The contradiction of would-be advisors to Single Family Offices
As reputation managers to the world’s UHNWI families and their Single-Family Offices, Michael Macfarlane Associates enjoys a unique inside perspective on the evolution of the segment. And one of the more interesting trends is the dichotomy between the ‘macro’ media coverage about the growing cohort of Family Offices, and the ‘micro’ reality.
There is a tendency within mainstream financial and wealth media, and indeed amongst all forms of prospective advisors to Single Family Offices, be them bankers or lawyers or financial advisors or PR’s, to consider and regard the Single Family Office world only in its amorphous totality.
A recent feature by Forbes spotlighted how Family Offices are reshaping global finance. Another feature by Bloomberg was a clarion call for the power of the Family Office and highlighted how Dubai-Based Family Offices now manage over $1 trillion in assets.
The inevitable response to this ‘macro’ tendency of perspective is for the media and others to see the Family Office as a category.
For the media, this means frequently not getting to the heart of Single Family Office activity. And for prospective advisors, it most often means a blindness grown from a voracious appetite to ‘sell’ products and services.
But in all instances, there is a reoccurring contradiction. Because the very purpose and nature of a Single Family Office is to be bespoke.
The earliest cohort of Family Offices were a reaction to UHNWI principals who had grown wearisome of being sold homogenous products by asset managers and wealth managers; and decided to effectively bring these activities ‘in house’ to save on fees.
They quickly discovered the amplifying impact of directly deploying their own ‘intellectual capital’ and teams to their investment goals.
This lesson inevitably expanded the scope of the typical Single Family Office as families sought to discover the benefits of deploying in house intellectual capital to private, investment, commercial and even philanthropic objectives as wide and diverse as managing households through to transacting investments and corporate buyouts.
And as they did, UHNWI families with Single Family Offices recouped the benefits of the immediacy of applying family-led discretion to the direct and unmediated management of their resources and activates. And the Single Family Office segment flourished as a result.
So today it is always a curious phenomenon to witness within the Single Family Office segment, lawyers trying to sell legal solutions, PR agencies selling legacy media solutions, or financial professionals selling product.
Because this misses the point of the family office, which is to pursue a bespoke approach to attaining defined outcomes.
Indeed, the entirety individualistic and bespoke ability of the Single Family Office is why, collectively, they have become so powerful.
The inherent power within the family office cohort is not their financial firepower. Indeed much of that firepower would be managed elsewhere if not within the Single Family Office. But in the manner in which Single Family Offices can deploy the firepower.
The power in the Single Family Office cohort is in its diversity. If one Family Office has no interest in an opportunity there is a good chance that another will. Because unlike a bank or a managed fund, each office is highly discretionary and can operate based on its own criteria.
When it comes to investment, those criteria are not always primarily financial either: witness the number of Single Family Offices that have acquired ‘trophy’ assets such as sports teams or newspapers.
But even this perspective is a diversion.
Because if the macro media view were to be believed, every single Single Family Office is permanently in a high state of alert and seeking deal flow to make big ticket investments and acquisitions and exits.
Whereas the reality is that many are focused on the preservation and growth and management and ultimately the handover and succession of their associate companies or legacy holdings.
The point thus is that to assume that any one family office can be compared to any other is a flawed approach.
The reputation management and crisis management segment where Michael Macfarlane Associates operates has been historically captured entirely by the conventional PR players. PR players typically view the prospect of working with Family Offices only through the prism of securing or modulating legacy media coverage.
Yet the true mission of a reputation manager for a UHNWI family or Single Family Office is entirely as a purveyor of outcomes.
For UHNWI families ‘reputation’ has become a primary vector for the successful achievement of private, commercial, investment and philanthropic outcomes. And this vector is becoming even more pertinent and powerful as the world moves to omnipresent AI.
Single Family Offices need support from teams who can take a holistic view on all of the options available, utilise them holistically, and perhaps even invent some more, all in the pursuit of attaining an optimal outcome.
This means lawyers not offering only legal solutions, bankers not offering only products, and reputation managers not only offering PR-based legacy media solutions. All must combine to provide holistic outcomes-focused solutions if the objective is to add value to a Single Family Office.
The Single Family Office is the equivalent of a finely tailored bespoke suit from Savile Row.
Advisors within the segment should stop regarding them as off the peg.
For support with any of the items raised in this blog post please contact the Michael Macfarlane Associates team: http://www.mmassocs.com
This blog was first published at: https://mmassocs.com/2024/11/off-the-peg-family-office/
