Two questions to ask of any family office.

Independence and ownership are not the same thing.

A family office may describe itself as independent because it has no parent institution. It may also be a distribution arm of a parent institution and use the same word. The word is doing different work in each case, and the family on the receiving end is rarely told which.

Ownership matters because ownership is what determines, in the long run, which products are recommended and which are not. A firm owned by a manager will have a difficult time recommending against that manager's product. A firm owned by an insurer will, structurally, find more reasons to recommend insurance. Neither is dishonest. Both are predictable.

Who pays you. Who owns you.

The first question: how is the firm compensated, and by whom. The acceptable answers are direct: a fee paid by the family, a retainer, an asset-based charge, a commission disclosed in advance. The unacceptable answers are oblique: "we have a relationship with," "we benefit from," "we are aligned with." Every oblique answer is an undisclosed payer.

The second question: who owns the firm, and what does the firm sell. If the firm sells a product the firm or its parent manufactures, that is a fact the family is entitled to. It does not disqualify the firm. It does qualify what the family hears next.

Both questions can be answered in fifteen seconds. A firm that takes longer is, by the answer's length, telling the family something.

Disclosure is the floor, not the resolution.

The regulatory framework requires conflicts to be disclosed. The disclosure is necessary. It is rarely sufficient. A family that receives a six-page conflicts statement and signs it has not, by the act of signing, resolved the conflict. They have agreed to proceed despite it.

The resolution, where one is possible, is structural — a firm whose ownership and revenue model do not require the conflict in the first place. Where that is not possible, the family at least knows where to apply pressure.