Every year, Northern Trust’s Global Family Office group publishes an annual report about its clients, more than 450 of the wealthiest families in the world, that have an average of $900 million with the firm. Other financial services companies, management consultants, and membership groups publish similar reports. They seem to all share the same handful of conclusions each year.
RIAs have limited use for these reports. Much of their content is dedicated to the asset allocations of the families, which are drastically different than the clients of most private wealth managers. In 2019, family offices allocated 35% of their portfolios to alternative assets classes, according to UBS, well more than most investors. The wealthiest families also have access to investment opportunities others don’t, even with a financial advisor (venture capital eludes RIAs and that might never change).
Still, these reports can be good sources of ideas for other wealth managers.
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Wealth managers have adapted to the world afflicted by the Covid-19 pandemic. But most financial advisors “do not use technology extensively” and have been focused on improving their communication with clients by video chat, as well as prospecting for new ones under restrictions due to the novel coronavirus.
But clients want more than just a virtual check-in or calming emails from their advisor. They want to interact with other clients. Northern Trust's family office report found that 83% of its clients would likely participate in an online discussion board offered to them. Even younger generations (55% of clients age 20 to 40) are interested in networking and learning with their family office peers.
“These networking opportunities are especially precious in today’s virtual environment, and we see strong interest from respondents (83%) in an online discussion board and networking platform,” Northern Trust says in the report.
The pandemic hasn’t stopped some RIAs from offering virtual value-added services or gatherings to clients. In March, MAI Capital Management, a Cleveland-based RIA that manages more than $7 billion, organized a live question and answer session for clients about the pandemic with University Hospitals’ chief executive and the chair of its department of medicine.
RIAs that aren’t connecting clients with experts or with other clients — or paused those things during the pandemic — could be making a costly mistake. Younger investors are demanding more from advisors, beyond just investment management and financial planning.
Advisors should rethink giving clients gifts or exclusively their own attention and instead consider giving them what they want, and not just during the holiday season.
Michael Thrasher (@Mike_Thrasher) is a reporter at RIA Intel based in New York City.