The ultra-wealthy (net worth = US$30 million or more) are preferred clients for investments, life insurance, bankers and other professionals. They have the financial needs and wants coupled with the ability to pay for value. Consequently, a lot of different types of firms are competing to address the financial needs and concerns of the ultra-wealthy.
In a survey of 206 ultra-wealthy individuals, about three-quarters of them prefer to work with multi-family offices. Another 15% like wealth management firms. Less than 10% choose investment advisors. The remaining few percent opts for planning firms. Clearly, individuals with money are strongly attracted to multi-family offices.
Almost all the ultra-wealthy who prefer multi-family offices cite responsiveness and taking a holistic approach as critical reasons for their attraction to the model. “Multi-family offices have many variations,” explains Evan Jehle, partner of FFO Business Management and Family Office. “Getting the results they’re expecting is essential for wealthy families. Also, a distinguishing characteristic of a well run multi-family office is that it’s exceedingly service oriented, not only quickly addressing issues but being able to anticipate issues and have possible solutions at hand.”
About four out of five are looking for state-of-the-art solutions and see multi-family offices as the best provider of exceptional services and products. Key to being effective as a multi-family office is the ability to bring the appropriate expertise to ultra-wealthy clients. While some of the expertise is in house, the odds are very good that much of it is external. All high-quality multi-family offices have a network of specialists they rely on to address particular needs and wants of clients.
The network of specialists enables high-quality multi-family offices to deliver not only comprehensive wealth management synergistically, but it is also instrumental in being able to deliver an extensive range of support services. About three-quarters of the ultra-wealthy surveyed prefer to work with a firm that delivers more than financial services and products.
High-quality multi-family offices will often also deal with administrative and lifestyle matters of behalf of their clients. Administrative services can include tax compliance, bill paying and the management of properties. The two most in demand lifestyle services are concierge medicine and family security.
It is clear the ultra-wealthy want what a well-run multi-family office can deliver. In fact, about 85% of them would establish a single-family office if they could afford to do so or were comfortable with the ongoing oversight role. Because of these restrictions, many ultra-wealthy families are gravitating to multi-family offices.
Russ Alan Prince, president of R.A. Prince & Associates, is a consultant to family offices, the ultra-wealthy and select professionals.