Signs You Need a Multi-Family Office

How do you know the multi-family office experience will suit you?

Over the last few years, Americans have navigated many challenges, including mounting partisanship, a global pandemic, rising inflation and higher interest rates. Yet, through it all, most have become wealthier, with real median net worth rising 37% from 2019-2022,¹ according to the Federal Reserve.

For the ultra-wealthy, the gains have been even more pronounced. The top 1% today controls nearly $37 trillion, while the number of families worth over $100 million has quadrupled since 2000.² Among other things, what that means is that managing that wealth has become increasingly rife with challenges.

All this, combined with the ongoing great wealth transfer,³ has explained why multi-family offices (MFOs) are experiencing such meaningful growth.⁴ The unique business – which is rooted in small, highly qualified and tailored support teams delivering personalized, highly focused and long-term services for wealthy individuals and their families – will undoubtedly take on more relevance in the years to come.

Indeed, how else can individuals and families with prohibitively complex situations grow and protect the entirety of their wealth? That said, how do you know the MFO experience will suit you? Below are some considerations to think about.

You want access to a wider range of investments

Like many wealth firms, MFOs can manage portfolios that include stocks, bonds, cash and other traditional assets available in the public market. But greater wealth often demands exposure to other types of private investments, including venture capital, private credit and private equity that can potentially offer added diversity and, in some cases, more return.

MFOs often have relationships that provide their clients with such opportunities – in most cases highly tailored to their specific needs and at attractive entry points.

Even as the retail market has seen an influx of alternative investment providers, most wealth managers have limitations in the quality of investments they can access. And it should be noted that many are incentivized to only provide products that they can benefit from.

Your wealth has or is expected to last many generations

Perhaps the biggest obstacle to making generational wealth last is a lack of communication and planning among family members. That’s why it’s important to have an experienced, impartial third party to lead the way.

An MFO can get familiar with your family dynamics to ensure values are aligned and everyone’s interests are taken into consideration, all while keeping conflicts to a minimum. And mitigating potential conflicts leads to greater wealth retention for the whole family.

Let’s also not forget that wealth can quickly be lost from generation to generation, especially if there is a lack of financial literacy among those who will inherit their family’s wealth. An MFO empowers families with the education they need to ensure their wealth remains intact or, better yet, grows for generations to come.

You are about to experience a liquidity event

The process of converting the windfall from selling a lucrative business worth tens of millions of dollars not only takes time but is extraordinarily complex. Much of the planning that needs to be done has to be put into motion well before a transaction happens. Otherwise, a seller could forfeit millions in taxes.

Complicating matters is that many sellers are ostensibly mass affluent up to that point, rich on paper but cash poor, never having to deal with things like making generational wealth last, intricate tax strategies and preserving enough capital to tackle their next set of goals.

MFOs specialize in providing comprehensive financial planning services, including those that deal in the complexities of a liquidity event, from risk exposure to tax management and beyond.

Making an impact

For many successful families, wealth is a means to an end – and the goal isn’t tangible like buying another house, joining an additional country club or pursuing some other luxury. Instead, it’s to make a difference and support the causes that are important to them.

Experienced MFOs help in this area by doing everything from performing due diligence on charitable organizations to structuring investments and donations for maximum impact (without sacrificing returns). MFOs can arm clients with a strategic philanthropy plan that aligns with their goals and ensures what they give has a meaningful impact.

The economic landscape is dynamic, complex and fraught with challenges, which is why working with a multi-family office is a compelling choice for those looking for comprehensive, high-touch and effective wealth management.

©2023 Caprock. All rights reserved. The Caprock Group, LLC (“Caprock”) is an SEC Registered Investment Advisor. This article is intended to provide general information about Caprock and is not a solicitation or offer to sell investment advisory services except in states where we are registered or where an exemption or exclusion from such registration exists. All content is for informational purposes only and may not constitute a complete description of available investment services. Registration with the SEC does not imply a certain level of skill or training.

1. “Survey of Consumer Finances (SCF),” Federal Reserve Board – Survey of Consumer Finances (SCF), 2023, https://www.federalreserve.gov/econres/scfindex.htm. ↩︎
2. Daniel Visè, “The Top 1% of American Earners Now Own More Wealth than the Entire Middle Class,” USA Today, December 6, 2023, https://www.usatoday.com/story/money/2023/12/06/top-1-american-earners-more-wealth-middle-class/71769832007/. ↩︎
3. JD Jennifer Wines, “How Might the Great Wealth Transfer Change Society?,” Kiplinger.com, December 5, 2023, https://www.kiplinger.com/retirement/how-might-the-great-wealth-transfer-change-society. ↩︎
4. Rep., World Wealth Report 2022 (Capgemini Research Institute, 2022). ↩︎