Wealthy families are increasingly demanding more services than just investment advice from multi family offices, with governance skills becoming sought after.
That’s according to Anthony Effinger, the author of a recent report on MFOs for Bloomberg Markets – which found that a “huge emphasis” is being placed on governance.
“The most striking thing was the emphasis on governance this year, and on services aimed at keeping the younger generations from making the mistakes that come with immense wealth,” he told CampdenFB.
“Clients, [MFOs] say, are very concerned with preventing the strife that can tear apart wealthy clans.”
Family offices are responding by putting more weight on non-financial services – the very things that they believe “set them apart” from banks, he said.
“They are setting up family councils to handle governance and educate younger members on the responsibilities of wealth.”
The report cited the example of a “money camp” run by US-based MFO Financial Management Partners, which gave children aged six to 11 classes on being rich.
The move appears to be paying off – according to the research, of the fastest growing wealth advisers to rich families, nine out of 10 were independent firms. HSBC Private Wealth Solutions was the only bank listed as growing quickly.
Although it is “easier to grow quickly” when you are small, Effinger said it wasn’t just down to size – the research found that “there remains significant distrust of big banks among some clients”, particularly when it comes to product pushing.