The number of single-family offices continues to multiply because they are generally seen by the ultra-wealthy as the best way to optimize their financial and personal lives. The appeal of single-family offices has created a deluge of multi-family offices and family office practices for those wealthy individuals and families that cannot afford a single-family office.
The attractiveness of the family office model by the wealthy has not been lost on a plethora of professionals from wealth managers to lawyers and from accountants to insurance agents. Many of them are claiming to be part of multi-family offices or have family office practices. For some of them, these proclamations are nothing more than a marketing ploy. Consequently, they cannot be high-performing and might very well prove detrimental to the finances of their wealthy clients.
Family offices are expert coordinators of experts. Thus, they’re able to effectively help their clients achieve their goals and address their concerns. What makes family offices high-performing is their ability to meaningfully exceed the expectations of the families or individuals they serve. Only by deeply understanding the worldviews of their wealthy clients can a family office possibly be high-performing and that’s where so many of them fall down.
Only when the multi-family office of family office practice professionals truly understands the desired outcomes of their clients. Can they connect the dots and provide the services and products that can make a meaningful difference in their lives. Processes like “discovery” prove essential in determining the goals and objectives as well as the most pressing concerns of wealthy clients. Unfortunately, a large percentage of self-ascribed multi-family offices and family office practices are more focused on the services and products they can sell than on gaining the necessary deep understanding of their wealthy clients.
There is another component for a multi-family office or family office practice to be considered high-performing. It has to deliver the services and products that will not only make a substantial difference to the lives of its clients but those services and products must be cost-effective.
According to Justin Breen, the driving force behind the exclusive BrEpic Network and co-author of Superior Results: Maximizing the Value of Your High-Performing Family Office Just Like the Super-Rich, “There’s no question that many multi-family offices and family office practices, as well as a great many providers in the private wealth industry, can indeed deliver on-point products and services. This is great, but it’s not enough when wealthy individuals and families are paying dearly for these products and services. Let’s keep in mind that for a considerable number of professionals throughout the private wealth industry, their compensation models are arbitrary. Negotiating better fees and working arrangements with providers in the private wealth industry started with successful single-family offices. Today, these actions are rapidly becoming more pervasive at all levels of wealth.”
Family offices of all types are becoming the dominant provider of financial and a range of support services to the wealthy. There is little indication that this is going to change in the near future. Still, for wealthy individuals and families to get superior results they need to be working with a high-performing multi-family office or a high-performing family office practice.
When it comes right down to it, the wealthy have to be involved and assertive if they want superior results. When the wealthy are in control which means carefully vetting prospective multi-family offices or family office practices, negotiating reasonable and respectful fees and operating arrangements, and remaining vigilant, they can better ensure they’re going to get the very best solutions at the best price possible. And, there are specific steps the wealthy can take to ensure they’re in control.
RUSS ALAN PRINCE is the Executive Director of Private Wealth magazine (pw-mag.com) and Chief Content Officer for High-Net-Worth Genius (hnwgenius.com). He consults with family offices, the wealthy, fast-tracking entrepreneurs, and select professionals.