At a presentation by Carbon Cap, visiting Toronto this week, I sat next to one of the top family office owners, not their CFO but the family member who has taken over his family’s wealth. He told me how difficult it was to choose investments for his Family Office and to clear out the real investment opportunities versus the hot air. This conversation seems particularly relevant as the week continued and with the cratering of FTX, even Ontario Teachers’ Pension Plan had a loss of $75M CAD. Fortunately, that loss is minimal in OTPP’s larger portfolio, who has an excellent record as investors. It goes to show how difficult it can be to pick investments.

The Family Office owner is on the right track when he personally meets with investment teams and asks direct questions.

Every Family Office has a list of standard questions to investigate before investing and to ask again on the annual review. Mike Azlen, Founder and CEO of Carbon Cap, shared with me the top five questions he would recommend that every Family Office should ask and investigate.

Key Questions for Family Offices to Use:

1. Alignment of interests (fees, third-party allocations, owners’ own investment alongside clients, conflicts of interest)

2. Positive Referrals: always get at least 3 referrals from existing clients

3. Length of time in business, infrastructure, and resources, profitability, headcount, and qualifications of key people. Be looking for turnover of key people.

4. Investment track record (independently audited). What is their Governance quality - must-have board members with a strong track record.

5. Fully regulated and no regulatory infractions audited financial statements, etc.