Who challenges the family office?

The rise of advisory boards in private capital governance

May 01, 2026

A guest article by Billy Stephenson FCSI, Managing Director of Stephenson Executive Search

Family offices have become more sophisticated. Their governance has not always kept pace.

A modern single-family office may now resemble a small institutional investment platform: a chief executive, chief investment officer, finance function, tax oversight, legal coordination, real estate management, philanthropy, direct investments, private markets exposure and, increasingly, responsibility for educating and involving the next generation.

The people running these offices are often highly capable. In many cases, they are former institutional investors, private bankers, lawyers, accountants, operating executives or trusted long-term advisors. Yet capability is not the same as challenge.

This is the gap that advisory boards are beginning to fill.

A recent conversation with the chief executive of a US family office brought this into focus. His view was that more families are introducing boards into their governance structures: advisory boards, investment committees, boards connected to private trust companies and boards attached to holding companies. Some are formal. Some are deliberately light-touch. But the direction of travel is clear: as the family enterprise becomes more complex, families are looking for independent judgement around the table.

The institutionalisation of the family office

The phrase “institutionalisation of the family office” has become familiar, but it remains useful. Family offices today can oversee a myriad of functions. As assets, operating interests and family participation expand, informal alignment becomes harder to sustain. Decisions that were once made by a founder, spouse and trusted advisor begin to involve siblings, cousins, trustees, executives, investment teams and external partners.

According to JPMorgan’s 2026 Global Family Office Report, 83% of family offices now have some form of formal governance structure, such as investment committees or boards. Yet I suspect far fewer currently have formal advisory boards.

The lesson is not that every family needs a board immediately. It is the complexity that eventually forces the governance question. At that point, a family office could benefit from a structure that can absorb disagreement, test assumptions and preserve trust.

Advisory board, investment committee or formal board?

Part of the difficulty is language. Families often use the terms board, advisory board and investment committee interchangeably. They are not the same.

A formal board has legal authority. In a company, directors have defined duties. They may approve budgets, appoint management, oversee risk, sign off strategy and carry fiduciary obligations. A board of a private trust company or family holding company may be even more sensitive, because it can sit close to control, succession and fiduciary responsibility.

An investment committee is narrower. Its purpose is usually to review asset allocation, manager selection, private investments, liquidity planning and portfolio risk. It may be advisory or decision-making, depending on the mandate.

An advisory board is different again. It is typically non-binding. Its value lies in perspective, challenge and judgement - but also in experience, tact and diplomacy that the best advisors bring, and in something harder to name: the ability to remain structurally independent while becoming genuinely trusted. An advisory board member may find themselves discussing the most sensitive family matters in the most informal of settings. Their skill lies in never forgetting, however warmly they are received, that their duty is to give sound counsel - not to treat the assets as their own.

That distinction matters. Many families want outside challenge but do not want to create unnecessary legal complexity. Many experienced advisors are willing to help but do not want to assume formal director liability. Advisory boards can therefore provide a useful middle ground: serious enough to matter, flexible enough to fit the family.

Why independence matters

Family offices are built on trust. That is their strength and, occasionally, their weakness.

Teams are small. Relationships are long-standing. Loyalty is prized. Principals often value discretion as much as technical skill. These qualities are essential in a private family environment, but they can make genuine challenge harder.

This is where the best advisory boards earn their place. They do not exist to second-guess every decision. Nor should they become a shadow executive team. Their role is to ask the questions that might otherwise be avoided:

What assumption would have to be wrong for this decision to fail? Where are we relying too heavily on one person’s judgement? Is this investment consistent with the family’s liquidity needs and governance maturity? Have the next generation been informed, consulted or merely assumed into the plan? Is this a family decision, an investment decision or a control decision?

In family enterprises, many failures are not caused by a lack of advice. They are caused by advice being fragmented, incentives being unclear or no one having the mandate to challenge the dominant view.

Case note: KIRKBI and the discipline of long-term ownership

The Kirk Kristiansen family’s holding company, KIRKBI, offers a useful example of governance following purpose. In 2023, the family completed the handover from the third to the fourth generation and articulated a new long-term owner vision. In 2024, KIRKBI announced1 a new structure designed to support that vision and the businesses owned by the family, including the LEGO Group.

The structure gathered activities and holdings into four business areas: LEGO Holding, KIRKBI Climate, KIRKBI Education and Financial Investments, while KIRKBI continued as the family office for the Kirk Kristiansen family.

