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THE STRUCTURE


The evolving Family Office


The financial elite is a discerning and demanding population that forces change and innovation from the companies and people around them. As a result, Family Offices exist in an environment of continual improvement and transformation that is often a leading indicator for the rest of the financial services industry. Hannah Shaw Grove outlines six new and enduring trends worth watching.


More multi-family offices As private wealth continues to grow, there is more demand for high-touch, holistic wealth management solutions. One by-product of this demand is the emergence of more multi-family offices – the integrated, cross-disciplinary organizations that cater to the personal and financial needs of the ultra-affluent. Unlike traditional MFOs that were offshoots of single- Family Offices and operated solely for the benefit of the underlying families (often at low or no cost), the new iterations are businesses that focus on growth and profits in addition to their clients’ needs. This trend has imbued the high-end of the marketplace with a more proactive mindset around activities such as asset gathering, client acquisition, networking and business development.


Scalable service models Another consequence of more MFOs is increased competition for the assets of wealthy individuals and families. To attract and retain affluent relationships, new entrants to the MFO arena are prioritizing the delivery of Family Office-style experiences via scalable service models. This allows them to decrease the


Departures from MFOs are rising among families with complicated finances and clear requisites for information and attention, many of who are exploring what it would take to create and oversee their own single-Family Office.


48 FAMILY OFFICE: THE FUTURE


threshold for client net worth or investable assets, which effectively increases the size of their target markets and research shows that the average assets of MFO clients have decreased consistently over the past decade. By lowering the hurdle for potential clients, new MFOs are helping to mainstream the concept behind one of the most private and exclusive financial constructs in history. More recently, however, there’s been evidence that scalable solutions may not allow for sufficient interaction and customization in certain relationships. Departures from MFOs are rising among families with complicated finances and clear requisites for information and attention, many of who are exploring what it would take to create and oversee their own single-Family Office.


SFOs back in the spotlight Historically, the upfront investment and ongoing administrative burden associated with single- Family Offices meant that only the most affluent, discriminating and tenacious of families had them. But the advent of new technological platforms, real- time reporting capabilities, family networking groups and virtual alliances of experts and specialists have all made it easier than ever to set up and run an SFO for families that span a wide range of wealth. At the same time, some of the world’s richest citizens are embracing SFOs as a way to ensure that their financial affairs can be managed with the highest degree of privacy and control. Within the last few years, Oprah Winfrey poached a CIO from billionaire Eli Broad to run her Family Office and hedge fund giants George Soros and Carl Icahn returned capital to outside investors and transformed their respective businesses into Family Offices thereby enabling them to focus entirely on the opportunities and issues they care most about, all without the scrutiny of regulators.


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