Harriet Davies
Editor - Family Wealth Report
24 May 2012
Feature
Over three-quarters of financial advisors are interested in some form of the multi-family office model, according to a new report from Rothstein Kass’ Family Office Group, due to a belief it can help attract new and wealthier clients, build stronger relationships and, ultimately, deliver higher revenues.
Specifically, 61 per cent of the study’s sample group (477 advisors) said they are interested in delivering MFO services to “select wealthy clients,” 17 per cent are interested in delivering “a comprehensive platform,” and 17 per cent are not interested in the model. The research also found there was a link between the success of the financial advisor – in terms of income – and interest in the model.
However, the report also raises the many challenges a transfer to the model entails. For example, the 292 advisors who answered that they are interested in delivering MFO services to select wealthy clients have fewer than four wealthy clients on average, the survey found.
One model which addresses the “common scenario” of having a handful of very wealthy clients dispersed among many less wealthy clients, is to focus on providing exceptional service to the best clients, the report says. To do so successfully, a good starting point is “identifying a few key relationships” as well as the needs of these clients and the similarities between these needs, said Richard Flynn, principal and head of the Family Office Group.
This challenge highlights the difficulties around the multi-family office over issues such as cost, as well as the boundaries around it: when does an advisory firm become a multi-family office, and how firm are those boundaries? In an ongoing poll on Family Wealth Report, 64 per cent of respondents said “yes” when asked whether the model was “too vague and increasingly indistinct from wealth management firm.”
For purposes of the study, the array of family office services covers the wealth management side (investment management, advanced planning and private investment banking) and support services (such as administrative and lifestyle).
In the Rothstein Kass study, of those advisors that have at some stage implemented family office services, only 17.9 per cent felt they had been successful, while over half felt they had been “somewhat successful” and just over a quarter felt the move had been unsuccessful.
