Investment Cultures Set U.S. Multi-Family Offices Apart

Investment Cultures Set U.S. Multi-Family Offices Apart

May 2018, Boston. New research from global research and consulting firm, Cerulli Associates, finds that multi-family offices (MFOs) have consistently achieved among the most impressive annual asset growth rates. Although MFOs often have lean staffing headcounts and resources, many continue to exhibit superior cultures, significant client-to-employee ratios, and the highest walletshare and asset retention rates among multigenerational family clients. These factors continue to set them apart from many of the traditional market 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%,” explains Donnie Ethier, a director at Cerulli.

Many family offices offer headline-grabbing services, but usually 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,” continues 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. “Small leadership teams can remain nimble and supportive of timely initiatives. The concentrated talent fosters sophisticated investment committees, processes, and portfolio customization,” says Ethier. “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.”

These findings and more are from the May 2018 issue of The Cerulli Edge–U.S. 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.

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