Is Prince Harry’s Book Spare an Example of a Failed Family Office?

Is Prince Harry’s Book Spare an Example of a Failed Family Office?

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Peace in society depends on peace in the family. - Saint Augustine

1. Introduction

Thrown into the shopping cart on a whim during a weekend Costco run, Prince Harry’s memoir Spare proved to be an interesting read.

Prince Harry’s story is unique, involving being born into what he calls the “gilded cage” of the British monarchy, a childhood marked by the divorce of his parents and the early tragic death of his mother Princess Diana, the unrelenting glare of the media and the eventual messy exit by him and his wife Meghan Markle from being working members of the royal family and the United Kingdom.

Despite his unique experience, Prince Harry’s story reflects similar struggles of many people raised in wealthy and well-known families: languishing self-identity, fear of failure, loneliness, depression and lack of motivation.

It can be argued that one of the remaining prejudices still generally accepted by our society is to prejudge and have contempt for those with wealth and high status, and even more so if someone has merely inherited that wealth and status. Yet, irrespective of where someone lands in the lottery of life, pain is a universal part of the human condition.

Many of us who act in the role of professional trustee or advisor to beneficiaries of significant wealth and from well-known families will recognize that what can underlie problematic behaviour, such disengagement, apathy and a lack of motivation, is often a deeply felt confusion, self-doubt, fear, shame and anxiety. While everyone thinks they have it all, offspring of affluent and high profile families often feel paralyzed by the external circumstances and expectations of their unique situation and privilege and accordingly struggle with internal feelings of loneliness, emptiness and inadequacy.

Wealth creators often set up family offices to centralize and provide services to their family members to help them manage the complexities of their lives. The fundamental goal of a family office is to create a unified and long term strategy to nuture and grow a family’s wealth. Best practice is to nuture and grow all types of wealth for family members: human, intellectual, social and financial. It can be argued that Prince Harry’s struggles as set out in his book Spare are a symptom of a failed family office.

2. The Book Spare

A. The Challenges of Heirs

Despite a public perception that people born into wealthy and high status families don’t have real problems, there is often a quiet suffering underlying the seemingly glossy surface of their lives. Heirs often feel great guilt and confusion because although they are lucky to be born into wealth and status, they are also often plagued by feelings of isolation and disconnection from their peers, a lack of motivation, difficulty defining themselves apart from their families and a deep fear that they will never measure up to the advantages and expectations accorded to them.

Prince Harry relates his discussions in therapy:

We talked about life inside the British bubble, inside the royal bubble. A bubble inside a bubble-impossible to describe to anyone who hasn't actually experienced it. People simply didn't realize: they heard the word "royal," or "prince," and lost all rationality. Ah, a prince-you have по problems. They assumed...no, they'd been taught...it was all a fairytale. We weren't human.
A writer many Britons admired, a writer of thick historical novels that racked up literary prizes, had penned an essay about my family, in which she said we were simply...pandas.
Our current royal family doesn't have the difficulties in breeding that pandas do, but pandas and royal persons alike are expensive to conserve and ill-adapted to any modern environment. But aren't they interesting? Aren't they nice to look at?

In Spare, Prince Harry reflects on his own feelings of isolation in an environment where everyone thinks he had it made. Similar to other heirs, he felt a disconnection from other people and a deep-seated loneliness. Keenly aware of the public perception of his privilege and unusual circumstances compared to his peers, he had difficulty being authentically himself or able to share his experiences in a relatable way.

Prince Harry states regarding his feelings of isolation:

As a Royal you were always taught to maintain a buffer zone between you and the rest of Creation. Even working a crowd you always kept a discreet distance between Yourself and Them. Distance was right, distance was safe, distance was survival. Distance was an essential bit of being royal, no less than standing on the balcony, waving to the crowds outside Buckingham Palace, your family all around you. Of course, family included distance as well. No matter how much you might love someone, you could never cross that chasm between, say, monarch and child. Or Heir and Spare. Physically, but also emotionally.

