HomePrivate WealthArticlesBeware The Multi-Family Office Bait-And-Switch Tactic

Beware The Multi-Family Office Bait-And-Switch Tactic

There is NO question that a majority of the wealthy and more so the ultra-wealthy prefer working with multi-family offices as opposed to other types of providers. It comes down to the fact that the wealthy are looking for the same advantages high-performing single-family offices provide the super-rich. And, with certain exceptions, a sizable percentage of the advantages high-performing single-family offices provide the super-rich are available to those considerably less affluent. Consequently, a growing number of professionals are claiming to be multi-family offices.

The compilation is that a good number of these self-proclaimed multi-family offices are NOT multi-family offices. They are professional firms using the moniker of a multi-family office to attempt to garner new high-net-worth clients. The bait is the idea a wealthy individual or family would be dealing with a multi-family office. The switch is that the wealthy individual or family is really dealing with a particular type of professional focused on selling his or her services.

According to Vince Annable, CEO and founder of VFO Advisory Group and co-author of Your High-Performing Virtual Family Office: Maximizing Your Financial and Personal Lives, “We find that while more successful entrepreneurs are extremely interested in working with a family office, most of them don’t quite know what a family office can do for them. As we educate them on our capabilities, we consistently find them choosing to work with us as well as refer their peers.”

A family office—whether it is a single-family office or a multi-family office—is an expert coordinator of experts. Most times some of the expertise is in-house and specialists are brought in as needed. At all times, the family office professionals oversee and manage the process with the clients.

Critical to being able to produce results comparable to a high-performing single-family office is Discovery. According to P.J. DiNuzzo, founder and lead coordinator of DiNuzzo Middle-Market Family Office and Wall Street Journal bestselling author of the book, The DiNuzzo Middle-Market Family Office™ Breakthrough: Creating Strategic Tax, Risk Cash-Flow, and Lifestyle Options for Successful Privately-Held Business Owners and Affluent Families. “Discovery is the process we use to develop a deep understanding of prospects and clients. It enables us to discern their needs, wants, and how we can best work with them. Based on Discovery, we’re able to craft customized solutions.”

Most supposed multi-family offices are “weak” when it comes to Discovery. They tend to collect a limited amount of information and that information centers on the relatively few services they provide. This is not inherently a problem, but these firms are not the type of multi-family office the wealthy are looking for.

Quality multi-family offices deliver superior results. But, in these bait-and-switch scenarios, rarely—if at all—are clients getting superior results. A large number of self-identified multi-family offices are poorly serving their wealthy clients and that’s because although they call themselves multi-family offices, they’re really nothing close to what high-performing single-family offices deliver to the super-rich. When we help the wealthy become better consumers and therefore short the balance of power from private wealth industry professionals to themselves, they tend to quickly recognize they’re getting subpar results.

A considerable number of so-called multi-family offices are incapable of delivering exceptional value to clients. Many of these firms are identifying themselves as multi-family offices to better attract the wealthy. It is purely a marketing ploy; a bait-and-switch tactic. Bait the wealthy in with the promise of a multi-family office and then switch to whatever the firm really does whether it is delivering investment management or life insurance or administrative services.

“The good news is that as the successful and wealthy become better consumers of private wealth expertise, these firms will be less and less able to use this bait-and-switch marketing tactic,” says Annable.

Russ Alan Prince is the executive director of Private Wealth magazine and chief content officer for High-Net-Worth Genius. He consults with family offices, the wealthy, fast-tracking entrepreneurs and select professionals.


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