Conclusion: Focusing On What Families Do Best

The investment decision-making process that works best will certainly differ from family to family. But there are some characteristic issues families face when making investment decisions, and by paying attention to these issues, family investment outcomes will be much improved.

In particular, I've tried to address such issues as the all-too-often dysfunctional investment committee and the poorly understood tradeoff between prudence (process) and returns. I've cited the typical decision-making process of the big sovereign wealth funds as a model for families to imitate, substituting independent advisors for in-house investment staff.

Most important of all, I suggest that families focus their activities on what they do best: on the broad, 80,000-foot issues associated with family cohesion and the critical issues that matter most to the long-term health of the family's capital, especially risk and asset allocation strategy. Day-to-day, week-to-week, month-to-month investment decisions should be in the hands of a capable advisor.

Families who best address the challenges associated with investment decision making will find that they have succeeded in having their cake and eating it, too: They will keep their families intact, and they will keep their capital intact.