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There’s a saying within the wealth management industry – “If you’ve seen a family office, you’ve seen a family office.” If you are a client of a family office, this won’t give you the warm and fuzzies that you're being well taken care of. Rather, it will make you feel undervalued and like a cookie-cutter client because the services you receive from ABC family office will be the same as the ones you receive from the DEF family office two towns away.
The onus is on the industry to change this perception to: “If you’ve seen one family office, you’ve seen one family office.” They shouldn’t all be the same, and neither should each financial advisor’s service model.
Here are some ways to differentiate your family offices services.
Tailored investment portfolios
We all know from sitting around a Thanksgiving table that every family is different; so are their financial needs. There are many dynamics and preferences and no two portfolios will look the same or serve two sets of families the same way; that’s why it’s important to offer tailored investment strategies that suit each individual family.
Why for so long have many stuck with the cookie cutter model? If you look at a bakery, making fresh items daily requires waking up incredibly early and a lot of hard work, not to mention managing a sizable team spread over a long workday to accomplish the end goal. In the context of finance and the family office, creating customized portfolios and services for each ultra-high-net-worth family takes a considerable amount of coordination. But the end goal must be the quality of the product. Firms that can pull together a team of experts who will provide their family office clients a single point of reference for all their needs will provide them with an invaluable opportunity to preserve and potentially grow their wealth for generations.
Concierge services
While each family office should be offering their clients some level of services, if you can offer true concierge-quality care, you will stand out. Accounting services and bill pay are table stakes. Are you helping to manage their household staff? Making travel arrangements? Finding a way to manage and preserve all their vital documents? Those are some of the ways to get creative when it comes to concierge-level services.
Integrate other programs into the family office
It’s one thing for a family office to be able to refer its clients to another advisor or service provider. But if you integrate your services into the family office model so that you are offering these ultra-high-net-worth families a one-stop-shop, you will retain these clients for generations.
For example, oftentimes there is a business that is the source of wealth for families. Sometimes the business has been in the family for generations and holds sentimental value. Other times the business is relatively new. Being able to integrate business owner services and consulting early on can be a differentiator in understanding the role that the business has played in the lifespan of the family. Offering support to help grow, value, or determine the strategic direction of the business in relation to the family’s wealth deepens the connection between the advisor, the family, and the business to provide a deeper level of understanding, and, ultimately, trust.
Often family finances are closely related to the business finances; sometimes they are literally one in the same. Being able to offer business owner services as a family office allows the family finances and legacy to carefully be detached and diversified away from those of the business so that the legacy of the family is secure and no longer solely dependent on the business as a lifeline. Ironically, this detachment may allow the business to evolve and grow in new ways by being able to take new risks, or even allow the business owner to start a new business.
Round-the-clock care
Typically, family offices assign their families a relationship manager who manages them along with a very few other families but there is an hour at which they call it a day and will answer their clients the next day. If you can devise a way to offer 24/7 services to your families, what a difference that will make!
With all the volatility in the markets, start assembling the team for this venture. We are at what many are considering the beginning of the greatest wealth transfer in modern history. Given the complexities of the markets and the incredible discount that some investments are valued at right now, these UHNW clients could really use your advice navigating what lies before them, understanding how to best accomplish their goals of transferring their wealth the way they would like to the next generation and taking advantage of those investments.
If you are one of the cookie cutter family offices and are getting fed up with the same old, same old and know you can do better, get some fresh flour and other ingredients and look at expanding your team to create the experience you would like your clients to have. Or for advisory firms who have been thinking about how to best serve your ultra-high-net-worth clients, I hope this has provided a recipe for success.
Stephen Kolano, CFA, is managing director of investments at Integrated Family Office.
Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.
