Family Office Exchange in partnership with Harris myCFO has released a new study to help affluent families assess the value they receive from their family office or outside wealth advisors.

The study, “How Wealth Owners Measure Value: Evaluating the Performance of Your Wealth Advisor or Family Office,” identifies 50 core expectations that wealth owners consider when evaluating their advisor relationships.  It also proposes a report card for establishing goals and regularly discussing delivery against these needs of wealth owners.

The 50 factors resulted from in-depth interviews and group discussion among FOX members and industry thought leaders recruited for this project.  More than 100 parties contributed. 

The factors fall into seven categories: family legacy and leadership, responsible ownership and governance, management and control of family financial affairs, operations and cost control, knowledgeable staff and clear communication, sustainability of wealth and risk management.

“Evaluation of an advisor’s performance against investment benchmarks is objective and relatively easy for wealth owners,” Sara Hamilton, founder and chief executive of Family Office Exchange said.  “However, there are many factors beyond investment performance that have a great impact on the overall level of satisfaction with the advisor.”

“While prioritizing the family’s goals and articulating them to their wealth advisors is critical in establishing the basis for measuring an advisor’s success, current FOX Benchmarking research indicates that only 30 per cent of family offices take the time to do it each year,” she added.

The study maintains that an annual review of expectations and performance is critical.  By having the family articulate its mission, values, and goals as well as prioritize among the 50 factors, expectations are set and the family office or advisor has clear direction about how to allocate resources to meet client needs.

To document progress on the factors that matter most to each client, a number of methods are suggested including:

-surveys of family and staff members’ impressions of delivery.

- collection of key examples of service delivery during the year by the advisor that make compelling stories.

-a report card system designed to quantify value and encourage dialogue about the relationship.

“Understanding what characterizes each clients’ definition of exceptional service experience is critical to helping our team successfully deliver on that promise,” Joe Calabrese, president of Harris myCFO said.  

The study was conducted in the wake of the current economic climate and the financial upheaval of the last two years which have caused many wealth owners to reconsider their family’s goals as well as the processes and resources they rely on to manage their wealth. Wealth owners are paying more attention to the wealth management process and seeking real value for their investment, according to the study.

As reported by this publication the market correction of 2008 and a lower return environment have families looking under the hood now more than ever at their investment returns and spending.