And loneliness:

Other than the occassional shopping, I stopped going out in 2015. Stopped entirely. …
Every night I'd go straight home from work, eat over the sink, then catch up on paperwork, Friends on low in the background. ... After dinner I'd smoke a joint, trying to make sure the smoke didn't waft into the garden of my neighbor, The Duke of Kent. Then I'd turn in early. Solitary life. Strange life. I felt lonely, but lonely was better than panicky. I was just beginning to discover a few healthy remedies to my panic, but until I felt surer of them, until I felt on more solid ground, I was leaning on this one decidedly unhealthy remedy. Avoidance. I was an agoraphobe. Which was nearly impossible given my public role.

Many heirs from high profile families feel overshadowed by the acheivements of their predecesssors and the fame of their families, struggling to create their own identity, sense of self-worth and personal achievements in the noise.

Prince Harry reflects on his role in his family:

I was twenty the first time I heard the story of what Pa allegedly said to Mummy the day of my birth: Wonderful! Now you've given me an Heir and a Spare-my work is done. A joke. Presumably. … I took no offense. I felt nothing about it, any of it. Succession was like the weather, or the positions of the planets, or the turn of the seasons. Who had the time to worry about things so unchangeable? Who could bother with being bothered by a fate etched in stone? Being a Windsor meant working out which truths were timeless, and then banishing them from your mind. It meant absorbing the basic parameters of one's identity, knowing by instinct who you were, which was forever a byproduct of who you weren't. I wasn't Granny. I wasn't Pa. I wasn't Willy. I was third in line behind them.

On meeting his first girlfriend Chelsy Davy:

Unlike so many people I knew, she seemed wholly unconcerned with appearances, with propriety, with royalty. Unlike so many girls I met, she wasn't visibly fitting herself for a crown the moment she shook my hand. She seemed immune to that common affliction sometimes called throne syndrome. It was similar to the effect that actors and musicians have on people, except with actors and musicians the root cause is talent. I had no talent-so I'd been told, again and again-and thus all reactions to me had nothing to do with me. They were down to my family, my title, and consequently they always embarrassed me, because they were so unearned. I'd always wanted to know what it might be like to meet a woman and not have her eyes widen at the mention of my title, but instead to widen them myself, using my mind, my heart.

Many may dismiss the stagnation of children of affluent and high profile families as a trivial matter compared to the large swaths of humanity who struggle daily with challenges such as food insecurity, access to clean water, basic safety, education and opportunity. But leaving struggling heirs alone to quietly suffer and spin their wheels won’t reduce global suffering. Working to enhance human flourishing across the socio-economic spectrum will help unleash untapped human and financial resources which can be deployed to better all individuals, families, communities and the world at large.

B. The Path from Family Connection to Family Estrangement

Similar to Harry’s personal difficulties in common with many other heirs, the narrative in Spare follows a familar, sad road of many families from harmony to estrangement. A recent survey found that over one-quarter of Americans are estranged from a relative and 40% have experienced estrangement at some point. Surprisingly prevalent in nature, in Spare Prince Harry describes some of the common pathways towards family estrangement: the legacy of the past, conflicts over resources, inter-generational and sibling rivalries, problematic in-laws and a general breakdown in communication and trust.

At the outset of Spare lies the quote by William Faulkner:

The past is never dead. It's not even past.

The groundwork for an estrangement can be established early in a person's life, through disruptions and difficulties that occur while growing up in the family. A history of trauma can shape family relationships decades into the future.

Clearly the traumatic early death of his mother Princess Diana in a car accident in Paris in 1997 when he was 12 years old was a pivotal event overshadowing Prince Harry’s life and the rest of the royal family. Yet even prior to the tragic car accident, Prince Harry and his brother William were both adversely impacted by marriage breakdown and subsequent divorce of their parents:

My mother legendarily said there were three people in her marriage. But her maths was off. She left Willy and me out of the equation. We didn't understand what was going on with her and Pa, certainly, but we intuited enough, we sensed the presence of the Other Woman, because we suffered the downstream effects. Willy long harbored suspicions about the Other Woman, which confused him, tormented him, and when those suspicions were confirmed he felt tremendous guilt for having done nothing, said nothing, sooner. I was too young, I think, to have suspicions. But I couldn't help but feel the lack of stability, the lack of warmth and love, in our home.

