• The human element : They require a deep understanding of wealthy family members . This level of understanding transcends the knowledge that the vast majority of professionals have of their clients . Without knowing what the personal interests of wealthy family members are , the advisor ’ s ability to deliver superior results is usually impossible . An advisor must uncover the needs ( including the unstated needs ), wants , and preferences of wealthy family members .
• A cohesive team : Single-family offices rarely have all the expertise the super-rich family requires in house . Outsourcing has become the norm to ensure that the office has state-of-the-art capabilities and that they are cost effective . Today , the most successful multi-family offices are also outsourcing . However , all family offices build and actively manage cohesive teams . This is not about
knowing other professionals and making introductions . Instead , the multi-family office coordinates a set of specialists on behalf of family members . There are specific methodologies both single and multi-family offices employ to build and manage their teams .
• Systematic processes : In order to get the best results , both types of office must be process oriented to help family members achieve their agendas . One thing they can do is stress-test — make sure that the actions a wealthy family member takes or is considering will produce the desired outcomes .
Again , these offices help the wealthy achieve their particular interests . They never sell product . There is no persuading of anyone to do anything . There is no influencing . By having a deep understanding of wealthy family members , the office should be able to match up its expertise to family members ’ agendas .
Implications For RIAs
Moving from an investment orientation to a comprehensive holistic solutions approach is certainly not for all RIAs — or probably even most of them . There are very successful RIAs who should stick to investment management .
But RIAs who transition to a multi-family office model will be able to offer a much more diverse and extensive menu of services and products , usually as a result of the cohesive team they ’ re establishing and managing . More important , an RIA should become more intensely focused on the human element , developing a deep understanding of its wealthy clients .
Those RIAs willing to make these changes will find a very powerful way to both add considerable value to clients and build significant practices .
RUSS ALAN PRINCE is president of R . A . Prince & Associates . BRETT VAN BORTEL is director of consulting services for Invesco Consulting .
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