The recent wave of mergers and acquisitions within the multi-family office field led to an opinion that the industry will soon divide into a few wealth management giants and numerous small advisories.
Multi-family offices continue to join forces. This year Cresset Asset Management acquired PagnatoKarp, this way creating a $9.5 billion operation, and soon after, Pathstone acquired Cornerstone Advisors, with their joined forces equalling $4 billion under management and a total network of over six hundred clients.
Apart from the acquisition, a lot of the industry’s top-players relocated among firms. For example, the $22 billion Tiedemann Advisors were joined by Cresset Asset Management’s Jill Shipley and Cypress Wealth Advisors’ Barbara Yong.
While the established behemoths continue to gain strengths, a large number of investor advisories that position themselves as family offices appear to lack in services they provide. According to the insiders, this operational insufficiency is partially due to the top-level experts involved with more prominent organizations, and partly due to lack of resources.
John Elmes, the executive managing director of family office engagement at Pathstone, suggests that the consolidation is very likely to continue in recent years, as large firms bring more and more services in-house.
Although the services of small investment advisories are sufficient enough in a lot of matters, a good portion of families looks for a more holistic approach. While wealth advisory plays a significant role in the overall success of the family office, there is a distinct range of additional contributing factors.
One of the main concerns of the currency UHNW family leaders is the generational transition. Simply put, the elders worry that the successors are not fit for the task that is about to fall in their hands. For this, multi-family offices focus on hiring specially trained professionals who will work on both the education of the heirs and the advancement of communicational practices among the age groups within each family.
Succession planning, in general, takes up a visible part of a multi-family office’s list of duties. And it comes to no surprise that for the families, this area is rather personal, meaning that they are looking to build mutually-trusting, long-term relationships. Once the advisor gets a chance to build this connection, they become virtually irreplaceable. And that, once again, can make the already significant FOs take an even more powerful position.
The tendency for a personalized, bespoke approach has also reflected in the families’ strive for establishing common values among all family members. The money isn’t the main focus for a lot of families. Instead, they are trying to focus on adopting forward-looking, impactful strategies that will cater to many generations ahead of them.
Of course, single-family offices and investment advisories will still occupy their portion of the field. However, according to the majority of opinions, the large multi-family offices will confidently remain in the center, due to the ability to provide an incredibly wide range of services in-house and offer tailored advice to each client.