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Forbes
24-07-2025
- Business
- Forbes
Spotlight: The Role Of Family Office Investment Committees
Do you know what an Investment Committee is? The Agreus and KPMG Private Enterprise 2023 Global Family Office Compensation Benchmark Report reveals that more than 60% of family offices cited wealth preservation and long-term growth as the primary purpose of their operations. For families focused on long-term success, one critical yet often underestimated enabler is the Investment Committee (IC). While many family offices have historically relied on informal decision-making, growing portfolio complexity, evolving family dynamics, and rising expectations for transparency are elevating the importance of structured governance. This has propelled ICs to the forefront of governance. Despite their growing importance, many families lack clarity around what these committees should do, who should sit on them, and how they can be leveraged most effectively. This article explores the evolving role of Investment Committees in family offices, including their structure, core responsibilities, and the types of expertise required to make them effective. Drawing on our experience advising and recruiting for family offices worldwide, Agreus offers a practical view on how to create committees that combine technical acumen with cultural is a Family Office Investment Committee? An Investment Committee is a formal governance structure responsible for overseeing a family office's investment activities. Its purpose is to ensure that investment decisions align with the family's financial objectives, risk tolerance, and long-term vision. We have previously discussed the importance of an Investment Committee on Forbes. In contrast to informal or ad-hoc investment decision-making, which is often led solely by principals or close advisors, a structured committee provides a level of oversight, accountability, and strategic direction. Its primary roles include: By embedding these practices into a formal committee, family offices can better navigate today's increasingly complex investment Responsibilities A well-structured IC plays a critical role aligning day-to-day decisions with the family's strategic investment goals. Key responsibilities typically include: Ultimately, the IC acts as a bridge between the family's values and the operational execution of their investment strategy, providing discipline, continuity, and Should Sit on an Investment Committee? While the structure of an Investment Committee varies by family office size and complexity, successful committees share common characteristics in terms of composition and expertise: Typical size: Suggested Composition: While there is no one-size-fits-all answer, we believe that the ideal composition should include a blend of: Success depends not just on credentials, but on the ability of members to collaborate, challenge constructively, and maintain trust. As family offices mature, informal or personality-led investment processes become harder to sustain. The move toward formal Investment Committees is no longer simply a best practice, it is fast becoming a necessity. As outlined in our Family Office Maturity Model, professionalising governance ensures not only operational resilience but also strategic foresight. A high-functioning IC can transform investment decision-making from reactive to visionary, supporting both current returns and multigenerational legacy. Process of identifying the IC members While agreeing on the type of individual who takes a seat at the IC, we must not ignore how this person was appointed for the role. We are currently in the process of collecting data for our family office governance report and we have been analysing how IC members, their selection process and its impact on the overall effectiveness of the IC. We found that the effectiveness of ICs shoots up dramatically when they have undergone a professional search process to identify the best person for the role. Our findings were interesting and indicate that the vast majority of family offices rely heavily on existing relationships or close contacts when appointing IC members. While this approach may seem convenient, it often lacks the objectivity necessary for good decision-making. You may not always be appointing the best person for the job. In contrast, the few family offices that undertake a professional and structured search process to identify and recruit IC members tend to have the most effective ICs, highlighting the value of a more deliberate and merit-based approach to committee composition.
Khaleej Times
26-05-2025
- Business
- Khaleej Times
Middle East leads globally in establishing formal board structures in family businesses
The Middle East leads globally in establishing formal board structures in family businesses, with 89 per cent companies in the region having a structure in place as against 67 per cent worldwide, a report showed on Monday. As family-owned enterprises continue to power the region's economic engine, the Global Family Business Report 2025, launched by KPMG Private Enterprise in collaboration with the STEP Project Global Consortium, reveals the key drivers that will determine whether these businesses simply endure or create lasting legacies for generations to come. The study analyses the opinions of 2,683 CEOs across 80 countries. It highlights how family businesses can navigate a rapidly shifting global landscape, marked by generational transitions, digital disruption, evolving governance expectations, and rising social and environmental accountability. Abdullah Akbar, Head of Private Enterprise and Family Business at KPMG Middle East commented: 'Family businesses have long formed the foundation of the economies in the Middle East, contributing significantly to employment, innovation, and national identity. But as we enter a new era of economic transformation in many of these geographies, businesses face an urgent need to modernize their governance structures. They will need to diversify their investment portfolios, explore options with respect to supply chain disruptions, invest in technological advances, including GenAI, develop strategies to tackle the war for talent, and embrace the next generation of leadership. Strategic succession planning is now essential and must move to the forefront of business strategy to safeguard the legacy and future readiness of family enterprises.' The report found that high-performing family businesses are 10 per cent more likely to have formal board structures in place, reinforcing the importance of sound and strategic decision-making. In fact, 67 per cent of high-performing businesses globally had established boards, compared to 89 per cent in the Middle East and Africa, the highest across all regions worldwide. This strong embrace of governance is a promising sign that family businesses in the region are positioning themselves for sustainable growth and cross-generational success. However, governance alone isn't enough. Entrepreneurship and growth capital remain key. Over the past 3 years, nearly 500 family businesses globally engaged in mergers and acquisitions, with 60 per cent of the acquired companies also being family-owned, suggesting a shift toward strategic consolidation and values-aligned partnerships. Private equity firms are also showing increased interest in well-run family businesses with strong fundamentals and generational continuity, further signaling the need for transparency, purpose-led strategies, and scalable models. The UAE's economy is heavily influenced by family businesses; roughly 90 per cent of the privately-owned companies in the UAE employ more than 70 per cent of the sector's workforce and account for 40 per cent of the national GDP, as reported in a Dubai Chambers report. These enterprises span critical sectors, from construction and manufacturing to retail, hospitality, and finance. As the region pushes forward with its economic transformation visions, long-term sustainability of these businesses will be central to achieving national growth targets. Many family groups are now also expanding into new sectors like technology, logistics, education and healthcare – opening doors to new investment and collaboration models. Despite the significant role of younger generations in shaping innovation and sustainability, the report found that only 52 per cent of next-generation family members are currently involved in strategic decision-making. This underrepresentation of generations, including millennials, limits the potential for fresh thinking around ESG, digital transformation, and impact investing. At the same time, nearly 40 per cent of respondents expressed concerns about the quality of communication within the family, underscoring a need for stronger dialogue, defined responsibilities, and a shared vision across generations. The findings highlight a strategic imperative: family businesses must evolve their definition of success to reflect today's economic and social realities. 'While financial performance remains essential, long-term resilience, adaptability, and societal contribution are just as critical. As the Middle East region advances its economic diversification agenda, businesses that embed purpose, strong governance, and entrepreneurial thinking at the core of their strategy will be best positioned to lead across generations,' a statement said.