King Charles had his own childhood trauma to bear:

For instance, Pa confessed around this time that he'd been "persecuted" as a boy. Granny and Grandpa, to toughen him up, had shipped him off to Gordonstoun, a boarding school, where he was horrendously bullied. The most likely victims of Gordonstoun bullies, he said, were creative types, sensitive types, bookish types-in other words, Pa. His finest qualities were bait for the toughs. I remember him murmuring ominously: I nearly didn't survive. How had he? Head down, clutching his teddy bear, which he still owned years later. Teddy went everywhere with Pa. It was a pitiful object, with broken arms and and dangly threads, holes patched up here and there. It looked, I imagined, like Pa might have after the bullies had finished with him. Teddy expressed eloquently, better than Pa ever could, the essential loneliness of his childhood.

Identity conflicts involve family members’ need to differentiate themselves from family expectations and act as independent, autonomous people. Identity conflicts often surface through sibling rivalry and parent/child inter-relationships. In Spare, Prince Harry regales the reader with details of long-held, deep seated rivalries and contests between Charles and his sons and between Prince Harry and Prince William as siblings.

Prince Harry reflects:

Now and then, as I grew older, it struck me that Aunt Margo and I should've been friends. We had so much in common. Two Spares. Her relationship with Granny wasn't an exact analog of mine with Willy, but pretty close. The simmering rivalry, the intense competition (driven largely by the older sibling), it all looked familiar.
Most of the time Willy and I didn't have any truck with all that Heir-Spare nonsense. But now and then I'd be brought up short and realize that on some level it really did matter to him. Professionally, personally, he cared where I stood, what I was doing.

Regarding Prince William’s reported complaint that Prince Harry would be using too much of their joint charitiable funds for his proposed Invictus Games:

Не complained that I'd be using up all the funds in the Royal Foundation. That's absurd, I spluttered. I was told only a half-million-pound grant would be needed to get the games going, a fraction of the foundation's money. Besides, it was coming from the Endeavour Fund, an arm of the foundation I'd created specifically for veterans' recovery. The rest would come from donors and sponsors. What was going on here? I wondered. Then I realized: My God, sibling rivalry. I put a hand over my eyes. Had we not got past this yet? The whole Heir versus Spare thing? Wasn't it a bit late in the day for that tired childhood dynamic? But even if it wasn't, even if Willy insisted on being competitive, on turning our brotherhood into some kind of private Olympiad, hadn't he built up an insurmountable lead? Не was married, with a baby on the way, while I was eating takeaway alone over the sink. Pa's sink! I still lived with Pa! Game over, man. You win.

The deep rivalries were not just between the siblings, but also generational between the Harry, William and their father over resources, press and attention, for example:

The papers were awash with stories about Willy being lazy, and the press had taken to calling him "Work-shy Wills," which was obscene, grossly unfair, because he was busy having children and raising a family. (Kate was pregnant again.) Also, he was still beholden to Pa, who controlled the purse strings. Не did as much as Pa wanted him to do, and sometimes that wasn't much, because Pa and Camilla didn't want Willy and Kate getting loads of publicity. Pa and Camilla didn't like Willy and Kate drawing attention away from them or their causes. They'd openly scolded Willy about it many times. Case in point: Pa's press officer berated Willy's team when Kate was scheduled to visit a tennis club on the same day Pa was doing an engagement. Told that it was too late to cancel the visit, Pa's press officer warned: Just make sure the Duchess doesn't hold a tennis racquet in any of the photos!
Such a winning, fetching photo would undoubtedly wipe Pa and Camilla off the front pages. And that, in the end, couldn’t be tolerated.

A pivotal conversation between Prince Harry and King Charles happened at a family shooting trip at Sandringham, the same day Prince Harry asked the Queen for permission for him to marry Meghan Markle. King Charles reportedly told Harry:

Well, darling boy, you know there's not enough money to go around. I stared. What was he banging on about? Не explained. Or tried to. I can't pay for anyone else. I'm already having to pay for your brother and Catherine. …

Whereupon Prince Harry reflected:

Pa didn't financially support Willy and me, and our families, out of any largesse. That was his job. That was the whole deal. We agreed to serve the monarch, go wherever we were sent, do whatever we were told, surrender our autonomy, keep our hands and feet inside the gilded cage at all times, and in exchange the keepers of the cage agreed to feed and clothe us. Was Pa, with all his millions from the hugely lucrative Duchy of Cornwall, trying to say that our captivity was starting to cost him a bit too much? Besides which-how much could it possibly cost to house and feed Meg? I wanted to say, She doesn't eat much, you know! And I'll ask her to make her own clothes, if you like. It was suddenly clear to me that this wasn't about money. Pa might have dreaded the rising cost of maintaining us, but what he really couldn't stomach was someone new dominating the monarchy, grabbing the limelight, someone shiny and new coming in and overshadowing him. And Camilla. He'd lived through that before, and had no interest in living through it again.

