Three core considerations when selecting a banking partner
The specific services that a family office needs from a banking provider will be determined largely by its internal management capacity and the complexity of its asset structure. As a primary step in the bank selection process, a bank’s core competencies should then be reviewed.
Internal management capacity
Robust family offices normally take responsibility for many operational and strategic areas including financial management, investment management, strategic planning, administrative support and advisory services. Within each of these operational areas, there are many sub-sets and it is important to detail what responsibilities and services remain in-house or need to be outsourced.
The complexity of a family office’s asset structure has a direct impact on the breadth and depth of banking services required. An established family office that has built a diverse portfolio of investments across different asset classes and geographies will have different service requirements for a family that has suddenly come into serious wealth.
Core competencies of banking provider
During the initial evaluation of banking providers, the tough questions need to be asked upfront to avoid issues down the line. At the very least, a bank needs to demonstrate a successful track record in servicing family offices and should have a dedicated family office team with the required skills and credentials. It is also important to understand what functions are in-house versus external. Performance checks and a review of AUM trends can also be helpful. Other core competencies to evaluate could include a bank’s risk-management processes, reputational scores relating to customer service levels and transparency, as well as a bank’s digital infrastructure and global reach.