Families that are new to the world of multi-family offices often find it difficult to initiate the process of finding the “right” one. In many cases, these families are new to the ultra-high net worth sphere and do not have a built-in network of contacts whose guidance they can seek. Additionally, multi-family offices service a specific clientele, a group that does not often publicly discuss the process behind their wealth management decisions. Without open discussion, information and advice are lost.
We spoke to members of an ultra-high net worth family that recently completed a search for a new MFO. For privacy reasons, their identities will not be shared, nor will the name of the MFO that they eventually chose. The following information should not be considered a testimonial, but it does provide insight into the process and thoughts of one family, and we hope it provides assistance to other families in similar circumstances:
What was it like to set out on your search for an MFO?
It was dizzying. No amount of online research can prepare you for the hours spent talking to potential advisors, looking at their offerings, and discussing the long-term legacy you want to leave behind. Besides coming to terms with the number of options—I can assure you, there are more than you imagined—one has to take a deep look at how they want the relationship between family, legacy, and wealth to be sustained going forward. That’s tough.
How was the typical family office structured? What kind of services could you expect to receive as a family just starting out?
Most of the offices we spoke with emphasized that we would be assigned a dedicated team of professionals. They varied quite a bit, though, in the ratio of families per advisor – in other words, how many clients they expected each of their advisors to handle. There were also significant differences in experience levels. Although many of the advisors who personally approached us about their firms had many years of wealth management experience, the offices were a mix of veterans and people just starting out. Basic services included wealth management, estate planning and tax planning.
What factors were you specifically focused on?
The point that we kept coming back to was that of legitimacy. With so many players in the market, it was important to us to choose an operation that had the history and resources to handle our level of wealth. Boutique firms were quick to promise high returns, but I don’t think any of them made a good enough case on why we should trust them. We knew we would have to watch out for potential conflicts of interest, regardless of which MFO we chose. Ultimately, we wanted to ensure they had the resources to manage us and could also handle any additional matter that might arise.
Did the maintenance of wealth across generations make a significant impact on your final decision?
Certainly, particularly after the internal discussions we held to discuss the role of wealth in our family. We don’t want this wealth to just carry over to our children. We want it to last for their children and their grandchildren and ultimately have a positive impact on those family members. Many families fail on this point due to a lack of structure and driving principles; most of the time, they never proactively talk about wealth and its maintenance. We don’t want that to happen to us, so we gave high marks to any MFO that stressed the importance of structure and family governance and could help us handle the “soft” questions that in the end are equally important.
If you and your family are currently searching for a multi-family office to assist with your needs, please contact GenSpring Family Offices for a review of available services.