Which leads the reader to the most overt family conflict in Spare: the “problematic” in-law. In-law relations cause strains in many families. They can reach a breaking point, however, when the struggle between the family of origin and the family of marriage becomes intolerable, which was clearly the case here from Prince Harry’s perspective.

Before Meghan Markle even enters the scene, there is the drama of the Other Woman, now known as Camilla, Queen Consort. Prince Harry weaves his theory through the text of how Camilla played the long game, a campaign by a “dangerous” woman to jump from mistress to marriage to eventually the Crown. Prince Harry states his repeated suspicions that Camilla leaked unflattering and often manufactured stories about him and subsequently Meghan to the press at their expense in a campaign to burnish her and King Charles’ own reputation and standing with the British public.

Regarding Meghan, Prince William had reportedly warned Harry not to marry Meghan at all:

It's too fast, he'd told me. Too soon. In fact, he'd actually been pretty discouraging about my even dating Meg. One day, sitting together in his garden, he'd predicted a host of difficulties I could expect if I hooked up with an "American actress," a phrase he always managed to make sound like "convicted felon." Are you sure about her, Harold? I am, Willy. But do you know how difficult it's going to be? What do you want me to do? Fall out of love with her?

Regarding what Prince Harry termed the “rolling catastrophe” of the events after their marriage leading to their departure from the royal family, consisting of personal disputes between the royal family members and their extended offices and the vicious, often racist, classist and misogynistic coverage of Meghan in the press:

For all this, every bit of it, Willy blamed one person. Meg. Не told me so several times, and he got cross when I told him he was out of line.

Immediately prior to the reported incident when Prince William “knocked me to the floor,” Harry writes about their argument:

Meg's difficult, he said. Oh, really? She's rude. She's abrasive. She's alienated half the staff.
Not the first time he'd parroted the press narrative. Duchess Difficult, all that bullshit. Rumors, lies from his team, tabloid rubbish, and I told him so - again. Told him I expected better from my older brother. I was shocked to see that this actually pissed him off. Had he come here expecting something different? Did he think I'd agree that my bride was a monster? I told him to step back, take a breath, really ask himself: Wasn't Meg his sister-in-law? Wouldn't this institution be toxic for any newcomer? Worst- case scenario, if his sister-in-law was having trouble adjusting to a new office, a new family, a new country, a new culture, couldn't he see his way clear to cutting her some slack? Couldn't you just be there for her? Help her? Не had no interest in a debate. He'd come to lay down the law. Не wanted me to agree that Meg was wrong and then agree to do something about it. Like what? Scold her? Fire her? Divorce her? I didn't know. But Willy didn't know either, he wasn't rational. Every time I tried to slow him down, point out the illogic of what he was saying, he got louder. We were soon talking over each other, both of us shouting.

With only one side of the story, it’s difficult for the reader to unpack objectively what really occurred, other than there was clearly a wholesale breakdown of communication and trust between the royal family members.

Towards the end of the book, there is a particularly sad scene between Charles, William and Harry in Frogmore Gardens, hours after the funeral of Prince Philip, Duke of Edinburgh:

Willy wasn't quite ready to accept defeat. I've felt properly sick and ill after everything that's happened and-and...I swear to you now on Mummy's life that I just want you to be happy. My voice broke as I told him softly: I really don't think you do.

3. The Monarchy of the United Kingdom

A. What is the Sovereign, the Monarchy, the Royal Family, the “Institution” and the “Firm”?

The British monarchy, an ancient, hereditary institution, has managed to survive to modern times as a central part of the democracy of the United Kingdom of Great Britain and Northern Ireland (the “UK”). Rife with contradictions and unrealistic expectations, the monarchy is meant to represent continuity, stability and tradition, yet is also expected to evolve over time and reflect modern values.

