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Financial Planning > UHNW Client Services > Family Office News

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Becoming a wealth manager. It’s an issue that more and more independent advisors are grappling with these days as industry consultants continue to warn them that they must either don a wealth manager’s hat or create a niche for themselves in order to compete against the large wirehouse firms.

The Merrill Lynch/Capgemini 2004 World Wealth Report was the most recent study to proclaim that advisors are missing out on serving a growing set of millionaires–the mid-tier millionaires with $5 million to $30 million in investable assets that need the holistic services that wealth managers, or family offices, provide. The World Wealth Report said this group of wealthy folks is growing faster than those with $1 million to $5 million in financial wealth.

I wrote about the World Wealth Report’s findings in my August column, and asked advisors if they could provide the holistic, affordable family-office services these mid-tier millionaires are seeking. Peter Wheeler, president and CEO of Wheeler/Frost Associates, Inc., a wealth management and registered investment advisory firm in San Diego, answered my query with a resounding yes. He’s created a virtual family office called Family Office Network (, which uses technology to help the various counselors–investment advisors, lawyers, accountants, real estate experts–collaborate more easily and cheaply. He says Family Office Network facilitates the outsourcing of certain functions not provided in-house, like investment services, concierge services for travel, and legal work, by creating a secure virtual environment where all of the various parties can share information about a client’s account.

The Family Office Network’s platform will accommodate practitioners of all sizes–small, medium, or large–Wheeler says, and is priced so that even small firms can afford it. Being a wealth manager “means you’re taking on responsibilities that are extremely time consuming,” Wheeler says. “You’d better figure out an efficient way to do it, or you won’t be able to do it very long.” Wheeler charges $1,250 per year for the service, and advisors can list an unlimited number of clients on the system. Wheeler figures the network saves his firm between $1,000 and $3,000 per month in salaries, postage, and paper.

Wheeler and his associates originally designed Family Office Network for their own use, but after other advisors heard about the concept, they urged Wheeler to make it available on a mass scale. He officially launched the product in late 2002, but found advisors weren’t clamoring for upscale clients back then. Nowadays, however, with affluent clients increasingly asking for more services, and with more advisors seeking wealthier clients, Family Office Network is “finally starting to catch on,” Wheeler says. Eighty advisors from Sydney, Australia to Portland, Maine use the virtual network, and more than 800 clients have been put into the system. The types of advisors that use the system vary, Wheeler says. Some run a “true family office/wealth management practice,” while others “want to get to that position and they see [the network] as a way to get them there and differentiate them from their competitors.” Others are running small practices, “and will continue to do so,” he says.

Curt Greenlaw, an independent wealth management consultant in Fort Collins, Colorado, says many advisors, particularly those with small practices, “are afraid to embrace the [family office] model” because they believe they’ll have to spend too much on technology. But he says the Family Office Network provides the answer because the platform “has the capability to provide the type of integrated, coordinated, and comprehensive services that an advisor would need to establish a cost-efficient multi-family office platform.” Instead of focusing on the cost of technology, advisors who want to transition to a wealth manager should zero in on “understanding effective techniques for marketing to the affluent,” Greenlaw says. This is where they can really make some headway in competing with the Merrill Lynches of the world, he says, because “although the wirehouse firms do not have a platform with the capabilities or flexibility of the Family Office Network, their marketing muscle and brand recognition allow them to attract hordes of affluent clientele.”

The various advisors using the Family Office Network platform have access to client files through the “primary advisor,” Wheeler says. This way, it’s the primary advisor’s responsibility to put new advisors into the system, and the client, working with the primary advisor, gets to choose his advisors. Greenlaw says the primary advisor role, or, using his term, “the generalist,” offers the biggest opportunity for advisors. While he agrees that most advisors need to be “specialists” these days in order to differentiate themselves, he says more advisors need to step into the generalist role so they can assess what is truly important to clients and coordinate the functions of the various parties involved.

