Family
Office Exchange in partnership with Harris myCFO has released a new study to
help affluent families assess the value they receive from their family office
or outside wealth advisors.

The
study, “How Wealth Owners Measure Value: Evaluating the Performance of Your
Wealth Advisor or Family Office,” identifies 50 core expectations that wealth
owners consider when evaluating their advisor relationships.  It also proposes a report card for establishing
goals and regularly discussing delivery against these needs of wealth owners.

The
50 factors resulted from in-depth interviews and group discussion among FOX
members and industry thought leaders recruited for this project.  More than 100 parties contributed. 

The
factors fall into seven categories: family legacy and leadership, responsible
ownership and governance, management and control of family financial affairs,
operations and cost control, knowledgeable staff and clear communication, sustainability
of wealth and risk management.

“Evaluation
of an advisor’s performance against investment benchmarks is objective and
relatively easy for wealth owners,” Sara Hamilton, founder and chief executive
of Family Office Exchange said. 
“However, there are many factors beyond investment performance that have
a great impact on the overall level of satisfaction with the advisor.”

“While
prioritizing the family’s goals and articulating them to their wealth advisors
is critical in establishing the basis for measuring an advisor’s success,
current FOX Benchmarking research indicates that only 30 per cent of family offices
take the time to do it each year,” she added.

The
study maintains that an annual review of expectations and performance is
critical.  By having the family
articulate its mission, values, and goals as well as prioritize among the 50
factors, expectations are set and the family office or advisor has clear
direction about how to allocate resources to meet client needs.

To
document progress on the factors that matter most to each client, a number of
methods are suggested including:

-surveys
of family and staff members’ impressions of delivery.

-
collection of key examples of service delivery during the year by the advisor
that make compelling stories.

-a
report card system designed to quantify value and encourage dialogue about the
relationship.

“Understanding
what characterizes each clients’ definition of exceptional service experience
is critical to helping our team successfully deliver on that promise,” Joe
Calabrese, president of Harris myCFO said.  

The
study was conducted in the wake of the current economic climate and the
financial upheaval of the last two years which have caused many wealth owners
to reconsider their family’s goals as well as the processes and resources they
rely on to manage their wealth. Wealth owners are paying more attention to the
wealth management process and seeking real value for their investment,
according to the study.

As
reported by this publication the market correction of 2008 and a lower return
environment have families looking under the hood now more than ever at their
investment returns and spending.