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About the guest:
UBS is the world's largest private wealth manager — roughly $4.3 to $6.1 trillion in global wealth management assets under management, and the firm of record for approximately half of the world's billionaires. When UBS publishes research on how wealthy families govern themselves, it's worth paying attention.
Mark Tepsich is an Executive Director in UBS's Family Office Advisory practice. Before that, he spent a decade as General Counsel at a large, complex family office — which means he has seen governance work, and seen it fail, from the inside. His research covered over 100 family offices with an average family wealth of $2.4 billion.
What he found was not what he expected. Families at that scale — mature, multigenerational, sophisticated — still rated their own governance as weaker than he anticipated. The issue isn't capital. It isn't access to advisors. It's culture. And the gap between what families write into a policy and what they actually live every day.
1. Governance Is Weaker Than Families Think — Even at $2.4B
When Mark's team at UBS surveyed family offices with an average wealth of $2.4 billion, the results came in lower than he anticipated on governance effectiveness.
"I actually expected them to rate their governance more effective. The stats came in lower. That gave us interesting data on — okay, what practices are actually improving governance outcomes?"
The gap isn't a money problem — it's a people and culture problem. Here's why wealthy families still struggle:
Multigenerational families are dispersed — they no longer live in the same city or work in the same business.
Shared ownership without shared presence makes even quarterly meetings a coordination challenge.
If the only time family members talk is a scheduled governance call, that governance will be fragile.
Governance is only as strong as the family culture underneath it. The culture has to come first.
2. Start With 'Who Are We?' — Not the End State
The biggest mistake families make when approaching governance: they focus on the destination. The investment policy statement. The family council. The twenty-page constitution. That's daunting — and it paralyzes them before they start.
"Don't think about, oh, I need to have this twenty-page family constitution; because it is daunting. Start small. The only way to take down an elephant is one bite at a time."
Mark's recommended starting point for any family governance conversation:
Ask: Why do we want to come together at all? What's the purpose?
Ask: Who are we as a family? What do we stand for?
Ask: Where are we trying to go in three, five, ten, fifteen years?
Get a couple quick wins first. Don't design the whole structure before you've had one good conversation.
The soft stuff: values, culture, identity — comes before the hard structures.
3. What a Family Constitution Actually Needs to Cover
Families with a written constitution tend to have stronger governance outcomes. But what does an effective one include?
The core questions a family constitution should answer:
Who is the family? How do we define membership and belonging?
Why do we exist together? What are we here to accomplish as a unit?
What are our assets — operating companies, portfolios, trusts — and how do we think about them?
How do we make decisions across those assets? Who has authority, and over what?
What is this wealth for? Philanthropy, entrepreneurship, compounding, community?
Critically, a constitution must evolve. A document written twenty years ago that nobody has looked at since is not governance — it's a relic. It has to be lived, revisited, and updated as the family and enterprise change.
4. The Case for a Neutral Third Party
Who leads these governance conversations inside the family? Usually, a designated family liaison coordinates with an outside advisor. But the outside presence matters more than most families realize.
"The family member would have a hard time leading this because they're coming at it from a shared history and a viewpoint. Somebody who's not them — like, why would you get to lead this? Having a neutral third party introduces an element of professionalization."
Why an outside facilitator changes the dynamic:
They've seen dozens or hundreds of families and recognize the patterns before the family does.
They can curate the conversation without being perceived as partisan to one branch or generation.
A family member who leads the process will always be seen through the lens of their shared history.
The risk of not including outside perspective is underestimated. The risk of including it is almost zero.
5. Why Families Hesitate to Formalize — And Why That Fear Is Overblown
Even families who know they need better governance often stall. Mark hears the same objections repeatedly: it's too daunting, we don't know where to start, and — most commonly — what if this opens a Pandora's box?
"Is this a Pandora's box? Like, we don't know what we're getting into. Am I going to lose control in some way, shape or form? What is this going to change?"
