Ask any wealth management executive what keeps them up at night amid a sea of competing priorities, and satisfying the needs of demanding clients will often top the list.
As advisory firms continue to tighten margins across the board, one lucrative opportunity with untapped potential remains: the highly concentrated ultrahigh net worth segment, made up of investors with more than $30 million in investable assets. This group makes up just 1% of the population but holds 34% of total global wealth, according to the
But out of that small but mighty group at the top, more than three-quarters of UHNW individuals may jump ship this year and switch their primary wealth management firm.
The question becomes: How do we keep them on board?
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Collaborate and conquer?
For traditional wealth management firms that have long served a broad client base of UHNW individuals globally, family offices can naturally feel like the
But is that really the case? Family offices are smaller, private shops serving as personal CFOs to ultrawealthy families, providing hyper-personalized advisory services tailored to each family's long-term plans and goals. This bespoke approach is especially important during
The reason UHNW individuals are drawn to family offices is because they crave more: value-added services, greater decision-making agility and control and personalized services at higher speed are all top of mind for ultrawealthy clients weighing their options. Therefore, it is no surprise that the number of single-family offices has surpassed 10,000 globally.
In turning competition into opportunity, collaboration could be the key to success.
The wealthiest of the aging generations passing over $80 trillion to
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Working together could enable access to deals across global markets and leverage through balance sheets. Also, wealth management firms are increasingly providing specialized services to those smaller family offices that can't themselves. For example, we have seen Citi Private Bank home in on growing intergenerational wealth transfer needs through its Citi Latitude program, serving 1,500 family offices.
With the rising popularity of family offices, wealth firms have a golden opportunity to leverage current products, services and technology through partnership. The result: winning the wallet share of the ultrawealthy and driving revenue sky-high together.
If competition is king, build a one-stop-shop model
If collaboration isn't on the docket, wealth management firms must create a robust ecosystem to compete with family offices.
Providing a one-stop shop that meets UHNW individuals' needs means identifying specialists with wealth management competencies and leveraging third-party partnerships to meet dynamic client demands.
For a one-stop shop to succeed in wooing away UHNW clients from family offices, firms must offer 24/7 access with a seamless digital channel while maintaining a consistent face-to-face customer experience.
At the end of the day, collaborating with family offices will be a decision best made on a case-by-case basis.
Family offices have the advantage of being very personalized to the individual client, but they often struggle to deliver comprehensive expertise. On the other hand, wealth management firms boast the products, services and global perspective UHNW individuals need to find investment success but lack the agility and control family offices wield. Each firm must decide if they want to grow these skills in-house or bring on partners to balance their strengths.
The one thing to keep in paramount in your mind when deciding whether to collaborate or compete with family offices: which model best serves and meets the needs of your ultrawealthy clients.
