More wealth managers are billing themselves as ‘family offices’ as clients request services formerly reserved for the ultra-wealthy.
To be clear, not everyone is a member of the Rockefeller or Vanderbilt families. For that matter, the Gates and Zuckerberg clans have limited membership as well.
And these obvious facts make it all the more curious as to why seemingly every financial advisory client believes they need a family office these days.
There has been an explosion in recent years of advisors offering family office services. The true meaning of a family office is a single, integrated wealth management entity built to serve the ultra-wealthy. Traditionally, it exists to manage every aspect of a family’s financial life under a single roof: investments, taxes, estate planning, insurance, philanthropy, and governance.
Samuel Diarbakerly, founder and private wealth advisor at Generation Capital Advisors, says the idea of the family office isn’t being diminished by this blitz. It still holds immense prestige and value, particularly for families of significant wealth and complexity. What’s changing, in his view, is accessibility.
“Technology and specialized platforms now make it possible to replicate that same experience for a broader audience, without the overhead of a dedicated in-house structure,” Diarbakerly said.
Diarbakerly believes Generation Capital is democratizing the traditional family office model by giving high-net-worth families access to the same level of integration and sophistication typically reserved for families with $100 million or more in net worth.
Paul Keeton, chief investment officer at Prospera Financial, meanwhile, believes the traditional family office model was certainly more exclusive in practice, but having expanded offerings in the hands of more advisors “doesn’t reduce the quality of services being offered.”
“The core value of personalized, holistic, and multi-generational wealth management is as valuable as it has ever been. Advisors who can provide this unique blend of financial, administrative, and lifestyle services that are tailored to the specific family still benefit from these as important differentiators,” Keeton said.
Not an ‘all in the family’ office
Anthony Englert, managing director at Alfa Advisory, a Sanctuary Wealth partner firm, is more skeptical about the family office craze hitting the wealth management industry. He believes there are “absolutely” too many firms claiming to be family offices when they really just offer investment management with a referral list.
“They sell you a portfolio, refer you to an attorney or CPA, and call it ‘integrated wealth planning.’ As a result, the term ‘family office’ has become a catch-all without a clear meaning,” Englert said.
Likewise, Michael Shawn, founder of Peregrine Private Client, believes the term ‘family office’ has become “overused and, in some ways, diluted.” What was once a structure reserved for dynastic families with multi-generational governance and integrated investment, tax, and estate functions has become a marketing term for wealth managers and RIAs offering concierge services, according to Shawn.
“The true family office isn’t losing value, it’s evolving. The best offices are becoming more institutional, professionalizing governance, adopting private-equity-style structures, and internalizing capabilities such as direct investing and tax strategy. Where value is lost is when the label is applied without the underlying discipline or purpose,” Shawn said.
Shawn does note the financial world is seeing an extraordinary rise in private wealth with data showing over 426,000 ultra-wealthy individuals globally, projected to exceed 587,000 by 2027. Considering that growth, he says its somewhat reasonable that the meaning of ‘family office’ has broadened, and can now be applied to everything from solo practitioners to institutional platforms.
The tech boom behind it
There is a theory that the boom in technology – and multi-million dollar IPO exits – in recent decades has boosted client demand for family office-style support. Englert, for the record, considers technology exits as only part of the story. In his opinion, the bigger shift is in client expectations.
Englert says clients at the $3M to $15M level are realizing they need the same level of sophisticated planning that ultra-high-net-worth families have always been privy to.
“The complexity doesn’t wait until you hit some arbitrary dollar threshold. Clients want all the pieces of their financial life integrated and optimized, not siloed and conflicting. They’re tired of playing referee between their CPA, attorney, and portfolio manager. They want strategic guidance on how their decisions today will impact their wealth 20 years from now, not just advice on what’s presently working,” Englert said.
Diarbakerly agrees that client demand has “absolutely evolved.”
“The days of ‘wealth management’ meaning just investment management are long gone. Today’s clients expect a holistic plan that incorporates every aspect of their financial lives, powered by technology and access to unique investment opportunities,” Diarbakerly said.
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