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The Appeal Of Family Office Services

Private Wealth Publication

MARCH 21, 2014 • 

The number of advisor firms claiming to be multifamily offices or providers of family office services is growing. Moreover, all indications are that the desire among advisors to be providers of family office services is going to intensify.

In a survey of 611 financial advisors whose primary offering was investment management and had five or more years continuous experience, 27.7 percent of them are offering some combination of family office services. More telling is that 59.6 percent of the respondents said they’ll be providing some family office services within two years.

Topping the list of family office services financial advisors anticipate offering within two years is advanced planning (70.9%).

This is followed by an array of other services on advisors’ lists:

Financing 40.9 percent

Concierge healthcare 33.5 percent

Project management 17.6 percent

Administrative services 3.3 percent

N = 364 financial advisors

Clearly, for most of these financial advisors to provide family office services, they’ll need to team up with other professionals. For example, financial advisors are not directly going to deliver concierge medical services. However, they can facilitate the process between the wealthy and appropriate providers.

The objective of being able to deliver family office services is clear. The logic of delivering family office services is very persuasive. In order to build a highly profitable book of business with the affluent, the ability to provide family office services can be strategically as well as financially rewarding.

To begin with, the family office business model is attractive to the affluent. It provides a competitive business development advantage to professionals who move in this direction and can effectively communicate this to the wealthy.

Additionally, family office services can enhance the relationship professionals have with their clients. Value-added services like concierge healthcare and project management can go a long way toward strengthening the bond between professionals and wealthy clients. Furthermore, many of these services, such as advanced planning and financing, can generate substantial revenues.

With the extensive movement by many professionals into family office services, some will get it right and others will likely crash and burn. The decision to provide such services needs to be carefully thought through with solid attention paid to the strategic and financial implications.