Keeping clients is not the problem. There's a lot of value that's been brought to clients, and there are many more potential clients out there. And it's, "How do you scale these services that really do work for that set?"
PATTERSON: I would also add that communicating the value-added that you provide can be challenging because a lot of the families haven't experienced this type of value-added service, and they don't know what it's like to have their advisory teams working together brainstorming solutions for them. And so, until they actually experience having that, they don't know what value to place on it.
PW: Research shows that more high-net-worth individuals moved money to MFOs in the past year than any other type of provider. Why do you think that's the case?
GROMEK: I think two reasons. People are questioning the advice that they've gotten in the past. They are looking for a sophisticated investment solution. The dislocations that happened at the end of 2008 created enormous opportunity. [Families] want someone who can vet those opportunities and really figure out which ones are the right ones to take advantage of, and how to effectively execute on that.
I'd say the second piece is that they want to be educated. They want to understand what's in their portfolio, how it works together, why it's acting the way that it is. And MFOs tend to provide that level of service and education.
SINSHEIMER: For me, the reason why money is flowing apparently into the multifamily office space is two-fold. One is the lack of confidence with the advisor they've had elsewhere.
But secondly, from the other end there are more and more single-family offices that are finding a need. Perhaps it's not a need they wanted to have, but a need nonetheless, to either fold down or trim down the single-family office in some fashion.
So, a family that had $1 billion three years ago, for whatever reason might have $300 [million] today, and can no longer afford the apparatus for the complement of services that that family was getting from the single-family office. And so, we're seeing a little bit of flow from that as well.
PATTERSON: I think there's just more awareness that there are other alternatives out there. And there's also been a lot of change in the wealth management field. The brokerage industry has, you know, fallen apart in some cases.
But more I think it's the awareness that there is another alternative out there. "Multifamily office" might not be a good name. Still, a lot of people don't understand it. If you say you're a multifamily office, they say, "Well, what does that mean?" We're still at the infancy stage of an industry, but we're getting to a level of awareness that some people are turning to us.