.
Rebuild it. Not a complete overhaul usually. But a refresh. Updated IPS, new decision authorities, new review rhythm.
Involve the right people. If it were just you, maybe that would still be right. If family is affected, involve them in the rebuilding.
Build in the adjustment. Governance should evolve as your situation does. Annual review should include: 'Is this governance still working? What should we change?'
Good Governance in Action
What does this look like in practice?
A couple with $25M, two young kids, and both co-founders on the advisory board.
Investment Policy Statement: 70% core (boring diversified portfolio), 30% satellites (PE, venture, occasional co-investments).
Decision matrix: either partner can approve core trades. Satellites over $500K require both to agree. New advisor relationships require both. Rebalancing happens automatically quarterly.
Annual review meeting: once a year, couple + wealth manager + tax advisor. Four-hour offsite. Morning: performance review and update on what happened. Afternoon: strategy session. Are we still aligned on the approach? Are there decisions coming up? What concerns does each person have?
Family meeting (with kids): once a year, usually when kids are old enough to understand, explaining 'here's where our money is, here's what we're trying to do, here's why we make the decisions we make.' Not asking 10-year-olds for approval on investment decisions. But building understanding.
Decision log: major decisions (e.g., a new PE commitment, a structural change) get a one-page note explaining the reasoning.
The result: both partners are aligned. Decisions don't surprise anyone. When something comes up that needs to be addressed, there's a process. And when a market crash happens, they both know the plan and can stick to it rather than panicking.
What Comes Next
You've now read the full playbook architecture. Chapters 1–9 cover the pieces. Chapter 10 is about sequencing the implementation. Chapter 11 covers the common mistakes.
Chapters 12a–12e are worksheets and frameworks for specific situations: first 90 days, pre-exit planning, auditing what you have, minimum viable setups, and the one-page framework.
To deepen your understanding of decision-making under uncertainty, explore high-agency operating systems. For detailed strategies on capital allocation, see decision architecture and capital allocation.
Common questions
What is a good investment policy statement?
An investment policy statement is your decision-making framework in writing, typically 3–5 pages, though one page can be enough in a simple situation. A good one covers what you're trying to achieve, how assets are allocated and rebalanced, what you will and won't do, how performance is judged and who approves what. Its value is that decisions are made in advance, so when markets fall or something new tempts you, the answer is already written down.
How often do founders usually review their portfolio and strategy?
Many founders either don't review at all or review constantly; the rhythm this playbook describes works on three levels: quarterly, annually and every three years. The quarterly check takes about 30 minutes and looks at performance only, the annual review takes about two hours and asks whether the strategy and adviser team still fit, and the three-yearly review tests the structure, policies and decision authorities. Consistency matters more than the exact schedule, because good decisions come more easily on a planned review than ad hoc under pressure.
What's the purpose of a decision matrix?
A decision matrix sets out who can decide what, and that clarity prevents both paralysis and recklessness. One example: anything under $10K can be approved solo, $10–50K needs one adviser review, and purchases over $50K need formal approval. A couple might also agree that either partner can approve core portfolio trades, while satellite investments over $500K and new adviser relationships need both of them.
How can spouses or family be involved in wealth decisions?
By sorting decisions into three types: personal ones a person can make alone, joint ones that need agreement, and informational ones where one person decides but explains the reasoning. Joint decisions are usually the big ones, such as major allocation changes, structural changes and spending when resources are limited. The aim is clarity on what needs agreement rather than consensus on everything, plus a short written note of the reasoning so the people affected, spouses especially, understand the big picture and have a say in the direction.
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