Is Scope Creep Running Rampant in Your Family Office? Regain Control with These Tips

What is Scope Creep in Family Office?

Scope creep is the gradual addition of more and more activity, such as the need to manage an expanding array of entities or generations of the family.

Expectation creep, a form of scope creep, is the expanding need for relevant, timely information and reporting that the family office and its technology was not initially set up to provide.

One of the most effective ways to optimize family office performance is to consistently review the family’s needs and expectations, as well as the office’s capabilities. Like with any enterprise, it’s important to review and address any shortcomings on a timely basis to prevent inefficiencies and potential frustration among the family and staff. Scope creep can create inefficient processes, manual work, increased risk, and a lack of visibility.

Tips to Addressing Scope Creep

Tip 1: Align Needs and Expectations

In most instances, family offices are set up to handle straightforward needs such as paying bills, financial reporting, investment management, and supporting tax compliance. Generally, little thought is given to how the needs of the family will change over time, as it expands generationally, has greater and more complex financial assets under management, and acquires personal assets such as homes, vehicles, and art collections with their own management and accounting requirements.

As this complexity arises, many family offices do not adjust to these changing realities and, as a result, fail to meet the family’s needs and expectations. For example, reporting and analysis become increasingly important but the team, the technology and the organizational structure does not support it. Consequently, the team is constantly scrambling to provide relevant reporting, most often using spreadsheets requiring extensive manual manipulation and subject to errors.

Adding the bill pay and reporting activity for additional generations with a growing array of assets can strain the office staff’s software beyond the capabilities of a basic accounting package. As a result, the staff prepares customized reports manually, taking time away from other responsibilities. In some instances, the same performance data is compiled into reports using different formats to meet the requests of specific family members.

Tip 2: Review Performance and Needs

To reduce problems from scope and expectation creep, consider the following practices and questions:

  • Periodically assess the family’s requirements and how they are being met. The annual family meeting is a good time to schedule such a review, or to discuss the results of a recent review and discuss potential improvements.
  • Evaluate the family office’s effectiveness and efficiency.
    • Does the current technology meet current and projected needs?
    • Are too many manually generated reports required to meet the family’s information requests?
    • Are you experiencing errors at a higher rate?
    • Are your people working harder, yet falling further behind?
    • Is the team staffed properly?
    • Do you have a high turnover of employees? Are you outsourcing what you can and insourcing what you must?
    • Would adopting better technology help alleviate the burden on staff and meet the family’s needs more easily or effectively?
  • Take any required actions as soon as a solution to a challenge is identified.

Tip 3: Continually Reassess

Revisiting family office’s performance on a consistent basis helps you identify opportunities for improvement in a timely manner and makes it easier to maintain alignment between the family’s needs and the staff’s systems and capabilities.

Get Help to Prevent Future Scope Creep

Scope creep can be a huge problem for family offices. If you would like assistance reviewing your current situation and implementing a roadmap to meet your goals, reach out to schedule a brief introductory call with our team or visit our family office services page.