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Multi-family office channel controls more than USD700bn, says Cerulli


The multi-family office channel currently controls more than USD700 billion, according to new research from Cerulli Associates.

"We estimate that the multi-family office channel is comprised of more than 200 firms that control more than USD700 billion," says Donnie Ethier, associate director at Cerulli. "Traditionally, the growth has been influenced by the independent registered investment advisor (RIA) segment of the channel. While this is still true, the highly-debated commercial multi-family office segment, which is financially backed by banks, posted the greatest asset growth in 2013.
"Despite the debate of whether or not these offices are genuine family offices, the high-end wealth management units are paying off for many of their parent banks.
"This sizing reflects the total assets controlled by their advisor forces," Ethier explains. "Although multi-family offices undoubtedly focus on high-net-worth (HNW) and ultra-high-net-worth families (UHNW), many do have a mix of clients that do not meet Cerulli's HNW criteria. These non-HNW assets are still a massive opportunity for third-party managers."
In High-Net-Worth and Ultra-High-Net-Worth Markets 2014: Addressing the Unique Needs of Wealthy Families report, Cerulli analyses the US HNW (investable assets greater than USD5 million) and UHNW (investable assets greater than USD20 million) marketplaces. The report focuses on the three constituencies of investors, providers, and asset managers.

"Many executives agree that the phrase 'multi-family office' has lost its allure because so many wealth managers use it to explain their services geared to wealthy investors," Ethier says. "This has generally watered down the term to a marketing scheme. Evaluating a multi-family office should be based on the practices' high-touch services and DNA versus its assets under management."
Cerulli believes that third-party management opportunities will only grow as additional RIAs move upmarket, qualifying for multi-family office status. More national and super regional banks and trust companies will likely follow suit and establish family-office practices of their own. Appeal will grow across the segments as the firm count and assets swell

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