In its latest report, Cerulli found although MFOs often have lean
staffing headcounts and resources, many continue to exhibit superior cultures,
significant client-to-employee ratios, and the highest ‘wallet share’ and asset
retention rates among multi-generational family clients.
As a result, such factors continue to set them apart from many of the
traditional market leaders, the report found.
Double growth of traditional HNW leaders
“During the past three years, MFOs’ compounded growth rate of 10% has at least
doubled that of the traditional high-net-worth (HNW) market leaders, including
wirehouses at 5%, trust companies at 4%, and private banks at 2%,” said Donnie
Ethier, a director at Cerulli.
Many family offices offer what Cerulli dubs “headline-grabbing
services”, but usually it is the leadership and investment cultures are the
differentiating factors that set them apart.
“MFOs tend to be close-knit and operate with lean staffs, which results
in the need for strong client-facing and investment talent,” said Ethier. “This
equates to staff members needing to demonstrate a high degree of
trustworthiness and be perfect cultural fits that will fully buy into the
investment philosophies of founding partners.”
These factors can create competitive edges as small leadership teams can
remain “nimble and supportive of timely initiatives”. As a result the
concentrated talent “fosters sophisticated investment committees, processes,
and portfolio customization,” she said.
“Several ultra-high-net-worth family offices can tout client-to-employee
ratios ranging between 1:2 and 1:10. These attributes help lead to MFOs
reporting the highest asset retention rates among wealthy families,” Ethier
added.
The findings are taken from the May 2018 issue of The Cerulli Edge – US
Asset and Wealth Management Edition, which explores the requirements for a
sophisticated service set and close attention to customers within the lucrative
market for MFOs, HNW advisors, and private banks.
Click here for the original article from International
Investment.