Changes in conventions and in political practice, accompanied occasionally by changes in the law, have seen the British monarchy retaining a constitutional role, but in practice enjoying little or no discretion in how their formal powers are exercised. Allowing their political power to shrink to virtually zero has been the key to their continuation. Yet, as their political power has shrunk, popular support for the royal family’s remaining role as ceremonial head of the nation has largely remained to legitimate their continued existence.

In the UK, the main provisions of the Constitution are found in a dozen Acts of Parliament, and important constitutional conventions affecting the monarchy have recently been codified in the Cabinet Manual (the “Manual”). The Manual provides as follows in the Introduction, paragraph 6:

The Sovereign is the Head of State of the UK, providing stability, continuity and a national focus. By convention, the Sovereign does not become publicly involved in the party politics of government, although he or she is entitled to be informed and consulted, and to advise, encourage and warn ministers. For this reason, there is a convention of confidentiality surrounding the Sovereign’s communications with his or her ministers. The Sovereign retains prerogative powers but, by constitutional convention, the majority of these powers are exercised by, or on the advice of, his or her responsible ministers, save in a few exceptional instances (the ‘reserve powers’).

And Chapter 2, paragraph 2.9:

Historically, the Sovereign has made use of reserve powers to dismiss a Prime Minister or to make a personal choice of successor, although this was last used in 1834 and was regarded as having undermined the Sovereign. In modern times the convention has been that the Sovereign should not be drawn into party politics, and if there is doubt it is the responsibility of those involved in the political process, and in particular the parties represented in Parliament, to seek to determine and communicate clearly to the Sovereign who is best placed to be able to command the confidence of the House of Commons.

In addition to his role as the King of the United Kingdom, the current monarch King Charles III is also head of the Commonwealth and the head of state of the 15 Commonwealth countries.

In practice, the day-to-day political functions of the Sovereign in Britain are working with the Prime Minister, other ministers, and senior officers of state, holding meetings of the Privy Council, giving audiences to incoming and outgoing ambassadors and appointing senior officials, based on recommendations from the government.

In addition to a political role, in the United Kingdom the monarch is also the Supreme Governor of the Church of England. On accession, the new sovereign must make three statutory oaths: to uphold the Presbyterian form of government of the Church of Scotland; to be a true and faithful Protestant; and the Coronation Oath, which includes promising to uphold the rights and privileges of the Church of England.

In addition to duties as the official head of state, the monarch has other important functions: to provide a focus for national identity, unity and stability in times of change, to recognise achievement and excellence and to encourage public and voluntary service. Further, its popularity and contribution to celebrity culture likely generate significant tourism revenues for the United Kingdom.

British law has no statute which defines which persons are to be regarded as royal family members. As with many constitutional conventions in Britain, the issue of who is part of the royal family is decided in practice informally. One visible means is those included in the “balcony party,” those closer relatives of the Sovereign who appear regularly on the balcony of Buckingham Palace at the conclusion of special national ceremonies. The royal website also features various members of the royal family.

The reining monarch decides who are the working members of the royal family, as Prince Harry and Meghan Markle found out when the Queen ruled that they could not be ”half in and half out.” Before their departure in 2020, and Prince Andrew’s stepping aside in 2019, there were 15 working royals. There are now 11 working royals recorded in the Court Circular as carrying out royal duties. Seven are full-time working royals: Charles (aged 74) and Camilla (75); William (40) and Kate (40); Edward, Earl of Wessex (58) and his wife Sophie (57); and Princess Anne (72). And there are four older royals who contribute part-time: Prince Edward, Duke of Kent (87); Princess Alexandra (85); Prince Richard, Duke of Gloucester (78) and Birgitte, Duchess of Gloucester (76).

“The Institution” refers to the institution of the monarchy, i.e. the business of the monarchy, so its public role. Within the institution of monarchy, there are palace aides which include “private secretaries” that oversee the diary and the day-to-day matters of senior members of the royal family and a communications team which handles the press. Within the royal household, there are people that oversee the day-to-day running of the monarchy, including managing its residences and properties. The institution of monarchy is the big picture. George VI, the Queen’s father, was the first person to have coined the phrase “the firm, ” referring to the family business. Historically, “the firm” has generally referred to senior working members of the royal family.

B. How Does Succession Work?

In the monarchy of the United Kingdom, the heir apparent succeeds to the throne automatically on the death of his or her predecessor and the new monarch is crowned and anointed in Westminster Abbey. The basis for the succession was determined in the constitutional developments of the seventeenth century, which culminated in the Bill of Rights (1689) and the Act of Settlement (1701).

