The world is ever-changing and family offices have to adapt and evolve in order to remain relevant to their clients and their evolving needs.
Originally the family office was conceived as a conservative fortress to guard the family wealth, invest it and shield it so that it may grow and be safe for generations. Over the last few decades, the world has become much more nuanced and with the impending wealth transfer close at hand, family offices are required to do more in order to stay at the top of their game. This has become a matter of relevance and listening to what the clients are asking for.
The role of lifestyle management in a family office
Alternative assets and luxury goods have blended so much over the last years, that many valuable acquisitions like watches and cars have become investments, which at times have even outperformed some financial markets. Identifying the right trends and products is the task of a well-versed lifestyle manager because investment specialists are not expected to know the ins and outs of the luxury market. So when, for example, a client wants to buy a watch and is asking for advice, then it is best to know which one will appreciate and which will depreciate over time. The same goes for cars as many can become money pits, while others can be truly valuable.
Lifestyle management is an art form and has little in common with the concierge service or VIP service offered by most top tier credit cards. Much rather, it is the art of helping clients add value in all areas of their lives outside of the traditional realm of the family office, such as finance or real estate management. Furthermore, lifestyle management enhances the client experience as it deals in things that generally excite the client such as travel, luxury or art.
A good lifestyle manager will be able to streamline the fulfilment of his or her client’s real needs and wishes. Additionally, chances are that a true expert can save the client a lot of precious time (and money) with this expertise, ranging from the avoidance of pitfalls and overpriced purchases to getting swift solutions to seemingly impossible tasks.
The human or emotional aspect of families has to be taken into account in the modern family office that wants to offer a truly holistic solution to its clients. For example, in the case of highly sought-after items with long waiting lists, it’s very common for family officers to be asked to find solutions around this. A skilled lifestyle manager knows exactly where to find everything that the clients want, at a fair market price.
Offering this holistic solution builds loyalty and in turn, makes the family office and its officers even more valuable to the family members. It enhances communication and broadens the spectrum of services that leave clients feeling truly satisfied and looked after. Freedom, removal of stress, as well as peace of mind are at the forefront of all customers’ concerns right now and the more stressful our world gets, the more important these intangible wishes will become.
Now, as the younger generations begin to gain access to considerable fortunes, there is a growing trend that places great importance on experiences and instant gratification. In the same way that most family offices will need to prepare for this wealth transfer, they will also need to this shift into consideration. The next generation doesn’t necessarily care for ownership and heavy administrative structures the way that their parents or grandparents did. They rather want to be able to pivot at a moment’s notice and fly to a yoga retreat in Bali or spend six months on an ultra-luxe road trip. By utilising proper lifestyle management, a family office can ensure these needs are expertly taken care of.
Another aspect worth considering is the decision between acquisition and rental services. Many wealthy families still think it is best to own a yacht, a private jet or a holiday retreat in an exotic location. The trend however is moving away from ownership and towards purely renting the things we do not need on a permanent basis. This also comes down to the client’s visibility. If you own big assets, they can become the focal point of the public eye and they can be tracked. If you rent, you’ll keep the prying eyes guessing. A small example is Jack Sweeney, the teen who reached notoriety in the media by openly tracking Elon Musk’s private jet and then moved on to tracking the jets and yachts of Russian oligarchs. When it comes to public visibility, less is always more, just like it would never occur to any savvy businessman to tell the competition his next move. Discretion is key, as any lifestyle manager will know.
In addition to the above services, there are other important topics that require someone to manage them so that all the members of the family can live their best lives, as full and as long as possible. These could include private security, relocation, ivy league education for the children, or private medical services for the family that are of the highest importance.
Lifestyle management will become an indispensable element for family offices during the course of this decade and the sooner the proverbial ship is readied for this change, the better the relationship with the patrons of the single-family office and the greater the edge of retaining and winning clients at multi-family offices.