The Growing Demand for Virtual Family Office Services – Episode 15
“If you build it, they will come.”
No, we’re not suggesting you turn a cornfield into a baseball diamond. But if you want to attract ultra-wealthy clients, you might consider building a virtual family office (VFO).
Our latest research strongly suggests that offering a VFO experience to the right clients will constitute a major growth engine for advisors in the coming years.
Here’s what the affluent have to say about family offices—and what it means to implement a VFO business model in your practice.
Key Takeaways:
- The vast majority of ultra-wealthy investors want family office services and solutions.
- A virtual family office business model is the right approach for most advisors looking to deliver those services.
- Advisors must create and coordinate a team of experts to successfully implement a VFO.
FACE THE FACTS
CEG Insights recently asked a group of ultra-wealthy individuals—with at least $25 million in net worth, not including the value of their primary residences—about their key concerns, their attitudes toward their wealth and investing, and their relationships with their financial advisors.
One of the most striking findings: The ultra-wealthy want their advisors to provide an integrated, coordinated approach to managing their financial lives via a family office experience. For example:
- Seven out of ten (70.8%) ultra-wealthy investors, are somewhat or very interested in receiving family office services.
- Among millennials, the desire for these services is nearly universal—96.5%.
Family offices combine exceptional wealth management with keen attention to clients’ administrative and lifestyle matters—as well as the capacity to deal with important one-off special projects that might arise. By providing extensive, coordinated solutions that address investors’ financial situations and many aspects of their well-being, family offices can build and protect their personal wealth while making their lives a whole lot easier and more enjoyable.
Given all that, it’s no wonder so many of the ultra-wealthy are interested in family offices. The problem: Traditional single-family offices cater to the seriously wealthy—often families with more than $500 million in net worth.
The good news: Advances in technology, along with the ability to deliver more—and more sophisticated—wealth management solutions to a wider range of investors, are giving the traditional family office concept new traction in the form of virtual family offices. By assembling and coordinating networks of specialists, usually virtually and without regard to geographic location, more advisors can offer the expertise that once was available only from traditional family offices—and do so for clients with far less than $500 million or more in net worth.
INSIGHTS INTO ACTION
These findings have potentially huge implications for the future of many advisory practices. If you’re seeking to move upmarket and serve wealthier clients, it’s strongly worth exploring the idea of adopting the VFO business model.
Essentially, creating a VFO involves three overarching strategies:
- Gain a deep understanding. To set up an effective VFO, first you must have a profound and comprehensive understanding of your ideal clients’ personal and financial complexities. The virtual family office services you offer will be built on this foundational knowledge. A deep discovery process must be used to know your clients extraordinarily well.
- Gather a team of professionals. Bring together a network of specialists to serve your clients in multiple aspects of their lives. These experts can include attorneys, tax professionals, life insurance experts and trust company representatives to help advise your client on different aspects of wealth management. But they might also include lifestyle experts, coaches, personal trainers and concierge physicians.
- Facilitate and coordinate. As the advisor, you act as the point person between the clients and the specialists, ensuring that everyone involved is moving in sync toward achieving the clients’ financial goals. In other words, you don’t hand clients off to each professional—you take responsibility for facilitating and coordinating the solutions with the experts on your team. In this way, you act as a true advocate for your clients.
Make no mistake: Building a successful, well-oiled VFO isn’t a simple or easy task. But for advisors who want to become preeminent when it comes to serving the affluent, a VFO may be the single best move to make.
SCHEDULE YOUR FREE PLAY TO WIN CONSULTATION NOW