When James II fled the country in 1688, Parliament held that he had 'abdicated the government' and that the throne was vacant. The throne was then offered, not to James's young son, but to his daughter Mary and her husband William of Orange, as joint rulers.

It therefore came to be established not only that the Sovereign rules through Parliament, but that the succession to the throne can be regulated by Parliament, and that a Sovereign can be deprived of his/her title through misgovernment. The Act of Settlement confirmed that it was for Parliament to determine the title to the throne.

The Act laid down that only Protestant descendants of Princess Sophia, the Electress of Hanover and granddaughter of James I, are eligible to succeed. Subsequent Acts have confirmed this. Parliament, under the Bill of Rights and the Act of Settlement, also laid down various conditions which the Sovereign must meet. A Roman Catholic is specifically excluded from succession to the throne.

The Sovereign must, in addition, be in communion with the Church of England and must swear to preserve the established Church of England and the established Church of Scotland. The Sovereign must also promise to uphold the Protestant succession.

The Succession to the Crown Act (2013) amended the provisions of the Bill of Rights and the Act of Settlement to end the system of male primogeniture, under which a younger son can displace an elder daughter in the line of succession. The Act applies to those born after 28 October 2011. The Act also ended the provisions by which those who marry Roman Catholics are disqualified from the line of succession.

C. Finances of the Royal Family

The finances of the British royal family come from a number of sources. The British government supports the monarch and some of the royal family members financially via the annual Sovereign Grant, which covers the costs of the monarchy’s official expenditures, including the costs of the upkeep of the various royal residences, staffing, travel and state visits, public engagements and official events. 

Other sources of income include revenues from the Duchies of Lancaster and Cornwall, income from assets of other trusts and income from private investments. The Duchies of Lancaster and Cornwall are “Crown bodies,” regulated by acts of Parliament and have similar powers to those of a corporation or trust. The administration of the duchies is regulated by the Duchies of Lancaster and Cornwall (Accounts) Act 1838. The duchies invest primarily in land, and their income is payable either to the monarch or the monarch's eldest heir.

D. Restrictions on the Royal Family

In addition to the regulation of the members of the royal family and their finances by law and convention, there are also the formal and informal constraints on their behaviour. The monarch and close members of the royal family are severely constrained in terms of their circumstances and life choices. They lack freedoms which ordinary citizens take for granted: privacy, free choice of career, freedom of speech, freedom to marry whom they choose, freedom of religion and freedom to travel.

As vividly set out in Spare, likely the most difficult restriction royals suffer from is the constant intrusion of the press into their private lives. Particularly in the UK, intense competition in the tabloid press has led to extraordinary invasions of the privacy of the royals. The challenge is the inter-relationship between the monarchy and the media, which makes it difficult for royals to criticize the press. If they do so, they risk getting a bad press, and monarchy depends on the press to publicize what it does and to maintain popular support. Critically, the modern monarchy no longer depends on “divine grace” for its continued existence but on the consent of the people. The challenge for the monarchy to sustain as the ceremonial head of the United Kingdom in the modern age will be how it successfully strattles this fraught public/private tension.

4. Family Offices

A. Definition of a Family Office

There is no hard-and-fast definition of a family office. Nevertheless, the Dodd-Frank Wall Street Reform and Consumer Protection Act, signed into law in the United States on July 21, 2010 following the financial crisis of 2007-2008, presents a statutory definition that is useful for helping to guide how one thinks about the nature and scope of a family office:

  1. A family office has no clients other than family clients.
  2. It is wholly owned by family clients and is controlled by family members or entities.
  3. It does not offer its services as an investment advisor to the general public.

The point at which the family makes the deliberate decision to combine the management of some or all of its shared assets is the moment it has decided to create a family office. While family offices come in many shapes and sizes—as wealth advisors frequently put it, “when you have seen one family office, you have seen one family office”— they all share this principal role: the management of combined assets.

Today, the term “family office” is usually reserved for a variety of legal and financial structures that many very high net worth (VHNW) and ultra high net worth (UHNW) families set up to manage and coordinate wealth of individual family members and to sustain and build long-term wealth of the entire family. Typically, a family office will assemble a professionally qualified team, often supplemented by specialized advisors as needed, to strategically manage assets and to prepare the rising generation within the family to be good stewards of those assets.

