Family Office Exchange, in partnership with Harris myCFO, has published a study to help affluent families assess the value they receive from their family office or outside wealth advisers.
The study, "How Wealth Owners Measure Value: Evaluating the Performance of Your Wealth Advisor or Family Office", identifies 50 core expectations that wealth owners consider when evaluating their advisor relationships.
It also proposes a "report card" for establishing goals and regularly discussing delivery against these needs of wealth owners.
The 50 factors resulted from a process of in-depth interviews and group discussion among Family Office Exchange members and industry thought leaders recruited for this project. More than 100 parties contributed.
The factors fall into seven categories: family legacy and leadership, responsible ownership and governance, management and control of family financial affairs, operations and cost control, knowledgeable staff and clear communication, sustainability of wealth, and risk management.
"Evaluation of an advisor’s performance against investment benchmarks is objective and relatively easy for wealth owners," says Sara Hamilton, founder and chief executive, Family Office Exchange. "However, there are many factors beyond investment performance that have a great impact on the overall level of satisfaction with the advisor. Until now, these non-investment-related factors had never been cataloged; nor has there been a serious attempt to identify metrics to evaluate delivery against these factors."
A key best practice identified by the study is that an annual review of expectations and performance is critical. By having the family articulate its mission, values, and goals as well as prioritise among the 50 factors, expectations are set and the family office or adviser has clear direction about how to allocate resources to meet client needs.