For various reasons, the ultra-wealthy, where possible, choose single-family offices to coordinate and oversee critical aspects of their lives, especially their financial lives. 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.

Without a competent coordinator, wealth management services and products are likely to be disjointed, overpriced and often inexact to the needs and desires of the ultra-wealthy family. High-performing single-family offices eliminate these problems. Furthermore, because of their effectiveness, more professionals and affluent individuals are adopting variations on the model.

The Rationale For Single-Family Offices
Based on the perceptions and insights of senior management of founders’ single-family offices, the discontent between what their super-rich families wanted and needed and what they were getting from their previous professionals was a solid motivator for establishing single-family offices (Exhibit 1). The biggest problem is that these professionals did not understand the founder and the family.

Many professionals, no matter how good they are, tend to operate within their silos. This often proves ineffectual and disconcerting for ultra-wealthy families. It is a significant reason various forms of multi-family offices are becoming very attractive to all levels of affluent families. Being forward-thinking, flexible and not “salesy” is also essential and leads to the ultra-wealthy choosing single-family offices or multi-family offices over other options.

Holistic Solutions Provider
One of the most significant advantages of high-performing single-family offices is that they provide holistic solutions (Exhibit 2). Holistic solutions providers start by being “built” around the distinctive needs and wants of the ultra-wealthy family.

Because a high-performing single-family office understands all aspects of the ultra-wealthy family, it can deliver synergistic solutions. This maximizes outcomes, leading to delivering superior results compared to other types of providers.

For many ultra-wealthy families, single-family offices are not the correct answer. Sometimes, they are not the best option because of the set-up and management costs. Sometimes, they are 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 ultra-wealthy families and a broader array of less affluent families.

Multi-Family Offices
When a single-family office is deemed inappropriate, but the ultra-wealthy want the many advantages of a single-family office, the answer is a multi-family office. For certain ultra-wealthy families, multi-family offices are the preferred way to address aspects of their lives and help manage their wealth.

In a study of 264 wealthy investors, 70% reported wanting the same advantages that a single-family office can provide to the super-rich (Exhibit 3). Breaking this down, we find that nearly nine out of 10 wealthy individuals with a net worth greater than US $30 million, eight out of 10 wealthy individuals with a net worth between US $10 million and US $30 million, and about three out of five wealthy individuals with a net worth between US $1 million and US $10 million are strongly attracted to the family office model.

Simply put, 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 super-rich family, multi-family offices are commercial enterprises designed around the broad-based needs and wants of the wealthy.

Jerry D. Prince is the director of Integrated Academy, part of Integrated Partners, a leading financial advisor firm. Russ Alan Prince is 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.