There are four general family office structures: single family office, multi-family office, virtual family office and the mixed mode family office. The “traditional” family office structure is the single family office, which is founded by a single family and serves that family exclusively. A multi-family office may serve as few as two or three families or as many as 500. The virtual family office is a digitally driven offshoot of the multi-family office. In the virtual family office model, the underlying multi-family office serves as a core group of financial advisors and other professionals who work in conjunction with a network of outside specialists on an as-needed basis. It is possible for a family to divide its service needs between some form of single family office, multi-family office and virtual family office structures. Such a mixed mode approach requires the family to prioritize their various wealth and family management needs and allocate them across the various structures available.

B. Functions of a Family Office

Common reasons for setting up a family office are to:

  1. enhance effectiveness and efficiency by centralizing investment, legal and financial matters for a family, including tax reporting and compliance;
  2. provide family continuity from one generation to the next, especially with regard to values and philanthropic contributions; and
  3. protect family wealth through successive generations, through estate and tax planning, family governance and educating younger family members on wealth stewardship.

Wealth can be understood as more than purely financial assets. A conception of a family’s “complete wealth” is that, in addition to quantitative, financial capital, wealth also includes qualitative components, including human, intellectual, social, and spiritual capital. The family’s financial capital is a tool to support the growth of its human, intellectual, social and spiritual capitals. The key concept of "complete wealth" is that the most important assets of a family are in fact its individual members.

Family offices structure their various service offerings in the context of the above main goals.

One of the important tasks of family offices, creating, implementing and maintaining good governance, is the best defence to prevent destructive family conflicts before they start. At its most basic level, governance is an organizational structure which helps groups make decisions.  The essentials of family governance are regular family meetings and a family charter/constitution.

Every family can benefit from regularly scheduled family meetings.  By implementing regular meetings where family members are able to communicate with each other in a structured environment, a family creates a system for dealing with miscommunication as well as addressing more serious conflict before it spirals. One size does not fit all, and the form of meeting will be adjusted to a family’s communication style.  Formalized meetings will include facilitated family councils and family retreats.  If conflict is particularly high, family meetings should be carefully planned in advance and facilitated by a trained third party.

Also called the family constitution, family creed, family protocol, or family agreement, the family charter is the document where the family sets out their values, vision, and commitment in relation to the family.  It is also used to record the agreement the family have reached on key issues such as who can own shares in or work in a family business.  Family charters are rarely binding legal documents and instead record agreements in principle and the aspirations of the family.

Families who are able to define and articulate their shared goals and the guiding values and principles that will help achieve them, give their families a strong foundation for cohesion and successful conflict prevention.  Values, or rules for living, underpin a code of behaviour that builds and supports a family vision and informs the family’s decision making.  During periods of challenge and transition, a family is supported by a belief in shared values, but where there is no clear vision to unify a family, opportunities for conflict can increase.

Codifying values increases in importance with the passage of time.  As families expand and scatter geographically and culturally, a sense of shared values, updated and revitalized with each generation, becomes increasingly important in binding families together. Research has shown that implementation of a family constitution, defined as formal protocol aimed at improving coexistence and cohesion in the family, was significantly and positively related to family business performance (Arteaga & Menéndez-Requejo, 2017).

5. How Has the Firm Performed as a Family Office?

A family office, structured and run well, can be of great value to a family’s financial and emotional prosperity, as well as its legacy and continuity. Based on the book Spare, it appears that the Firm hasn’t implemented some best practice family office structures that may have served to reduce the level of family conflict and associated reputational threat to the monarchy.

The Royal coat of arms, borne only by the Sovereign, features the motto of the Sovereign, Dieu et mon droit ('God and my right'). Woven through the narrative of Spare is the underlying value of the monarchy to protect the crown, and those in the direct line of succession, at the expense of everyone and everything else. The fundamental incompatibility of protecting the Sovereign at all costs with greater family harmony is not explicitly addressed.

The only explicit family value that Prince Harry mentions in Spare is “the family motto: Never complain, never explain.” And “the ethos of the family, that crying wasn’t an option - ever.” The irony is that the one purported family motto was routinely breached by family members, with regular surreptitious leaks to the press and certainly with the publication of Spare, a first person, tell-all memoir.