The relevance for family offices is not that every family should replicate KIRKBI. Very few can, should or would. The point is that governance design followed a clear owner vision. The family did not merely ask, “Who owns what?” It asked what structure would support active ownership, future generations and long-term strategic priorities.

That is the best argument for advisory boards. They can help families move from reactive governance to intentional governance.

No bureaucracy please

Families considering advisory boards raise understandable concerns. Some worry about the operational burden — more meetings, more papers, more voices in an already stretched organisation. Others ask questions that go deeper: can we trust an outsider with information this personal? Might this unsettle something we have worked hard to build? These are not objections to be dismissed. They are entirely reasonable, and a well-designed advisory board should address them directly.

That risk is real. A badly designed advisory board becomes either ceremonial or intrusive. It reviews materials too late, lacks a clear mandate or becomes a forum for retired executives to rehearse past successes. That is worse than useless.

A good advisory board is different. It is small, focused and carefully composed. Three to five members is often enough. The mandate should be clear. The board should know whether it is advising on investment strategy, governance, succession, operating businesses, risk, philanthropy or all of the above. It should meet often enough to matter but not so often that it becomes operational.

The best advisory board members are not necessarily the most decorated. They are people with judgement, discretion and the confidence to challenge without grandstanding. Former CIOs, family business leaders, trustees, governance specialists, operating executives and family office CEOs can all be valuable. But chemistry matters. A family office advisory board requires tact as well as expertise.

What people get wrong

The first mistake is confusing independence with distance. An advisor who does not understand the family’s values, sensitivities and history may be technically independent but practically ineffective.

The second mistake is confusing loyalty with agreement. The most useful advisor is not the person who always supports the principal. It is the person who can disagree without damaging trust.

The third mistake is recruiting only for investment expertise. Investment judgement matters, but many of the hardest family office decisions are not purely investment decisions. They involve liquidity, tax, control, reputation, family education, succession or emotional attachment to legacy assets.

The fourth mistake is leaving the remit vague. Advisory boards need terms of reference. They should know what they are being asked to review, what information they will receive, what decisions remain with the principal and how their advice will be recorded.

The fifth mistake is assuming that advisory boards are only for very large family offices. Smaller offices may not need formal structures, but they may benefit even more from external challenge precisely because their internal teams are leaner.

Why join a single-family office advisory board?

For those considering such a role, the question of motivation deserves an honest answer. Most who join single-family office advisory boards have already enjoyed distinguished careers - as institutional investors, operating executives or trusted advisors. They are not seeking to replicate former compensation, nor to extend an executive career by another name.

What draws them is something different. A single-family office operates at the ultimate intersection of capital and purpose. The assets are personal, the time horizon is generational and the decisions - on investment, succession, philanthropy and legacy - carry a weight that few professional environments can match.

There is also the nature of the counsel itself. Principals of significant family wealth are rarely short of people seeking their attention. An advisory board member occupies a different position entirely: trusted enough to be given access to the most sensitive matters, yet independent enough to provide advice that is genuinely in the family’s interest.

In a sector where wisdom and experience are valued on their own terms - where there is, refreshingly, no ceiling on age - that is a rare and meaningful privilege.

The future of advisory boards

Advisory boards are not a cure-all. They will not resolve family conflict, guarantee better investments or replace trust between the principal and executive team.

But when designed well, they introduce something many family offices need: structured challenge.

They create a place where assumptions can be tested before capital is committed. They give executives access to experienced judgement without undermining their authority. They help principals hear perspectives beyond the immediate circle. They provide continuity through generational transition. They also signal to the family that governance is not an afterthought.

In the end, the question is not whether a family office has good people. Most do.

The question is whether those good people are being challenged in the right way, by the right people, before the most important decisions are made.

GPFO Thoughts

Perspectives from the team, on guest articles.

The key point is not that every family office needs another board, committee or meeting. Many do not. The danger is that “governance” becomes a proxy for process rather than judgement. A good advisory board should not slow the family office down. It should help the right questions surface earlier.

There is also a human dimension. Family offices are built around trust, loyalty and discretion. These are strengths, but they can make disagreement difficult.

The larger lesson is that mature governance is not about importing corporate structures wholesale into the family office. It is about creating the right conditions for better judgement: fewer blind spots, clearer accountability and more honest conversations before important decisions are made.