Benchmarking for Family Offices (Full Article)

Family offices should measure themselves against defined benchmarks. 

Without benchmarks, inefficiencies, underperformance, and governance drift can hide in plain sight.

A defining strength of family offices is their long-term time horizon, but long horizons can also blur accountability. Patience should not mean performance goes unmeasured or that benchmarking is ignored.

Today, it’s a look at financial and non-financial benchmarks in family offices. 

Most financial institutions manage money for others. They compete against peers, live by league tables, and are judged against external benchmarks.

Family offices are different. 

Single family offices manage their own capital. They have their own goals. Success is about meeting their own objectives, not beating an index or peer group.

But benchmarking is still vital. Not to chase rankings, but to ensure the family office is operating effectively. Of course, families will want to understand how their performance compares with others, but the real objective is to ensure their office is disciplined, efficient, and aligned with the family’s long-term goals.

Benchmarking should be diagnostic: a way for family offices to surface strengths, blind spots, and internal misalignment.

Family offices today are more complex, more professionalised, but also more exposed to risk than at any point in the past. Against that backdrop, benchmarking has become an essential requirement for durability.

Most family offices think they know how they compare to peers. But in reality, those views are often built on anecdotes, conference chatter, or selective data points.

So what do we actually mean by benchmarking? In practice, benchmarking splits into two dimensions: financial and non-financial. 

Both should be taken seriously.

Let’s start with the easy one. 

Quantitative measures are easier to deal with and most family offices start (and often stop) with financial benchmarking. 

Financial benchmarks may include capital allocation, performance, costs, and liquidity. They are visible, measurable, and comparable.

And while private banks and fund managers don’t always make it easy to crystallize costs and performance, a strong family office can cut through the noise and fairly easily establish whether portfolios are structured sensibly, costs are proportionate, and outcomes are broadly in line with the family’s objectives.

At the portfolio level, the starting point is deceptively simple. Is the investment portfolio meeting its objectives? 

For most families, that means preserving purchasing power and generating real returns over time. In practice, this often translates into benchmarking total returns against inflation plus a margin, or against a cash or risk-free rate as a baseline. 

The question is not actually whether returns are positive, but whether the family is being adequately compensated for the risk it is taking.

Any benchmark must be relevant to the family’s actual investment strategy. A portfolio heavy in private equity should not be judged against a public equity index. A conservative, liquidity-focused mandate should not be compared to an aggressive endowment-style model. Benchmarks that do not reflect the underlying risk profile are useless.

A better approach than comparing headline performance is to benchmark by asset class, analysing how each sleeve performs, how much risk is taken per unit of return, how the portfolio behaves in stressed markets, and whether results are driven by repeatable process or blind luck.

Private markets make this harder. Many family offices still lack clear, agreed benchmarks for private equity, venture capital, or direct investments.

Without structure, performance discussions in privates can quickly become emotional or political. The best family offices work hard to separate emotion from data. They benchmark each sleeve independently. They track risk alongside return. And they review performance regularly, not just when markets move against them.

Operating expenses for family offices typically sit somewhere between 50 and 100 basis points of assets under management, with staff costs representing the largest line item. Median headcount remains under ten people, though dispersion is wide depending on complexity, geography, and investment style.

Cost benchmarking is often misunderstood. It’s not about being cheap or cutting costs, it’s about alignment and ensuring the operating model matches the family’s ambitions.

A lean office running complex direct investments may be under-resourced and exposed to key-person risk. A more expensive office with experienced staff, strong controls, and robust reporting may deliver far better value over time. Benchmarking costs helps families ask a more constructive question: does our cost base actually match our ambition?

One of the most important shifts in financial benchmarking over recent years has been around liquidity.

More family offices are now stress-testing cash flows, modelling prolonged downturns, and assessing their ability to fund family needs across generations. 

This reflects a broader change in mindset. Away from maximizing returns at all costs. Towards building resilience.

Liquidity benchmarking goes beyond cash on hand. It’s about understanding where liquidity really sits in the portfolio, how quickly it can be accessed under stress, and how dependent the family is on market conditions remaining benign.

In many cases, there is the difference between a portfolio that looks robust on paper and one that proves resilient in reality.

OK, now the hard part. 

Qualitative benchmarking is decidedly harder than quantitative benchmarking. Non-financial benchmarking involves opinions, feelings and experiences. While financial benchmarks are tangible, non-financial benchmarks measure the intangibles that truly decide longevity. 

Non-financial benchmarking can be achieved through surveys, workshops, interviews and open conversations. 

Non-financial benchmarking often receives less fanfare, but it’s arguably more predictive of whether a family office will endure for generations.

Effective non-financial benchmarking doesn’t ask if structures and systems exist, they ask how those structures and systems are experienced. 

That distinction is key. Many families assume governance is working because they have family councils or mission statements. But benchmarking often uncovers gaps: differing perceptions across generations, branches, or roles. And those gaps are early warning signals.

Non-financial benchmarking focuses on the quality of governance, not just the existence of governance structures. 

The goal isn’t optics, it’s substance. 

Are boards independent and empowered?
Is decision-making transparent?
Are shareholder agreements clear and liquidity policies defined? 

Families that score well here rely less on informal understandings and more on explicit frameworks that function as intended. These are the structures that endure through leadership transitions and periods of emotional stress.

Perhaps the most under-benchmarked asset is human capital. 

It’s often the weakest link. Successful multi-generational families invest early in next-gen development: financially, psychologically, and practically. 

Benchmarking here looks at education pathways, exposure to responsibility, mentorship, and readiness for ownership. 

Families who neglect this often realize (too late) that wealth transfer can spark anxiety and even the ultimate dissolution of the family office.

We say it often: culture eats everything in family offices. 

Culture is vital but also extremely hard to quantify. But it’s not impossible to benchmark. High-functioning families share traits: open dialogue, tolerance for disagreement, and a shared language around wealth and responsibility. 

All families fight, but the goal of a strong culture isn’t to avoid conflict, it’s to handle it well. You can’t see culture in a spreadsheet, but you can measure how it shows up in practice.

So how do you actually benchmark culture? Start with simple tools: conduct anonymous family surveys about communication satisfaction, run workshops where family members define what “healthy disagreement” looks like, or assess how decisions are made under stress. Some families even benchmark by inviting independent facilitators to observe key meetings and offer feedback.

Financial benchmarking tells you how your portfolio is performing. 

Non-financial benchmarking tells you whether your people, structures, and capabilities can sustain that performance. 

Families that endure take both seriously. They measure. They reflect. They adjust. 

For family offices, benchmarking should not be about keeping up with peers. It should be about building a family office that can adapt, endure, and remain coherent as complexity grows.

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