Without a robust, shared and refreshed code of values holding the family members together, there was nothing to prevent covert and overt conflicts within the family from eroding trust and unity. Prince Harry wrote:

Everything I'd been taught, everything I'd grown up believing about the family, and about the monarchy, about its essential fairness, its job of uniting rather than dividing, was being undermined, called into question. Was it all fake? Was it all just a show? Because if we couldn't stand up for one another, rally around our newest member, our first biracial member, then what were we really? Was that a true constitutional monarchy? Was that a real family? Isn't "defending each other" the first rule of every family?

In the absence of a unifying positive vision for the family and it’s future, fear appeared metastasize, contributing to division and competition between family members:

Maybe the stress around all this stuff stemmed from the overarching stress about the monarchy itself. The family was feeling the tremors of global change, hearing the cries of critics who said the monarchy was outdated, costly. The family tolerated, even leaned into, the nonsense of the Court Circular for the same reason it accepted the ravages and depredations of the press-fear. Fear of the public. Fear of the future. Fear of the day the nation would say: OK, shut it down.

The other important family office governance structure that didn’t appear to happen was regular, faciliated family meetings to enhance communication and build (or re-build) trust. It appeared that courtiers and staff members in the respective offices of King Charles, Prince William and Prince Harry were often working against each other and at cross purposes. The palace courtiers, some refered to by Harry as “middle-aged white men who'd managed to consolidate power through a series of bold Machiavellian maneuvers,” often appeared to be running the show, rather than the family members themselves.

As family conflict continued to spiral, it didn’t appear that there were any pro-active, professionally faciliated meetings to address the underlying issues. Was it true that King Charles and Prince William prioritized their own reputations and considered Prince Harry as a “spare” and thus expendable? Prince Harry is left to wonder in the face of family silence when he writes:

The more disheartening response was from my family. Silence. They never commented publicly, never said anything privately to me. I never heard from Pa, never heard from Granny. It made me think, really think, about the silence that surrounded everything else that happened to me and Meg. I'd always told myself that, just because everyone in my family didn't explicitly condemn press attacks, it didn't mean they condoned them. But now I asked: Is that true? How do I know? If they never say anything, why do I so often assume that I know how they feel? And that they're unequivocally on our side?

6. The Impact of a Failed Family Office: Personal and Institutional Costs

Family estrangement remains a societal stigma. Individuals who perceive themselves as stigmatized often feel alone in an unsympathetic world. Shame, isolation and embarassment pervade family estrangements. Estrangement implies failure, poor judgement and suspicious family secrets. Revealing an estrangement from a close family member leads many people to silently wonder what is wrong with that person.

Estrangement causes personal distress so profound it can last a lifetime. In his book Fault Lines, Dr. Pillemer writes:

Here are the four ways that estrangement threatens human health and happiness. First, I discovered that estrangement meets the criteria for what researchers term "chronic stress," a set of challenging circumstances that persist over a long period of time. Second, estrangement disrupts biologically based patterns of attachment, causing anxiety and insecurity. Third, family rifts involve social rejection, which research shows is extraordinarily damaging. Fourth, estrangement violates a basic psychological need for certainty, instead creating a situation that is disturbingly ambiguous. Estrangement disrupts what are still the most reliable ties available in our society: family relationships. Human nature is such that our happiness depends on reliable, secure, and predictable social relationships, and without them we feel lost.

In addition to the personal costs to the royal family members of the conflict set out in Spare, the publication of the book, the Netflix documentary and the related onslaught of media coverage constitute a serious reputational risk to an institution that relies on the goodwill of the public for its very existence. For this unique family, the monarchy of the United Kingdom:

Its mystery is its life. We must not let daylight upon the magic.

(Bagehot, 1927)

My hope for the royal family, and all estranged families irrespective of their wealth and status, is that they somehow find a way back to each other. A professionally mediated family meeting may be a good way to start.

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Nicole Garton is president and co-founder of Heritage Trust.

Recognized by Best Lawyers in Canada for trusts and estates and family law, she previously chaired the Canadian Bar Association Wills and Trusts Subsection (Vancouver).

Contact Nicole by email or phone at (778) 742-5005 x216.

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