Far from Rome, on the sunny island of Capri, an emperor decided to disconnect from the hustle and bustle. Tiberius had left Rome in AD 26 and eventually settled there, enjoying what we might imagine as the ancient equivalent of an Aperol Spritz while the sun descended over the Bay of Naples.
He had grown tired of the business of Rome. Tiberius would live another eleven years without returning to the capital.
Even though authority remained with him, the empire began to move away from him. The system adapted around his absence, as few matters warranted sailing to Capri and back to get the emperor’s opinion.
The high-level decisions ostensibly remained with Tiberius, but more everyday concerns moved to someone more available.
The man who occupied that space was Lucius Aelius Sejanus, commander of the Praetorian Guard.
The Man Between the Emperor and Rome
Sejanus was useful and capable, and because of that he was given more power over the years. Eventually, he became the filter through which any plea to the emperor had to pass. He did not need the throne to exercise power. He already had the emperor’s ear, and decided what it heard.
A wealthy family can create the same vacuum without anybody behaving like a Shakespearean villain.
Family offices are often founded with one explicit goal: “capital preservation and expansion.” This appears to be a very clear goal, but there are numerous ways of interpreting it.
Should the family preserve the legacy business that earned them the empire? By what criteria should an acquisition be judged? Should maximum returns be prioritised over stable ones? These are all value judgements. When the family has not articulated its philosophical stance, the day-to-day decisions are left to interpretation.
Earlier this year, I had coffee with someone who perked up when I said I was helping set up a family office. He immediately pitched himself as the potential manager thereof, and listed several projects he would tackle with funding - Limassol real estate, restaurants, you name it.
I asked how any of this reflected the family’s preferences.
He shrugged. “When they see the money rolling in, they won’t care where it’s coming from.”
His answer was an unusually candid expression of the principal-agent problem. The principal owns the money, and hires an agent who represents them in managing it. The problem arises in that the agent is their own person with their own interests.
Even if we exclude any dishonesty, an agent has their own incentives, professional habits, and biases. As such, if the principal family doesn’t establish their management goals and philosophy, the agent’s values will prevail - as almost any profitable use of his delegated capital can be argued to be faithful service.
Judgement needs to be Stated
Sejanus understood that being close to the decision-maker is a power in its own right.
Modern family courts are less theatrical. The principal hires lawyers, investment professionals, personal assistants and so on to form a court. Collectively, they filter opportunities and decide which questions deserve the principal’s attention. These are professionals, not courtiers vying to take the crown, yet courtly politics remains.
Each professional naturally views the family fortune through the priorities of their own role. The principal’s role is to act as a moderating force - take the best elements of each discipline, but without allowing any single perspective to dominate the discussion. In short, to exercise judgement.
Judgement requires a standard against which competing decisions are measured.
A principal may keep these higher principles to themselves provided they remain active and guide the agents when they are out of sync. However, that management arrangement cannot survive their withdrawal, incapacity or death. If their judgement is to outlast their daily involvement, the principles behind it must be articulated and transmitted.
Cyprus Can Preserve the Structure. The Family Must Supply the Purpose
Over the last few decades, Cyprus has developed a substantial professional ecosystem and legal scaffolding to accommodate and attract international wealth. Its lawyers, fiduciaries, accountants and investment professionals manage assets across companies, trusts and generations.
But operational precision cannot compensate for an undefined destination. A family office is intended to manage wealth across generations. If it is to preserve more than the assets themselves, the family must also transmit the purpose that management is intended to serve.
Wills can determine who gets what.
Trusts define who benefits from assets.
Family constitutions can determine how decisions are made.
Investment policies determine the terms under which capital is allocated.
Yet by default, none of these structures define what the wealth is for, unless the family has already satisfactorily answered that question for themselves.
The Quiet Succession
Eventually, Tiberius did turn against Sejanus. He was arrested and executed after a single letter from the emperor to the Senate.
Family offices rarely experience grand moments of betrayal. The danger is drift. Rational agents follow prevailing incentives and make decisions that are perfectly defensible on their own. Taken together, however, they can diverge substantially from the founder’s intent.
Yet, the professionals working for a family are not mind readers. If the founder’s intent is not made explicit, there is no yardstick to measure against. Heirs, similarly, can only guess why decisions were made.
The solution is simple: state what the wealth is intended to make possible beyond the heirs’ continued wellbeing, what principles should guide decisions, and which opportunities the family will refuse regardless of their potential return. Those commitments can then inform its succession and management policies, including its choice of advisers.
Money is a tool, not an end in itself. Whether it serves the purpose the founder intended depends on whether they leave a blueprint that heirs and staff can follow.
A fortune without a purpose will be given one by others.
*By Richard Amador, Founder of Avus, preserving the ‘why’ behind the wealth through commissioned family narratives
