Multi-Family Office: A Human Touch with Responsiveness & Cohesion ( part 2 )
In a previous article (Multi-Family Office: a new paradigm of trust for investors (Part 1), we talked about how MMOs have emerged as true providers of trust for clients, generating credibility and showing professionalism. Moreover, for many wealthy families, having confidence in a financial professional is the key element in the relationship to achieve the best result.
But, specifically, what are the key benefits of working with OMFs that are attracting wealthy individuals?
According to John Bowen, founder of CEG Advantage, about three-quarters of participants in a survey of 206 ultra wealthy individuals said they preferred to work with multi-family offices. Another 15 percent favored wealth management companies. Less than 10% chose investment advisors. The remainder opted for planning firms. It is clear that ultra-rich individuals are much more attracted to multi-family offices.
What is essential for wealthy families is that they get the results they expect. A peculiar feature of well-managed multi-family offices, which can appear in different ways, is that they are extremely service-oriented. Not only do they solve problems quickly, but they anticipate them and offer the right solutions.
Almost all “ultra wealthy” individuals, who opt for multi-family offices, speak of their responsiveness and holistic approach as key reasons for being attracted to the model. Approximately four out of five look for cutting-edge solutions and see multi-family offices as the best providers of exceptional products and services.
A human touch with responsiveness
For many wealthy families, making the most of their situation and supporting a strong legacy requires significant focus and resources. But providing families with good stock selection and a smart investment or tax optimization strategy is no longer enough. Today, it’s about adding a human touch or a human element. In our previous article, we talked about the human aspect being the most important resource of an MTO.
Wealthy people expect a wide range of services in one place and trust that they will be delivered through a simple and cohesive strategy. Managing investments, taxes and resources requires more than just an application on a phone. Most of the time it takes more than just one highly qualified professional advisor. Because managing wealth is not an easy task. And for most of these clients, having someone or a group of experts to personally guide them through complicated tax laws or investment strategies is very valuable. This is the kind of personal relationship that families can build with a family office. Thanks to this human factor, the work environment is much closer. It is for these reasons that many families feel that their relationship with the Multi-Family Office is very close, often with daily interaction. Thanks to this unique connection, the OMF can play a role that goes far beyond managing a portfolio.
Because multifamily offices focus on a few clients, advisors have more time to concentrate on the needs of the families. Conversely, when families are dealing with banks, a single advisor may have to serve hundreds of clients. Family office counselors are under less pressure and can focus on providing high quality services.
Some banks predict that technologies such as artificial intelligence will soon replace human beings and will provide a faster and better experience for investors at a lower cost.
In a 2017 interview with Bloomberg Television, Vikram Pandit, who led Citigroup Inc. from 2007 to 2012, said that up to 30 percent of bank jobs could disappear in the next five years due to the development of artificial intelligence technologies.
But technology cannot replace human interaction. Critical reasoning, analytical thinking, judgment and decision making will always be needed. For many (if not all) investors, it is critical to interact with a real person when obtaining investment advice or resolving a financial issue. Have you ever tried to resolve a disputed credit card charge with a virtual advisor? I have no more to say. And without an expert on your side, auditing and pointing out errors in your bank statements, they are likely to go unnoticed.
Because multi-family offices focus on a few clients, counselors have more time to concentrate on the needs of the families. Conversely, when families are dealing with banks, a single counselor may have to serve hundreds of clients. Family office counselors are under less pressure and can focus on providing high quality services.
Some banks predict that technologies such as artificial intelligence will soon replace human beings and will provide a faster and better experience for investors at a lower cost.
In a 2017 interview with Bloomberg Television, Vikram Pandit, who led Citigroup Inc. from 2007 to 2012, said that up to 30 percent of bank jobs could disappear in the next five years due to the development of artificial intelligence technologies.
But technology cannot replace human interaction. Critical reasoning, analytical thinking, judgment and decision making will always be needed. For many (if not all) investors, it is critical to interact with a real person when obtaining investment advice or resolving a financial issue. Have you ever tried to resolve a disputed credit card charge with a virtual advisor? I have no more to say. And without an expert on your side, auditing and pointing out errors in your bank statements, they are likely to go unnoticed, unless a class action lawsuit is filed by an unknown lawyer in the United States.
The modern banking system is a wonderful thing that works with almost 100% accuracy. However, it can fall short due to both technical and human error. But what is most frustrating and damaging to the customer relationship is an inefficient communication channel. If you carefully choose the most appropriate channel, refine your communication skills and carefully consider your customer’s needs, you will significantly improve the quality of communication.
Most of the time, effective responsiveness comes down to simple questions like what does my client need or what does he or she value? And how can I offer it to him in a way that is understandable to him? You cannot get an answer to these questions without a deep understanding of your client, which is why human communication is paramount and there is nothing where this is more true than in the world of financial advice.
There is no denying that there are few things more frustrating for an investor than running into a financial professional with a question or a request for information and not getting a timely response. This can become an even bigger problem in times of crisis. In 2014, the CFA Institute stated that the most desirable quality of an OMF was responsiveness.
This great responsiveness can only be achieved when professionals prioritize quality over quantity.
Cohesion
Responsiveness alone is not the only attractive element of working with an OMF. Investors can only obtain relevant information in a timely manner if advisors provide a holistic approach to managing their clients’ assets.
Moreover, wealthy clients expect a wide range of services in one place and expect them to be delivered through a simple, cohesive strategy.
As family wealth increases, more challenges arise and family support services take on a greater role in resolving complexities. Therefore, the breadth and integration of services becomes essential. OMFs offer several quality services: tax and legal services, access to private banking and private trust services, custody and document management, expense management, accounting services, early childhood education, real estate services, family support services and family management.
Cohesion occurs when all the different services, investment and legal advice work together. It is the integration of all these elements that allows for optimal asset management. The combination of these services in one place allows for greater coordination, which leads to better results and a reduction in costs. And when the money at stake consists of millions of dollars, a small percentage is important.
By having these key services, an OMF can offer consolidated information and generate reports that clearly show families their position in a holistic manner, while maintaining strict confidentiality. This allows experts to work together in close collaboration, achieving greater efficiency and resulting in better ideas and solutions.
Maxime Berthet
CEO & Founding partner
To learn more, contact us at:
info@kb-familyoffice.com
November, 2019
