Ultra-high-net-worth families have always preferred family offices over other wealth management options like investment banks, private wealth advisors, etc. for two primary reasons – greater control and privacy at the expense of higher establishment and operational costs. However, the number of family offices worldwide has grown by leaps and bounds since they started gaining traction in the early 1980s. The increasing competition in the industry, especially amongst commercial, or more public, multi-family offices, has led to a gradual shift in operational priorities away from absolute privacy. This article explores the potential drivers behind this trend and how family offices can exert a well-balanced marketing strategy to attract more clients in an increasingly competitive market.
The Shift Away From Privacy
The surge in the growth of family offices is primarily attributed to the explosion in the creation of global wealth across the world. The 2022 Global Wealth Report by Credit Suisse estimated that the total number of UHNW families globally stood at 264,200 at the end of 2021 – a 4.7x increase since 2009. The shift away from privacy for family offices can, therefore, be explained from two perspectives:
For commercial family offices, the sheer competition in the private wealth management space has made it difficult for them to attract and retain clients. Here, a compromise on absolute privacy could be a move towards integrating marketing campaigns into their operational strategy to exploit the increasing number of UHNW families globally and turn them into potential clients for the future.
For private multi-family offices and single family offices, publicity and family branding could be the primary driver in their move away from privacy. For example, most UHNW individuals with net worths over $5 billion engage in philanthropic investments through their family office. A well-planned PR campaign following such an investment can be extremely beneficial in building favourable family branding in the eyes of the public.
It is estimated that nearly 95% of all multi-family offices in the world are commercial or public-facing. They are generally established by experts in finance or legal industries like ex-bankers, lawyers, or hedge fund managers. These firms are able to attract employees from diverse academic/employment backgrounds because of their larger size and diverse client base. Multi-family offices require a broader range of skills and expertise from their staff and offer opportunities for career advancement and specialisation.
Additionally, multi-family offices tend to foster a more collaborative work environment, which can lead to more innovative thinking and problem-solving, making them an attractive option for top talent seeking dynamic and engaging work environments.
Marketing as a Tool
While marketing is primarily used as a tool for lead generation by most businesses, it is not the same for family offices which do not have a large enough potential client pool in the first place. Instead, family offices should incorporate a well-structured marketing policy that is more catered towards standing out from the competition in the market.
Like most other businesses, family offices too can leverage the power of digital platforms to build a strong public perception among the UHNW community. A 2020 BackBay communication report on family office marketing highlighted that, from their sample size, nearly 55% had created websites, 70% had hired dedicated PR units, and 75% produced regular content. Let us look at how these strategies can help family offices position themselves competitively from similar players in the market.
- A well-designed website can act as the first source of digital information for a family office. However, unlike other businesses, a family office’s website should only contain limited but succinct information about its mission and value statements, an overview of the family office’s generational wealth management strategies and services, and an introduction to its team.
- A well-planned public relations (PR) strategy can not only help with a family office’s branding but also create a favourable public perception of its actions and intentions. This can help attract more UHNW clients who share these same values. An aggressive PR strategy can also help leverage a family office’s online presence to reach a larger section of its potential clientele globally.
- Content marketing is a very effective marketing strategy that family offices can use to demonstrate their superior knowledge of the private wealth management industry with their existing as well as potential clientele. The three major forms of content marketing include:
- Blogs – Blogs are primarily used to drive traffic to business websites through search engine optimisation. Family offices can also use blogs to provide any information that might be relevant for UHNW clients like comparative asset performance reports, investment news, etc.
- Social Media – Having an active social media presence augments a family office’s PR strategy. It helps improve public perception and engage in active communication with potential clients who might be interested to know more about a family office’s services and operations.
- Email marketing – Like social media, family offices can use email marketing to update their clients about their operations and investments or notify them of new services and content.
Family offices have realised that operating in privacy silos can lead to them being underserved. To attract more clients, the need for a well-defined marketing strategy has become increasingly important. However, unlike businesses, family offices still need to maintain a balance between publicity and client privacy and customise their PR campaigns in a way that will suit their clients’ specific needs.