The client also has access to all of his files through a virtual filing cabinet. However, the “client has limited access to the system,” Wheeler says, insofar as they can only upload a file to the advisor and then the advisor takes responsibility for it. “It’s tough enough to decide which file a piece of paper needs to go into,” he says. “We didn’t want the client to make those decisions.”

The virtual platform also has a “tasking” tab, which allows the primary advisor to send out automatic e-mail reminders to other advisors and clients telling them a certain task needs to be done. E-mails are secure as well, in that “it’s advisor-to-advisor communication only; the client doesn’t see it,” Wheeler says. This way, the correspondence is “not subject to compliance issues with the broker/dealer–it’s not client correspondence, but it is retained in the system forever.”

The system also includes a bookmark that links to dynamic aggregators like Yodlee, which allows advisors to provide clients with aggregated account statements. By using Yodlee’s system, advisors can access all of a client’s financial accounts–brokerage, mortgage, banking–and redisplay the information on one aggregated statement. What’s more, the system is also a “static data aggregator,” Wheeler says, because it provides clients aggregated account statements on wills, trusts, powers of attorney, and tax returns–”things that don’t change very often.” The bookmark “is a way to get to any password-protected site that you may have need for,” Wheeler says. “It’s a place the client can keep track of all of their passwords, and at their discretion, either grant or not grant one or more advisors access to the information.”

Wheeler imagined that most advisors would find that the “real power and strength” of the network is the ease with which they can communicate with other advisors. But he’s found that “the advisors that have put the most number of clients into the system are not using it to share information with other advisors. They are simply using it as a way to effectively communicate with the client, and provide them with the most up-to-date info on wills, trusts, financial statements” and so on.

While the virtual family office won’t be replacing the traditional bricks-and-mortar family office of yore, Wheeler argues the traditional structure is becoming antiquated in terms of technology. Family offices “have to become more efficient,” he says, not only to keep up with the times, but to also be able to effectively communicate with growing families who are spread across the country and the world.

Wheeler says the Family Office Network is so efficient that he’s actually “taken a client through the process” in less than 15 minutes “and picked a lawyer and formalized the relationship with a telephone call.” When clients are looking for an accountant or lawyer, most other wealth managers hand clients three business cards, he says, and say, “Call these people.” They’re not being “true wealth managers because they’ve just handed off the next piece of the relationship to somebody else,” he says. They’ve “lost control of the referral process and don’t know what’s happening with the client.”

What’s Wheeler’s advice to those advisors who want to become wealth managers? Know that “it’s not as easy” as you think, he says. Advisors “have to develop systems that are very efficient. They have to clearly identify which areas of the broad spectrum they are going to manage and which areas other parties will be responsible for. And how that relationship with that other party is going to be maintained.”

Bruce Wright, president and CEO of Macro Strategic Design, Inc. (, a strategic planning firm in Simi Valley, California, that helps the wealthy achieve their personal and business goals, says before advisors can become holistic wealth managers, they have to think and behave differently–and he questions whether the majority of advisors can do either. If advisors truly want to be wealth managers, he says, “They have to stop talking to clients about money and stop trying to sell them something.” But this is a monumental task for advisors because most of them have been trained to be salespeople, Wright says, not wealth managers. “The greatest human need is to be understood,” he says, and advisors must find out what is most important to the client. “When talking to a client who has enormous wealth, money almost never makes the top of the list” of the things they value most, says Wright, who’s also president and CEO of The Wright Company (, which assists advisors in creating viable strategic plans and in developing wealth management teams.

The “irony,” Wright says, is that advisors want the higher-net-worth clients, “but these clients are not attracted to them because they’re not providing the holistic services.” The mid-tier millionaires are underserved, he says, so honing their skills and capturing some of them as clients should be on every advisor’s list.

Washington Bureau Chief Melanie Waddell can be reached at [email protected].


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