Any successful financial advisor who has been in the business long enough has probably been approached this century by an individual worth $5 million or much more and asked, "Can you tell me what a 'family office' is," or "Should I have a family office?" My own experience with this was while shopping at Target last year and meeting a woman who was worth tens of millions and had just lost her second parent. The New York Times reported in 2010 that Oprah Winfrey had just established a family office, and the concept grew in popular culture because Oprah is a pop icon. Yet, Hannah Shaw Grove, executive editor of Private Wealth, reports that in 2003, almost no one knew what a family office was.

Ms. Grove is an expert on the highest net worth families in our society and their preferences. She and her business partner, Russ Alan Prince, do social and statistical research to pinpoint trends. Lately, Ms. Grove is noticing advisory firms' interest in repositioning themselves as multifamily offices (MFOs). Likewise, her research uncovers that many single-family offices (SFOs) are at least entertaining strategies that can be used to expand in the direction of an MFO. "The risks that you can have often are that staying within family needs can become myopic," says Ms. Grove. Regarding SFOs, she says, "A lot of family offices are running on a shoestring" and "are not supporting the needs of all the family."

The list of services desired by both SFOs and MFO clients is expanding beyond investment-related staples. Tax and legal services are already closely related to investments and financial planning. Administration, consolidated reporting and strong fiduciary oversight should be expected (which does not mean SFOs and MFO are in top form in these areas). However, it is the rare family office that acts as the insurance advisor, healthcare advisor, family values advisor, financial educator and lifestyle advisor. There is a defined need in the marketplace for a family office that can be at the value-added beck and call of each family.

In 2011, the average age of the independent financial advisor is almost 50 years old. Whether sitting in a wholesaler's steakhouse lunch or an investment mega convention these days, it is hard not to notice that more advisors look "retired" (if retired has "a look") than as if they have on their game faces to go after billions of dollars in new client money. Yet, many senior advisors take an outfielder-with-an-open-mitt-approach to catching boomers and their earned and inherited millions. The rain delay sets in, and the advisor keeps standing on the muddy grass trying to catch a boomer.

Just as with the senior advisors in the outfield with their open mitts, any financial advisor that builds a MFO just because he or she can, will see those families go flying into the stands. Many brick-and-mortar-based entrepreneurs, as well as Internet entrepreneurs, have learned the hard way that just because you build it, does not mean the customers will come. Building a successful MFO practice, as well as outsourcing financial advisory services to the MFO community at large, is going to involve active outreach efforts on every front.

It is natural for a financial advisor who has a couple of million-dollar-plus clients to start thinking bigger and better. Ms. Grove reports that in the U.S., $20M-$30M is thought to be enough net worth to have a family office. If an advisor nets a percent on a million dollar account, and can net a percent on a $20M account, it makes sense to strive for the $20M accounts. Most financial advisors have experienced that it is those $200K accounts that are the most difficult to manage, because when this is a person's whole net worth, they think about every dollar of it every day.

It is not new news that the family office industry is at a crossroads. What is noteworthy is how SFOs and MFOs are tailoring their capabilities to emerge at the forefront of the race. The head of one New England SFO - which has been around for generations - astutely pointed out that what used to be 15 extended families spending the money is now closer to 90 extended families. Savvy investing alone cannot keep up with new generations of consumers needing formal educations and their own experiences of American consumerism. When I asked this East Coast CEO if any of the 90 families have ever challenged any of the trusts from which he derives his authority, he thoughtfully replied, "Not Yet." It is all too common for family office trustees to be battling the beneficiaries of the trusts, often in court. Legal fees are yet another component that can eat away at sustainability. It seems that many SFO CEOs are getting wise to the generational issues at the forefront of what they helm. They are at least opening their eyes to partnership ideas and other scalability solutions. The question according to Ms. Grove is, "Can the organization evolve as the family evolves?"

While SFOs are looking to strengthen their structures, MFOs are seeking to renovate and add on additions. With hands everywhere competing to manage the dollars of the uber-wealthy, firms are expanding their capabilities. More firms are becoming experts at Customer Relationship Management (CRM) and even hiring Customer Relationship Managers. The owner of one successful wealth management firm speaks about how his office knows the drink order of every client and hands it to them soon after they walk in. The clients never have to ask. There really is something comforting about a white-collar service professional who knows you take your coffee with nonfat milk and one sugar.

Ms. Grove points out that the wealthiest clients with hundreds of millions or billions do not want to have to remind their professionals who they are and what their unique needs are. This brand of deep and managed CRM extends beyond just asking, "Mrs. Customer, how is your cat, Snowflake?" If Mrs. C does not want to own any tobacco stocks, this needs to be in the Investment Policy Statement. Mrs. C's insurance policies and annuities need to be reviewed yearly in light of her estate plan. Perhaps Mrs. C requires help choosing a Medicare Supplement, and her grandchildren need health insurance because mom or dad's COBRA has run out.  If Mrs. C has fine art and collectibles, she may need help with specialized appraisers, dealers and brokers. Most critical is to try and understand and appreciate Mrs. C's family dynamics. She may have certain family members who are authorized to speak on her behalf, and some family members she does not even speak to. Interpersonal skills and EQ (Emotional Intelligence) comes naturally for some advisors. For the rest, employing a Customer Relationship Manager who understands their business can be a key to success.

Growing beyond money management and financial planning may lead to connecting MFO clients with private equity and venture capital deals, investment banking opportunities, credit, philanthropic training, family education, family security, concierge services and specialty lines of insurance. Ms. Grove notes, "100 percent of rich people have alternative investments." In other words, if a MFO does not offer alternative investments, its growth is likely stunted.