Family offices aren’t one and done. Instead, many pride themselves on personalized service, and with that comes an all-embracing approach.
“We have spent 12 to 112 hours over a number of days and sessions,” says Neil Nisker, co-founder, executive chairman and chief investment officer of Our Family Office Inc., of the process. “We listen and we let them talk.”
The reason is simple: Family offices need to know everything about their clients. They will query a family’s lifestyle, goals, finances, investment philosophy, assets and legacy plans, says Toronto-based Nisker, who onboards about 12 clients a year. In addition to gleaning all of this key information from clients, they will also be open about their services and philosophy to ensure a good fit. “The idea is: how are we different?” he says.
While onboarding approaches generally cover the same topics, family offices may alter their line of questioning depending on the size of a client’s portfolio and their needs, says John Amonson, president of Unbiased Financial Services Inc., a family office and wealth advisory service in Calgary. For example, he says many ultra-high-net-worth clients may need risk management or estate planning, while high-net-worth clients are looking for investment management.
All in all, you can expect to provide a lot of personal and financial information. Here are the steps many family offices follow:
They’ll meet with you many times.
“It can take a year – or three – to work through all of the areas that need to be addressed,” says Amonson. The topics covered will include investing strategies, risk management, estate planning, family continuity, strategic philanthropy and family administration. Nisker says, “We ask hundreds of questions.”
They’ll ask about your goals and wishes.
Nisker’s firm uses a questionnaire to identify clients’ goals, mission and values. They are also asked about obstacles, whether that’s a family member who doesn’t share in a legacy plan or an investment strategy that’s no longer working. “We ask them about the pebble in the shoe,” says Nisker. Amonson says his team focuses on one or two of the family’s key goals. If it’s a multi-generational family, he may interview multiple members to ensure all are aligned.
They’ll need paperwork and financial data.
Family offices need a lot of financial information. This will probably include bank statements, corporate and legal documents, shareholder agreements, insurance policies and information about previous financial advisors. “Most clients have had different professional advisors over the years,” Amonson says. “So this stuff is all over the place.”
They may talk to your other advisors.
A family office may reach out to other professionals managing your affairs to ensure a smooth transition, says Amonson. “The existing professionals can make or break your ability to help the family.” He frequently meets with various advisors to create new relationships. “The role of the family office is to integrate all of the professionals,” he says.
They will discuss fees upfront.
Fees are generally discussed at the onset of the family office/client relationship, says Amonson. While some clients will opt to tackle such things as estate planning or data consolidation on a more ad hoc basis, and pay for each service individually, others are all in right away. A letter of engagement will be drafted upon acceptance, stating which services will be taken care of by the family office.
Part of a good onboarding session includes informing clients about how long things will take and what they will be required to provide. “We have to manage their expectations – we give them timelines,” says Amonson.
Education plays a part.
Guiding all family members about the importance of leaving a legacy is one of the roles family offices play, says Nisker. He says he often walks families through the ins and outs of setting up a foundation, which can highlight family dynamics that need to be addressed. “We want the next generation to be good inheritors,” he says.