For wealth management firms targeting ultra high net worth clients, not providing non-financial fiduciary “soft-side” services is no longer an option. An “enhanced” family office model will be de rigueur for firms competing in the extremely competitive UHNW market, according to a recently released Optima Group white paper on the family office market.
He conceded that competitively-fueled “institutional-based pricing” on the asset management side of the business has reduced margins as “clients recognize [asset management] is becoming more commoditized and expect to pay less and less.”
But Ascent teams can also provide non-financial services to “a reasonable amount of clients – no more than twenty,” Cole said. “If we can provide the right service to the right client, we can maintain a certain amount of revenue per client.”
For Rogerson, the potential profitability of non-financial fiduciary services lies in their appeal to potential clients.
“It’s a better way to open a door with a prospect than tax planning or investment management, [which] will ultimately be delivered and isn’t hard to find.” he said. “ If I bring tax planning or asset management up at a social gathering, it’s a nonstarter. But when I talk about the fiduciary side, people perk up. It’s not how you prepare the money for the family, but how you prepare the family for the money.”