To address the common problem of diminishing assets due to family expansion, Market Street began working with new clients (none of whom shared the Houghton surname), signaling its transition from a single-family office to a multifamily office, and adopted a mutual structure that gives every client an ownership stake in proportion to their assets, with a onetime capital commitment equal to slightly less than one year’s fee. The move “was not driven by profit, but actually allowed us to align clients’ interests around excellent service at competitive prices,” Young says.

At the same time, they embarked on an initiative to reconcile the typical client’s need for truly integrated services with greater cost transparency. The wealth management industry has clients that “think they are paying for one thing but getting another; they don’t understand fees,” says Young. The goal was to address the broadening scope of requirements—beyond trust administration and investment management, to things as diverse as insurance, philanthropy and bill-pay services—while helping clients recognize the difference in process and value. More changes soon followed, including the appointment of non-family and eventually outside directors to Market Street’s board.

To establish a more corporate environment, the team looked to the Houghton family’s traditions of innovation, technology and small-town values for inspiration. “Our standards are excellence, integrity and continuous improvement,” says Young, explaining how Market Street has managed to preserve its unique culture despite considerable changes in focus and infrastructure.

Houghton points out that the “dynamic of a big company in a small town” still permeates the operation, but that the aforementioned changes were a point of departure for Market Street. It was the right time to “build on the solid foundation established by earlier generations of the family” and take the reins of this “sophisticated, networked organization and invest in future generations,” he says.

Managing The Evolution
One of the most challenging aspects of becoming a public-facing business was the need to shift from being a reactive, service-oriented operation focused on a single, albeit extended, family to one that thinks proactively about growing its business, Young says.

Longtime employees were augmented with professionals such Vice Chairman Rob Elliott, COO Keith Horn, CIO Mike Eisner, and Beth Landin, vice president of client and strategic relationships. It also became apparent that Market Street’s headquarters in western New York state limited the team’s ability to meet and service potential clients. More urban and easily accessible locations would be needed, leading them to open a new office in Manhattan earlier this year (see sidebar).

“Outside interests have created a more stimulating environment” for the staff, Young says.

Shoring up the professionals and the governance structure “has raised the bar for everyone,” Houghton adds.

Market Street’s approach to growth and expansion is two-pronged: It develops new relationships organically and sources them through key strategic partnerships. “The clients most attracted to our model appreciate the value of an integrated approach to their wealth management needs,” Young says.
The firm is best suited to help households with enough wealth to have complex needs, most likely in excess of $30 million, and who are willing to engage in an inclusive relationship. Market Street oversees $1.3 billion in client assets with a five-year goal of reaching $2 billion. Each year, it targets the addition of between one and three new households to its client base, with Young keeping a close eye on capacity constraints. “We will not take on something if there are any questions about our ability to deliver excellent service and advice,” she says.