One of the knock-on effects of the Great Wealth Transfer, which will see an estimated $124 trillion change hands through 2048, according to Cerulli Associates, is a growing demand for a multi-family office (MFO).
Whereas big banks and brokers were once the only options for wealth management, there are now more than 8,000 family offices around the world, according to Deloitte. This number continues to swell as newly-minted high-net-worth (HNW) and ultra-high-net-worth (UHNW) families spring into existence.
Whether you are newly wealthy or have been putting your wealth to work for years and are simply exploring your options, you might be at a turning point – do you place your wealth into the hands of a big bank or do you work with a multi-family office? Here are some considerations.
One-Size-Fits-All vs. Customized for Me Approach
Big banks typically offer a one-size-fits-many, model-driven approach, which can be appealing to those who prefer a standardized set of services and model portfolios. And though big banks have the scale to offer their clients a wide range of services and investment products, such as stocks, bonds, mutual funds, money market accounts, and more, they may not be able to offer the same level of conflict-free financial advice or customization as an MFO. This is because big banks are incentivized to sell their own products and don’t have the option to offer investments that aren’t associated with their institution.
We created a list of the 10 most important questions to ask a financial advisor to discern whether they are right for you and the number one question is “Are you a fiduciary?” The answer to this simple yes-no question will let you know whether the advisor must act in your best interest.
MFOs can offer unbiased advice because they are generally fiduciaries and do not sell proprietary products. They can opine on any type of investment across a client’s balance sheet, unlike big banks limited to their own products and investments. MFOs can invest in a wider range of investment opportunities and some of the more connected and experienced firms have greater access to alternative investments, including smaller private equity funds, which can offer better performance.
Some MFOs, like Caprock, have significant private market access and the ability to complete due diligence on the investments you are introduced to by your connections, as well as robust and well-researched options that can meet your desired objectives. MFOs can also create highly tailored investment strategies because they have fewer clients per advisor – and fewer clients per advisor means more time can be spent working with each one.
Is My Advisor Empowered to Put My Needs Above All Else?
While going with a big bank may provide some peace of mind simply due to its size, brand recognition, and reputation, those institutions aren’t always the most trustworthy. In just one example, 10 big banks paid more than $46 million in 2024 to settle a lawsuit accusing them of conspiring to rig the market for interest rate swaps, according to Reuters. While not all big banks are involved in such activities, investors should dig a bit deeper to determine whether the institution has any fines or open cases related to their investment practices.
What’s just as important to consider is whether a big-bank advisor is empowered to put your needs above all else.
When working with a big bank, you are at a disadvantage because of the limitations their advisors have when recommending investment options. They can’t access a broader range of investments, including private equity and private credit. They also can’t support your overall wealth picture as they are often relegated to standard reporting and advising on what you have invested with their bank.
Advisors at big banks also typically serve many more clients, which impedes their ability to develop deep client relationships and offer customized wealth management strategies. MFOs can get a detailed look at your complete financial picture and support all of your financial needs with comprehensive services that include tax mitigation, estate planning, philanthropy, family governance, and more.
| Big Bank | Typical MFO | Caprock | |
|---|---|---|---|
| Holistic, highly customized approach to wealth management | No | Yes | Yes |
| Significant access to private markets | No | Maybe | Yes |
| Personalized and detailed financial picture | No | Yes | Yes |
| Conflict-free advice, fiduciary duty | No | Yes | Yes |
| Investment flexibility | No | Maybe | Yes |
| Long-term, multi-generational focus | No | Yes | Yes |
What about the costs?
It can be a challenge to get a clear picture of what you’ll be paying for wealth management services from a big bank, so be sure to do your homework when ferreting out fees and other costs. Costs associated with big bank-branded investments can add up quickly.
Talk to an advisor about the various fees you could be charged to help determine whether paying those fees is a sound investment. While going with a big bank may appear to be more economical on the surface, it could come at the cost of greater returns on your portfolio and a more comprehensive wealth strategy.
Different Names Don’t Make a Difference
Big banks often give their wealth management branches different names to position them as boutique-like offerings. While you may see phrases like “private banking,” “private wealth management,” or “family office solutions” affixed to their name, they are still beholden to the bank investment products and standard set of services. They have limited emphasis on family dynamics and legacy planning and can do little to support multi-generational families with wealth transfers, governance structures, and succession planning.
Not All MFOs Are Created Equal
At Caprock, we cater to a select group of discerning clients who value independence, personalized service, a long-term investment approach, and comprehensive family wealth management. With more than $13 billion in assets under advisement, Caprock is structured to support large and sophisticated balance sheets.
Our experienced advisors, backed by a dedicated investment team and support staff, provide comprehensive wealth and investment management tailored to the needs of each family we serve. We leverage our professional connections and cutting-edge investment management platform to support complex and bespoke portfolios. We are committed to providing our clients more clarity and transparency than a typical family office.
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©Caprock. All rights reserved. The Caprock Group, LLC (“Caprock”) is an SEC Registered Investment Advisor. This communication is not an offer or solicitation with respect to the purchase or sale of any security and is for informational purposes only. Information contained herein has been derived from sources believed to be reliable, but Caprock makes no representations as to its accuracy or completeness. Investment in securities involves the risk of loss. Past performance is no guarantee of future returns. Registration with the SEC does not imply a certain level of skill or training. Caprock, its Employees, Affiliates and Advisers are not tax or legal professionals and do not provide such advice. Therefore, the discussions contained herein are for informational purposes only and should not be construed as a recommendation or endorsement of a strategy. Please consult with your tax or legal professional for further guidance and information.
