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Want to break into the family office market? Here’s what you need to know

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SAN DIEGO — There was a reason the session on family office trends at Schwab’s Impact conference was packed.

The U.S. has some 80,000 ultrahigh-net worth households with $30 million or more in net worth, on pace to grow approximately 30% in the next five years, according to research firm Wealth-X.

“There are lots of opportunities for advisors to take advantage of this market,” said Jill Matestic, family office strategist for Charles Schwab.

But her fellow panelists warned that advisors who want to break into the coveted segment face plenty of challenges as well. Here’s a breakdown of what to expect:


  • Impact investing: Wealthy families, especially the younger generation, have a keen interest in impact investing, according to Bret Magpiong, chief practice officer at Aspiriant, a multifamily office based in San Francisco and Los Angeles.

“There’s great interest in the meaning of money,” Magpiong said. Advisors with expertise in ESG investing have a leg up on the competition, he added.

  • Direct investments: Many wealthy families, especially those who made their fortunes by starting and then selling private companies, “distrust the public markets,” according to Glen Johnson, the chief operating officer of Family Office Exchange.

Around 20% of the association’s members prefer to invest in direct investments, he said. “They need partners for due diligence,” Johnson told advisors. “If you can introduce them to firms with access to direct investments, you have an advantage.”

  • Partnering: As the founding members of wealthy families grow older, an increasing number of chief executives of single family offices will die or retire, said Tom Livergood, CEO of Family Wealth Alliance. Only 25% of the SFOs have a succession plan, Livergood adds. As a result, more single family offices will have to either “buy, build or partner,” he told advisors.

That means single family office will be looking to advisors with UHNW expertise for talent or to outsource work they can no longer handle, Livergood added. “SFOs aren’t marrying MFOs yet,” he added, “but they’re definitely dating.”

  • Club concept: Families with wealth tend to be very private and guarded, Livergood said. What’s more, the wealthier families have fewer peers. As a result they welcome the opportunity to talk candidly with other wealthy families facing the same issues, Livergood said.

Advisors who can put these like-minded families together and leverage what Magpiong calls “the exclusive club concept” are well positioned to gain their trust — and business, he told advisors.


  • Competition: RIAs hoping to break into the family office market face a major hurdle, panelists agreed: a severe shortage of advisors with the expertise to service UHNW clients. “The competition for clients will be exceeded by the competition for talent,” Livergood said.
  • Scaling: Serving UHNW clients and multi-generational families of wealth “is very complicated. You can’t scale it,” Magpiong warned. “You need a lot of in-house expertise and each family is different,” he said.
  • Wirehouse domination: For now, wealthy families prefer wirehouses and private banks. “What would be called the ‘category sell’ for RIAs in this market still hasn’t happened,” Livergood said. “The big brands still dominate, although independent firms are increasing market share.”
  • Margins: Competition is fierce, a fact of life reflected in pricing and margins. As Livergood told advisors, “It’s a very tough business.”

Families with $50 million or more in investable assets pay between 35 and 40 basis points as a percentage of AUM, according to a recent survey of Family Wealth Alliance members. Firms that have over-relied on the percentage of AUM fee model now offer too many services for too little compensation, or service creep. This has resulted in profit margins being squeezed to around 20%, he said.

Still, Magpiong, said, opportunity will follow expertise: “People will pay for the personal touch if you do it well,” he said.

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