by Cynthia Harrington One of most challenging aspects of family office work is the transition of the advisory relationship from the first to the second and third generations within a client family. Some financial advisors are solving the problem by encouraging families to formalize governance structures.

Advisors with Frye-Louis Capital Management Inc., in Chicago, do just that. Most of the 30 clients at the multi-family office have formed executive committees. These committees include the first-generation family members, and two members of the second generation. The second-generation members usually are chosen for a particular expertise, as well as their sound business judgment. Assistant vice president Jason G. Raymond, CPA, JD, said that the structure pays dividends for the second generation: “Governance issues are really relevant in dealing with multiple generations in wealthy families.”

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