Role
An advisory board for the family office: counsel from outside
Updated: · Leutrim Miftaraj, FLIORE · Editorial standards · Other languages: Deutsch · Français · Español
Short answer
An advisory board brings outside experience into the family office: it advises the family and management on strategy, investments, governance or succession and acts as a neutral body in conflicts. It is usually advisory, but can also be given control or approval rights. Its design and rights should be set out in writing, so that it remains clear who decides and who is liable.
What an advisory board is for
Family offices are small organisations with great responsibility. An advisory board brings perspectives the team lacks: entrepreneurial experience, investment expertise, legal and tax knowledge, experience with families in a similar position. It asks the critical questions that no one asks internally and helps the family to assess management.
Possible tasks
- Advice on strategy, investment policy and organisation.
- Accompanying succession in the family and in the family office.
- Mediating differences of opinion within the family.
- Selecting and assessing the head of the family office.
- Approving certain transactions, where this right has been granted.
Legal classification
As a rule, an advisory board is not required by law. In a German GmbH, an advisory board can be provided for in the articles of association; if it is given supervisory tasks, provisions of stock corporation law may apply accordingly, depending on its design. In Switzerland, company law does not recognise an advisory board as a corporate body; an advisory board advises without an officer's function. For the Austrian private foundation, the Private Foundation Act expressly provides for an advisory board as a possible body.
Beware of becoming a de facto officer: anyone who actually decides like an officer may also be liable like one. An advisory board should therefore advise, not instruct.
Setting up an advisory board
- Define its purpose and rights: advisory, supervisory or with approval rights.
- Determine the members' profile and ensure their independence.
- Adopt regulations covering term of office, meeting frequency, confidentiality and remuneration.
- Govern the flow of information: which papers the board receives and when.
- Clarify liability and, where needed, take out insurance.
Composition
Three to five members are usual: external experts and, depending on the family, one or two family members. Independence is important – advisers who are at the same time paid service providers of the family office face conflicts of interest. Limits on terms of office ensure renewal.
In FLIORE
For advisory board meetings, FLIORE provides consolidated wealth overviews and monthly reports. Board members can be included as external advisers with restricted, logged read rights; governance deadlines appear in the compliance calendar.
At a glance
| Function | Advice, control or approval – depending on its design |
|---|---|
| Typical size | Three to five members |
| Risk | De facto officer status and liability |
Terms on this page
- Consolidated wealth
- The overall view of a family's wealth across all banks, structures and currencies in one reporting currency.
Frequently asked questions
Does every family office need an advisory board?
No. For small family offices, close involvement by the family is often enough. An advisory board is worthwhile as complexity and wealth grow or when the family wants external oversight.
How is an advisory board paid?
Usually with a fixed annual fee and meeting fees. Performance-related pay is unusual and can endanger independence.
Is a purely advisory board liable?
With pure advice, liability is limited. If the board intervenes in decisions, the risk of liability as a de facto officer rises.
What distinguishes the advisory board from the family council?
The family council represents the family; the advisory board brings in outside expertise. Many families have both, with clearly separate tasks.
How often does an advisory board meet?
Two to four meetings a year are common, supplemented by circular resolutions or short votes on urgent matters. Good preparation with papers available in time matters more than the number of meetings.
Sources
- German Limited Liability Companies Act (GmbHG), section 52
- Swiss Code of Obligations (OR) – company law – Fedlex
- Austrian Private Foundation Act (PSG) – Legal Information System (RIS)
This page provides orientation and does not replace legal or tax advice. The cited legal sources in their applicable version are authoritative.
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