I’m not the only one who has observed the sharp increase in the number of organizations calling themselves family offices. When Russ Prince and I first realized separate research on family offices made sense—yes, back in the 20th century—the term “family office” left most people with a blank look on their faces. These days, every major financial services and consulting firm has a family office initiative. There are at least five member-driven organizations for family offices and their service cohorts in the U.S. alone, with more being created every day. There are dozens of conferences staged throughout the year billed variously as ways to meet, do business with or build your own family offices. And companies that provide everything from asset management to life insurance to concierge services and a multitude of other things all use the label indiscriminately.

I recently consulted with the board of a successful wealth advisory organization where this very issue came up. Just this morning, I read an online article in which an employee of Family Office Exchange said, “It is essential to monitor the quality of organizations that use that label and ensure that standards are … maintained.” The idea is well intentioned, but it may be a little like fighting the Google War. Despite the diversification of its business, Google is still strongly synonymous with Internet search. When someone says, “I googled it,” people know exactly what that means.

When professionals and companies refer to themselves as family offices, it’s because it’s a relatively clean and simple way to communicate that they understand and work with the affluent. But, perhaps more importantly, they use that term because they believe it’s tantamount to saying they deliver a high-touch experience to wealthy clients.

The landscape of multifamily offices (MFOs) changed and grew so profoundly over the past 10 years that we felt impelled to put criteria in place while conducting our second major research study a few years ago. After examining more than 1,000 firms, we established baseline characteristics of an MFO: the provision of investment advisory services; a minimum threshold for net worth and investable assets; and the regular use of the term when describing the operation. Several years on, it appears that more criteria are needed to help the industry make sense of the rapid expansion. Conversations with a few MFO executives yielded these ideas:

• Operating with a client’s best interests in mind.
• Offering a breadth of services that reflect the totality of clients’ personal and financial affairs.
• A platform that enables objectivity and independence.
I’d like to believe there can be standards that will help raise the bar without denigrating or excluding certain professionals that play a critical role in managing and protecting the wealth of their clients. If everyone benefits, we can strengthen the industry.