Families in transition need to be as flexible as possible when structuring their family office, said executives at Family Office Metrics’ annual OpsTech conference in New York this week.

Editor’s Note: This is the second part of Family Wealth Report’s exclusive coverage of Family Office Metrics’ OpsTech conference. To view the first part on how mobile computing is shaking up the family office tech market, click here.

Families in transition need to be as flexible as possible when structuring their family office, said executives at Family Office Metrics’ annual OpsTech conference in New York this week.

“The more choice family members have, the more efficient the family office will be,” said Rebecca Meyer, managing director, client strategy for Pitcairn, the Jenkintown, Pa-based multi-family office.

The unusual core-satellite structure of Interlaken Management, the Wilton, Conn-based investment management arm of the Abraham family office, provided a vivid case study of that principle at an executive roundtable session on exploring family office structures.

As time passed and the family expanded, the founders realized that next-generation members were becoming more independent and less collaborative, said Rich Sauer, Interlaken president and a family member who is on the SFO’s investment committee. As a result, Interlaken reorganized three years ago to re-assert the primacy of the first generation’s investment and governance goals. Succeeding generations have smaller, satellite offices scattered around the country that contract for back-office services with Interlaken and team up with the main office to leverage purchasing power when contracting outside providers.

The second generation “does not have a seat at the table” when it comes to governance and investment decisions at Interlaken, Sauer said. But G2 does have the “freedom and flexibility” to make their own decisions for their satellite offices, he added.

And if the satellite offices want to combine, they can. “They either will or they won’t develop a methodology to collaborate,” Sauer said.

Accommodating “different levels of involvement”

Meyer, who moderated the roundtable, described Interlaken’s approach in an interview as a more “formalized” version of a concept she called “free association,” where parties were not forced to stay in a particular structure. While other single-family offices were unlikely to adopt such a strict configuration, Meyer said she expected other SFOs to recognize “different levels of involvement” by the second generation in a variety of ways.

Paul McKibbin, program director for the conference and managing partner for Family Office Metrics, also thought variations of Interlaken’s approach would be appealing to “lots of families.”

Manchester Capital Management of Vermont offered a more conventional family office evolution. After being founded by two prominent Wall Street families, Manchester’s investment prowess attracted other wealthy families, and in 1993 the multi-family office registered with the Securities and Exchange Commission as a registered investment advisor.

Manchester has expanded its services over the last ten years and opened up an office in New York earlier this year. The MFO plans to keep growing, said chief financial officer Scott Swenor, and plans to allow the next generation of employees to become owners, joining two clients who are already owners.

The infusion of new blood is seen as both an alignment of interests and a way to keep Manchester from falling into a rut, Swenor said. “Having new owners bring the clients perspective to the boardroom has been a breath of fresh air,” he said.