The private wealth industry is solidly tilted to the side of the professionals and not the clients. This imbalance is inherently structural. It also leads to many professionals with a lack of knowledge and skill working with the ultra-wealthy. Additionally, it leads to some professionals that are criminals aiming to exploit this industry.
A single-family office aims to optimize family members' financial and personal lives. One of the primary reasons for the explosive growth in single-family offices is correct for the imbalance. High-performing single-family offices ensure the highest quality professionals are retained and managed, delivering precisely aligned, cost-effective solutions to family members.
The complication is that not all single-family offices are high-performing. Based on a series of studies over the last decade, only 20% to 30% of single-family offices can be defined as high-performing. Most single-family offices provide viable but not exceptional solutions to their family members.
The difference between those single-family offices and those that are not has been clearly detailed. One of the most significant differences is the ability to maximize their relationship with providers. According to Homer Smith, founder of Konvergent Wealth Partners and co-author of Making Smart Decisions: How Ultra-Wealth Families Get Superior Wealth Planning Results, “When relying on in-house experts or outsourcing to specialists, the approach management at high-performing single-family offices take centers on sensitivity to the needs and wants of family members coupled with leveraging the knowledge and skills of talented professionals. This regularly entails working with industry professionals to pull back the curtain on the private wealth industry.”
The best way to correct this structural disadvantage is for them to take control of their financial lives. Doing so is NOT about becoming specialists themselves. Instead, it is about understanding the range of options available to them to address their agendas.
The aim is to ensure that the family and the required professionals achieve substantial results. According to Frank Carone, chairman of Oaktree Solutions and co-author of Everyone Wins! How You Can Enhance and Optimize Business Relationships Just Like Ultra-Wealthy Entrepreneurs. “Whether it’s single-family offices and professionals or corporations or corporations and governmental entities, the best results possible are when all involved build relationships that deliver tremendous results. It’s possible to constantly get tremendous results when you’re focused on what you want to achieve and what the other parties want to achieve, and you help them get the desired outcomes.”
The senior executives at high-performing single-family offices are adept at maximizing relationships with providers. They regularly use processes such as Everyone Wins to get the best arrangements for their family members while helping the providers archive a great deal, which is, for many of them, more than they were thinking.
“The trend is not only for the management of single-family offices but the wealthy at large to become better consumers of private wealth expertise,” says Prince. “The goal of every professional needs to be to help their clients make smart decisions, and the Everyone Wins process is instrumental in making this happen.”
Russ Alan Prince is the executive director of Private Wealth magazine and chief content officer for High-Net-Worth Genius. He consults with family offices, the wealthy, fast-tracking entrepreneurs and select professionals.