Last updated: 08:27 / Tuesday, 18 November 2014
Cerulli Estimations

The Multi-Family Office Channel Controls More Than US$700bn in the U.S.

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The Multi-Family Office Channel Controls More Than US$700bn in the U.S.
  • Multi-family office channel is comprised of more than 200 firms that control more than $700 billion
  • Traditionally, the growth has been influenced by the RIA segment of the channel but multi-family office segment, which is financially backed by banks, posted the greatest asset growth in 2013
  • 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

According to new research from global analytics firm Cerulli Associates, the multi-family office channel controls more than $700 billion.

"We estimate that the multi-family office channel is comprised of more than 200 firms that control more than $700 billion," states 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," adds Ethier.

"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 their High-Net-Worth and Ultra-High-Net-Worth Markets 2014: Addressing the Unique Needs of Wealthy Families report, Cerulli analyzes the U.S. HNW (investable assets greater than $5 million) and UHNW (investable assets greater than $20 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 continues. "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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