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Provider Relevance in the Ultra High Net Worth Market
The challenges of relevance in a cluttered industry
Loraine B. Tsavaris, Managing Director, Rockefeller Financial

Ultra High Net Worth (UHNW) families, individuals and their family offices are sophisticated, smart and complex, and have access to the finest intellectual capital and choice of solutions available. Providers of all disciplines are more than willing to serve these clients and strive to get their message out to this client segment to let them know why they are the appropriate solution for them.  So why is this market so challenging for both clients and providers?

Truth and Illusion

The challenge is very simple: the ability to offer families and individuals of extraordinary wealth what they want.  The execution of this is difficult for several reasons.  Assuming for the moment the client knows exactly what it is that they are looking for (probably as a result of working with a good consultant), the challenge is finding those relevant providers who can truly help them. What does it take to make a provider relevant when a UHNW family begins a search?

In trying to participate in the UHNW market, many providers suffer from the “me too” syndrome.  In an effort to make a sale, they will present themselves cloaked within the language of a long-standing and sophisticated wealth management firm or a sophisticated multi-family office (MFO) that specializes in the needs of the UHNW client. The result – providers sound alike.  There is often an inability to distinguish one provider from the other since so many are offering “comprehensive, customized and un-conflicted wealth management solutions delivered by a team of seasoned experts who put the client first.”  The truth is that those firms that are not dedicated to the UHNW client have well written sales collateral, are using trendy terms, but ultimately cannot deliver on their promise or at least, the entire promise.  They may do a fine job with other client segments, but not this one. Only a few firms have the discipline, intellectual commitment, experience, technology and capital to be able to meet the needs of these families of great wealth and complexity. This is a difficult business and not for the intellectually meek or the capital constrained.

Both clients and the industry in general would be much better off if firms clearly stated what their core competencies were and delivered on them, whether they are one or several. Not every firm or advisor needs to be in the wealth management business and not every wealth management business needs to be a MFO.  If a firm is in the investment management business, it should gather the assets and focus on its craft – which is both admirable and difficult. Acknowledge the business that you are really in and clearly state the ones that you are not in. One firm cannot be all things to all people.  All firms have strengths and weaknesses.  The clients know this and respect honesty.

The Multi-Family Office Misnomer

The term Multi-Family Office is not an accurate description for firms that serve the UHNW segment.  Why – because anyone can call themselves an MFO and as a result, the description does not clarify the services available to the potential client.   All types of firms classify themselves as MFOs.  As a result, the term Multi-Family Office is a misnomer. The terminology does not help the client find what they are looking for.

To provide greater transparency for clients, it would be enormously helpful for an industry litmus test that gives standards for firms dealing with the UHNW client segment and how they present and classify themselves to the market.

Integration vs. Unbundling

There is no question that an UHNW client needs his or her entire financial picture integrated. There is no greater example of the integrated whole being greater than the sum of its unbundled parts than with a complex family situation with multiple members, generations, structures, investment policies, jurisdictions and personalities.  This crucial role could be performed by the CEO of their Single Family Office, or one of their trusted advisors or their relationship team at a wealth management firm – MFO or otherwise.  The question is not whether it is necessary, but whether this integration is being accomplished professionally and expertly.   This is a difficult role and task, and should not be a throw-away line in a marketing brochure.

Even if a firm is more than capable of delivering integrated multi-disciplinary wealth management advice, they may also be also capable of unbundling one or several of their stronger disciplines.  This does not make them less of a valuable advisor.   It means that they are honest with what they believe they excel at and are willing and flexible in offering one of their core competencies to the client on an unbundled basis, especially if there are other capable advisors already in the mix.   This is a client-driven discussion and the most successful firms will be the ones that listen to the clients and meet this need.

The Current Time Horizon Disconnect

Another challenge is the current disconnect between long-term decisions that clients need to make (both investment and generational) and the short-term focus of the firms that serve them. Many financial institutions are under different levels of stress – replaying a theme from 2008.  During times of market volatility, when the clients need a steady hand and a long-term focus that goes beyond a triple digit movement in the market in a single day, many firms are focusing on their own survival not the clients.

In this regard and in summary, a well-capitalized, private firm with a proven history, a true commitment to UHNW clients and an ability to focus on the long term, will always be relevant.


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