‘Off The Peg’ Thinking Is Incompatible With The Single Family Office
The very nature of a Family Office is to be bespoke
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 if they were off the peg.
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 global cohort of Family Office, and the ‘micro’ reality.
There is a tendency within mainstream 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 the Family Office world only in its amorphous totality.
The point is to pursue bespoke approaches to attain outcomes.
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 Family Office activity. And for prospective advisors, it most often means a voracious appetite to ‘sell’ products and services.
But in all instances, there is a reoccurring dichotomy. Because the very purpose and nature of a 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.
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 objectives as wide and diverse as managing households through to transacting investments and buyouts.
And as they did, 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 still trying to sell packaged products.
Because this misses the point of the family office, which is to pursue a bespoke approach to attaining defined outcomes.
A good reputation manager is a purveyor of 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 cohort is not their financial firepower, indeed much of that firepower would be managed elsewhere otherwise, but in the manner in which Single Family Offices can deploy it.
The power in the cohort is 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 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 UHNWIs ‘reputation’ has become a primary vector for the successful achievement of private, commercial, investment and philanthropic outcomes. And this vector is becoming 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 legacy PR. Instead, all must combine to provide holistic outcomes-focused solutions.
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.