The market turmoil has hit wealthy families, raising the need for institutions like multi-family offices to pay closer attention to risk control and focus less on chasing returns, Dirk Jungé, chairman and chief executive officer of Pitcairn, a US multi-family office, said in a report.

The complexities of today’s stressed global economy have created unprecedented problems - particularly for those advisors serving ultra high net worth families or single family offices, he said in a statement.

“Skillfully and discretely managing the many options in today’s unpredictable investment environment,” he said, “as well as the unique relationship between affluent families and great wealth, remain the central challenges to sustaining that wealth over the long-term horizon.”

“Because of the substantial assets involved, the need for long experience in many market environments, coupled with objectivity and transparency in every aspect of a family’s wealth structure, cannot be over-emphasized. It is incumbent upon the MFO industry today to provide a ‘bridge of trust’ to meet the very specific requirements of its client families,” he said.

The Pitcairn CEO cited another emerging trend as investors move away from what had become a myopic-like focus on investment returns. “Rather,” he said, “they are taking a much more sober attitude towards risk; realizing that additional risks may now exist where not previously anticipated.”

Due diligence of investment managers, once perceived as perfunctory by some investors, is now recognized for the critical risk management essential it is.

“The impact from the Lehman Brothers, Madoff, Stanford and many other debacles has touched families around the world. Many still do not know where to turn, having lost confidence in institutions and ‘trusted advisors.’ True due diligence is a disciplined, ongoing process of evaluating areas of opportunity and risk, and gets behind the well-crafted sales pitch and expensive suits,” said Mr Jungé.