Sun Tzu and The Art of Family Office

It was around 2012, in the offices of Chambers and Company, where, in the boardroom, there was a banner quoting an interpretation from the Art of War.

The banner read, “Sun Tzu believed that a big force does not necessarily guarantee victory. Rather, victory lies in the concentration of forces, regardless of their size, and efficiency of their employment.”

It stayed with me, and I have shamelessly borrowed from it since first seeing it. It captures the essence that across industries and disciplines, scale alone is not enough. It's not that smaller forces always defeat larger ones. It is that sheer size does not decide outcomes by itself. It’s the organisation, concentration and deployment of “resources” that matter more than scale alone.

That is the theme I’m drawing on as I consider family offices, single and multi, and traditional wealth management.

In Australia, not more than twenty-five years ago, the term family office was not well known, and, if it was, it was likely associated with well known family names in Europe or America. As stated by KPMG in Family Offices in plain view, (2021), “Australia has seen the emergence of the term as part of the financial lexicon. Reference to 'family office' investment activity in the financial press is now common”.

Building on the point that the term family office is now “common”, I would take this a step further and say that it is overused - applied to services that are traditional private wealth management with new branding. As wealth has grown in scale and complexity, so too has the need for structures that do more than manage portfolios.

Scale can be powerful, but it does not guarantee success. Large institutions bring brand awareness and significant resources. They can also bring internal product priorities, slower decision-making and bureaucracy tied to an offshore head office. 

A single-family office may have freedom from bureaucracy, but not always breadth. A single-family office risks becoming myopic in its approach, lacking input from adjacent families with different experiences, industries, and networks.

A multi-family office can be understood as “the effective concentration of smaller forces”, multiple families, perspectives and pools of experience, brought together in a coordinated way without necessarily inheriting the bureaucracy or inertia of large institutions.

A well-run multi-family office can be more personal and aligned than a large institution, yet broader, deeper and less isolated than a single family trying to build every capability in-house.

We can define a family office as having a core set of disciplines, including: administration, governance, succession planning, education, philanthropy, policy creation, network liaison, aggregated reporting, and a CIO/CFO function – outsourced in the case of a multi-family office.

That matters because the needs of significant wealth holders are rarely confined to investment options or asset allocation. Once wealth becomes substantial, traditional wealth management alone is not enough.

The focus shifts more toward ensuring the family's wealth endures, rather than simply investing. Questions around how decisions are made? Who is being prepared to lead? How is information consolidated and reported? How are values translated into structures that can survive beyond the current generation? How should family members participate, and what oversight is required?

Perhaps the most important role for a family office advisor is to say “no” to a proposal that might have been put in place to maintain family peace, to the overall detriment of the family. There is significant work required to build and guide the family in putting the framework in place for that “no” to be heard.

These are not secondary issues. In many cases, they are the central issues, with investment management and administration forming only one part of the broader task. KPMG’s report explicitly links family office evolution to issues such as governance and purpose. This is where philanthropy, process and (documented) decision-making frameworks are critical.

This is why the choice between a single-family office and a multi-family office is important for significant wealth holders. A single-family office can be deeply appealing. It offers privacy, control, and the ability to build a platform entirely around one family’s objectives. For some families, that is the right answer. But there are trade-offs. Control is rarely costless. A true single-family office requires substantial investment in people, systems, reporting, governance, and specialist capabilities. If you have not had an “apprenticeship” in the financial services sector, it is harder to judge and measure who you are bringing into your world.

It also brings a subtler risk: the “myopic focus” point raised above. When a family builds a single ecosystem, it can become exposed to a narrow view, concentrated influences and networks, and deal flow linked to those risks.

A multi-family office, at its best, offers a different proposition. It is not simply a lighter or lesser version of the same thing. It can provide significant families with tailored advice and personal alignment, while also giving them access to a broader bench of expertise, stronger comparative insight, and more developed infrastructure than many could build on their own. Importantly, it can reduce the risk that one family’s strategy becomes captive to the view of too few people. There is value in informed comparison. There is value in a broader perspective. There is value in being able to test an idea against experience that extends beyond one household, one operating business or one generation.

Seen that way, the question is not simply whether a family wants more control or more convenience. It is whether it wants to bear the full cost and consequences of building its own platform, or whether it would benefit from participating in one that concentrates capability more efficiently - “the concentration of forces, regardless of their size, and efficiency of their employment”.