For various reasons, the ultra-wealthy, where possible, choose single-family offices to coordinate and oversee critical aspects of their lives, especially their financial ones. The ability of high-performing single-family offices to be in sync with ultra-wealthy families, act proactively and be right on point is a great advantage to these families.
Based on the perceptions and insights of senior management of founders’ single-family offices, the discontent between what they wanted and needed and what they were getting from their previous professionals was a solid motivator for establishing their single-family offices. The biggest problem is that these professionals did not understand the founder and the family.
“One of the most significant advantages of single-family offices is that high-performing ones are holistic solutions providers. Being holistic solutions providers starts with being “built” around the distinctive needs and wants of the ultra-wealthy family,” says Angelo Robles, Founder and CEO of Family Office Masterclass. “Because a high-performing single-family office understands all aspects of the ultra-wealthy family, it can deliver synergistic solutions. This maximizes outcomes, delivering superior results compared to other providers.”
For many ultra-wealthy families, single-family offices are not the correct answer. Sometimes, it is not the best option because of the set-up and management costs. Sometimes, it is a poor choice because the ultra-wealthy family does not want the responsibility for continuous oversight. Whatever the rationale, there are other possibilities for these wealthy families and a broader array of less affluent families.
When a single-family office is deemed inappropriate, but the ultra-wealthy want many advantages possible with a single-family office, the answer is usually a multi-family office. For certain wealthy families, multi-family offices are the preferred way for them to address aspects of their lives and help manage their wealth.
According to Homer Smith, founder of Konvergent Wealth Partners and co-author of Making Smart Decisions: How Ultra-Wealthy Families Get Superior Wealth Planning Results, “A multi-family office is an entity that delivers an array of expertise to a number of wealthy, unrelated clients. The aim is to mirror the variety of potential deliverables of a high-performing single-family office. While single-family offices are designed around the ultra-wealthy family, multi-family offices are commercial enterprises usually designed around the broad-based needs and wants of the wealthy.”
In conclusion, single-family offices are proving to be the superior wealth management solution for a growing number of ultra-wealthy families. Moreover, as they are customized, single-family offices can be just what these families want them to be, within the limits of laws and regulations. This sets them apart from many financial and professional firms they would otherwise engage. It is not that the services of these various experts might not be used; it is that how the relationships will be structured tends to favor ultra-wealthy families strongly.
Russ Alan Prince is the executive director of Private Wealth and a strategist for family offices and the ultra-wealthy. He has co-authored 70 books in the field, including Making Smart Decisions: How Ultra-Wealthy Families Get Superior Wealth Planning Results.