family office banking provider

How to evaluate your banking provider

Updated on May 2, 2023

Illustration: Lourenço Provencia

Table of Contents

When evaluating a banking partner, a family office should take a structured approach to measuring current service levels and assessing the bank’s capability and capacity to support future requirements. Currently, banking partners play an important role in providing many of the services that family offices are not responsible for. Wanting to keep up, they are also actively positioning themselves as a competitive and cost-effective alternative to the in-house offerings of a family office.

Family offices emerge as a threat to banks

In recent years there has been significant growth in the number of family offices worldwide. Family office assets-under-management is now estimated to be in the trillions of dollars, driven by substantial growth in global wealth and the increasing popularity of the family office concept amongst the super-rich. Despite there being a growing pool of wealth to target, the banking sector has, until recently, struggled to keep up with the pace of change, with private banks experiencing asset outflows as family offices snatch the reins and take charge of their own investment strategies.

Banks up their game

In response, banks have had to adjust their service offerings to cater for the evolving needs of this very wealthy segment, many private banks actively position themselves as family office specialists and offer a tailored, personalised service that can either supplement or compete with the services that many family offices are now providing. However, the current reality is that less than a third of family offices facilitate private banking services to their clients. Banks are well aware of the size of the prize when it comes to the family office sector but also know the risk of not satisfying the unique and evolving demands of the clients they have.

This guide is intended for family offices that are utilising the services of a private bank and who want to take a structured approach to evaluate their banking partner. Considering how family office demands are evolving in line with changing investment priorities and circumstances, there is certainly a need for family offices to regularly assess whether they are getting the support they need now and into the future.

A fifteen-point service-level checklist for banks

Family offices are all different and each has its own unique service requirements, however, the below checklist—encompassing most of the core indicators—can serve as a good base from which to build your own unique appraisal document.

Create a scale from 1 to 5, 1 being very poor, 5 being outstanding, to rate your banking partner’s service in the following areas:

  • Building a unique investment strategy, including asset allocation and tactical allocation.
  • Portfolio performance.
  • International infrastructure to support all my investment needs.
  • Providing quality legal services in support of wealth management.
  • Providing expert tax advisory services, including for foreign jurisdictions.
  • Fiduciary capabilities, including estate plans, wills and trusts
  • Philanthropy advisory and management
  • Structuring the family office, including governance structures
  • Employing modern technology to drive efficiencies in communication, transactions and access to data.
  • Transparency of reporting.
  • Transactional banking and savings products.
  • Loan and debt products.
  • Corporate banking for the operational business.
  • The quality of the relationship and bank interactions.
  • Affordability in relation to fees and incentives


The purpose of the checklist is to identify key discussion points with your banking partner. The outcome of this discussion should be agreed upon actions to address shortfalls with timelines attached.

Keep an eye on the future

The services outsourced to a banking partner are dependent on the current expertise that resides within the family office. When evaluating the services of a banking partner, family offices should consider both their current and future requirements, taking into account their investment strategy, operational costs as well as emerging priorities. With the inclusion of a structured checklist approach to measuring service levels, a thorough evaluation should reveal whether a bank is delivering against current expectations and whether it is the right partner for the future. It may also highlight opportunities for broader outsourcing of services which could lower the cost base and possibly deliver more value to the family.

Key considerations when evaluating a banking partner

Before jumping into an analysis of your bank’s service levels, it is wise to look beyond the scope of your current requirements and view the relationship through a more strategic lens.

Anticipate changes in investment strategy

One of the top priorities for a family office is to build and preserve wealth across generations. This means that investment strategies need to be regularly reviewed in response to emerging risks and opportunities as well as significant shifts in the business, political and regulatory landscape. As an example, if there is an anticipated redirection of investment into a particular emerging industry or an intent to diversify the family office portfolio across multiple geographies, this should be taken into account when evaluating the specific expertise and capabilities of a banking partner.

Optimising the intersection between in-house and outsourced services

It is important to clarify your bank’s scope of responsibility in relation to the services provided by the family office. Equally important is clarifying what future changes may be expected in terms of this dynamic. The intersection between services provided by the family office versus the bank can shift over time due to a number of factors. A key concern for many family offices right now is the increasing cost associated with wages and IT which could trigger some families to downscale their internal management capacity and lean more on outsourced expertise. Banks are investing more heavily in the family office space, offering superior expertise, and bespoke services and raising their game in the philanthropy and private equity space. When evaluating your banking provider, consider how their expertise, services and investment opportunities compare to what other banks are offering and whether they are flexible and capable enough to accommodate new service requirements going forward.

The financial health of your banking partner

From a risk-management perspective, it makes sense to assess the financial status of your banking partner and whether there is a positive or negative trend over time. The most common way to evaluate a bank’s creditworthiness is by verifying the bank’s capital adequacy by referencing the Common Equity Tier1 ratio. The ratio is shown on the balance sheet and is often published on the bank’s website. The higher the value, the greater the bank’s capital strength. It should never dip below 8%.

A robust analysis of a bank’s capital adequacy should also consider other relevant indexes, such as Leverage and Total Capital Ratio as the CET1 ratio does not take into account the bank’s profitability, asset quality, liquidity and management efficiency. A reliable way to assess a bank’s soundness is to verify the rating assigned by Rating Agencies which includes both internal data, like balance sheets, corporate longevity, exposure towards foreign countries etc. as well as external variables like the country GPD, inflation, unemployment rate and political risk.

Considering banks' key trends

It is important to consider the emerging trends reshaping the family office investment landscape and influencing family office priorities. Whether the below trends are relevant to you now or at a later stage, it is advisable to assess how your banking partner is evolving their offerings to stay in touch with the core needs of the sector:

family office banking provider

Focus on governance

Improving internal controls and governance structures is becoming an important priority for many family offices, especially those that are larger and more complex. Having an independent advisor to support a family office’s governance requirements would certainly be valuable.

family office banking provider

Embracing globalisation

Family offices are taking a more global approach to their asset allocation, diversifying their investments across industries and geographies. Specialised expertise in the international investment, tax and regulatory space is essential to support this intent.

family office banking provider

Succession and wealth transfer

Estate and succession planning is not a new priority to family offices but is still highly relevant. Effective management of wealth transfer and changes in the family hierarchy is vitally important to all family offices and requires the necessary expert support.

family office banking provider

Sustainable investing and philanthropy

There is an increasing appetite amongst family offices to make investments that have a positive societal impact. Although the family office normally takes complete charge of this area, banks are playing a more active role in supporting this agenda with some placing much emphasis on their specialist services and expertise in this space.

family office banking provider

Private equity with a focus on innovation

Family offices are allocating more capital to unlisted, private equity investments, often cross-border. It is estimated that almost a third of family offices only opt for direct investments, many targeting new-tech industries like automation, robotics, digital transformation and green tech. Due diligence skills and specialist tax and investment expertise are required to support this investment agenda.


How to evaluate family office banking provider?

Start with reviewing investing strategies and how the bank responds to emerging risks. Further optimise the intersection between in-house and outsourced services. An important factor to evaluate is creditworthiness and health of your family office bank - verify bank’s capital adequacy by referencing the Common Equity Tier1 ratio.

What are key trends in banking?

Banks nowadays should respond to the changes in the industry. They should focus on governance, embrace globalisation, succession and wealth transfer, engage in sustainable and impact investing, and focus on innovation.

What is the difference between a family office and a private bank?

While private banks serve wealthy clients, family offices’ main clients are ultra-wealthy families and individuals.
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