The real reasons families avoid formalizing governance — and Mark's response to each:
"It's daunting." — True. But strip back the word governance. It's really just: how do we make decisions as a family? Who decides? How is information shared? Who gets a seat at the table?
"We'll lose control." — The founder's influence rarely disappears with governance. What disappears is ambiguity, which tends to benefit everyone.
"We don't need it yet." — The best governance is the family culture itself. But families move, grow, and disperse. Culture alone can't scale indefinitely.
"We made all this wealth ourselves." — Most families didn't make their money in the markets. An outside, unconflicted perspective on investment decisions isn't a threat to that identity — it's a resource.
6. Non-Financial Gatherings Predict Stronger Governance — Here's Why
One of the research findings that stood out: families who meet regularly to discuss non-financial topics tend to have stronger governance outcomes. Mark explains why it's more than a correlation.
"It's really an artifact of family culture. It's not that they have meetings. It's that getting together on non-business topics is an indication that they bond, they know each other, they know how each other thinks, they know how to communicate. Governance lives in the norms."
What this finding actually tells us:
Governance is only as strong as the relationships underneath it. If the only time family members interact is a scheduled financial meeting, that meeting will be harder and more combative.
Families who socialize together have already built the communication muscles they need for difficult decisions.
This isn't a case for adding more meetings. It's a case for investing in the relationship as a family asset.
If the only call you get on is the one you're required to attend, something is already wrong.
7. The Next Generation Needs a Seat at the Table — Earlier Than You Think
Wealth creators consistently fear that showing their kids the numbers will demotivate them. Mark hears this constantly — and pushes back on it every time.
"They already know. They might not know the exact number, which changes every day anyway. So bring them in. Don't focus on the number. That's the wrong thing to focus on. Focus on growth."
What next-gen heirs actually learn when they're invited in — and what they lose when they're not:
They're not learning your net worth. They're learning how you ask questions, how you hold people accountable, how you manage.
If you keep them out, their identity hardens around reliance. Once that starts, it's very hard to reverse.
Allow them to make mistakes when the stakes are low — not after they inherit the whole thing.
Open an account with a smaller dollar amount. Engage the family office staff individually. Let them touch the capital early.
The one governance rule Mark would give every family: invite them in. Earlier rather than later. What are you waiting for?
8. Family vs. Institutional Investment Committees: A Key Distinction
Seventy percent of family investment committees are advisory in nature — not binding. That's a fundamental difference from how institutional committees work, and it's often misunderstood by professionals crossing over from the institutional world.
The core differences between family and institutional investment committees:
Institutional: single pool, single timeline, one strategy — five agree and it's done.
Family: multiple trusts, multiple risk profiles, multiple liquidity needs, multiple emotional relationships with capital.
Family committees are often collaborative bodies for sharing information and ideas — not binding decision engines.
A family office that offers only one menu item will lose family members. Flexibility and optionality are what keep the family engaged.
An Investment Policy Statement (IPS) is critical for each pool of capital: it defines who the investor is, how decisions get made, and creates a framework for trade-offs.
9. Shared Infrastructure vs. Going It Alone — The Restaurant Analogy
As families grow into the third, fourth, and fifth generation, the question of whether to stay inside the family office or spin off a separate one becomes real. Mark's answer is clear — and so is his reasoning.
"Think of it as shared infrastructure. If you're going to hire your own controller CFO, your own instance of Addepar or Maestro — why? You probably all leverage the same external CPA or tax advisor anyway."
The case for staying inside — and what makes it work:
A family office sits atop shared infrastructure: cost sharing, shared advisors, shared research, shared deal flow. Leaving means rebuilding all of that alone.
The restaurant analogy: if the family office only serves steak and you want lobster, you'll leave. But the answer is to expand the menu — not for everyone to open their own restaurant.
Flexibility and optionality inside the family office — pooled vehicles, separate allocations, personalized strategies — can accommodate most divergent preferences without a split.
Splitting can be isolating. There's comfort in knowing what other family members are doing, even if you're not doing it together.
10. In-House vs. Outsourcing: Stay Solution Agnostic
As family offices scale, the temptation is to build more in-house. Mark's advice: be careful. The more you build internally, the less flexibility you have to find the best solution externally.
"The best family offices remain solution agnostic. The more things you build in-house, the less agnostic you could be, because you are then the one providing that solution rather than coordinating external advisors."
A practical framework for what to keep in-house vs. what to outsource:
Keep in-house: deal flow sourcing from your entrepreneurial network — you can't outsource that relationship.
Keep in-house: a private markets hire if direct investing is central to your strategy.
Outsource: hedge fund and PE manager selection, research, and ongoing due diligence.
Even with in-house counsel, consult externally on nuanced income tax, securities law, financing, or real estate development.
Think plug-and-play with the best external providers — not a vertically integrated firm.
11. First Hires: Build the Foundation Before Everything Else
If a family has a limited budget and needs to make a few hires, where do they start? Mark's answer is clear and counterintuitive to those who think the investment team comes first.
The three roles every family office needs, in order of priority:
CFO / Controller first. You cannot call yourself a family office if you don't know what's coming and going, when, and from where. This is the foundation for liquidity, budgeting, and capital deployment.
Investment person second. Once the financial foundation is in place, you need someone to hold external managers accountable and enable informed decision-making.
Tax always in the mix. Family office capital lives inside trusts and jurisdictions with complex income, estate, and wealth transfer implications — either in-house or as a close external relationship.
12. Family Banks: Why 60% Say They Drive Next-Gen Entrepreneurship
The family bank model — a formal process for funding entrepreneurial endeavors within the next generation — is gaining traction. It's not about capitalizing a fund. It's about signaling support and creating a process.
"It is a signal the family is sending to say: we will support you. We will not only support the funding, but support you as you build."
How family banks actually work — and why they matter:
It's usually not pre-capitalized. It's a process: submit a business plan, raise some external capital, demonstrate real intent.
The research shows 60% of families with a family bank in place report it influences entrepreneurship in the next generation.
It can extend beyond startups — home purchases, educational ventures, and other non-business endeavors can qualify.
The key is not to set it up and never discuss it again. It has to be lived — ongoing guidance and mentorship, not just a one-time funding mechanism.
13. What Actually Destroys Family Wealth: Governance, Not Bad Investments
Prashant asked Mark directly: what destroys family wealth more — poor investments or weak governance?
"How do you make those poor investments? It comes through governance. Not understanding how to make decisions, or not being able to work together with your co-owner family members. Governance and culture first — because the good investment decisions will follow."
The underlying logic:
Families that can't navigate their internal environment can't make clear, disciplined investment decisions.
The next generation doesn't need to build a billion-dollar company — but they should be builders and creators in their own right.
You cannot reach your full potential if you can't navigate the complexity you were born into: operating companies, shared assets, community obligations, and co-ownership.
A toxic environment is rare. But even a non-toxic family can fail the next generation by never preparing them to navigate what was built.
Key Takeaways
Governance is weaker than even mature families think — and culture is the reason why.
Start with identity and purpose, not structure. The constitution comes after the culture.
Reframe the word: governance is just how do we make decisions, who decides, and how information is shared.
A neutral third party isn't a luxury — it's what makes the process credible inside the family.
Non-financial gatherings predict stronger governance. Relationships are the infrastructure on which governance runs on.
Invite next gen in early. Let them make mistakes when the stakes are low. Don't wait.
70% of family investment committees are advisory, not binding. Build in flexibility or you'll lose family members.
Shared infrastructure beats going independent. Expand the menu — don't open a new restaurant.
The best family offices stay solution agnostic — don't over-build in-house.
First hire: CFO/controller. Then investment. Tax always in the mix.
Family banks signal support and drive entrepreneurship — 60% of families say so.
Governance failures cause more wealth destruction than bad investments. The good investment decisions follow the culture.
Connect with Mark Tepsich and Prashant Choubey
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