Working at an asset management firm, a Fortune 100 bank and a wealth management firm before launching my registered investment advisor firm in 2008 gave me a front-row seat to the family office concept. The idea of ultra-high-net-worth families having a dedicated in-house team to oversee their wealth struck me as intriguing, highly desirable and out of reach for 99% of the population.
As I prepared for the certified financial planner exam and designed my first RIA, I was inspired by an RIA-owner mentor who demonstrated the power of financial planning as a microcosm of the family office model. She showed me how true financial advice went beyond the investment-focused approach of most RIAs. Her example validated my belief that holistic financial planning is the cornerstone of wealth management.
Integrating Holistic Family-Centered Engagement
Over the last few decades, households across the wealth spectrum have recognized the critical role of integrated, family-centered financial planning when seeking wealth management services and solutions.
“Clients were willing to accept various levels of service, ranging from simple product sales to investment-only services, and even standalone financial plans,” said Jason Howell, President of Jason Howell Company and author of Joy of Financial Planning: 7 Strategies for Transforming Your Finances and Reclaiming Your American Dream. “However, comprehensive financial planning goes beyond these transactional approaches; it takes responsibility for the entire client, including their family. This level of care and integration requires the collaboration of a team of advisors, which forms the foundation of the family office model.”
While the family office model represents the standard-fare UHNW households, these households have also increasingly recognized the need for integrated, holistic guidance and implementation outlined in the CFP Board’s Guide to the 7-Step Financial Planning Process. These steps work hand-in-hand with the UHNW Institute’s Ten Domains of Family Wealth model, a clarion call for “UHNW professionals [to] organize their work in integrated ways to deliver services to individual clients and families.”
Stoy Hall, CEO & Founder of Black Mammoth, stated, "the family office model focuses tremendously on the assets and legacy, where we focus more energy on the client's current life experiences while encompassing the legacy planning throughout the engagement.”
“In both financial planning and family office models, all experts will need to partner with other experts to get the job of comprehensive service done and done well,” suggests Howell.
Available Resources Define Service Experience
The depth of service between financial planning and the family office model is often distinguished by the resources households can allocate to wealth management. According to Deloitte’s 2024 report, “Defining the Family Office Landscape,” operational costs to run small to large family offices annually range between $2.1 million to $20.8 million annually, with assets under management for these offices spending $250 million to over $5 billion. Envestnet’s” 2024 State of Financial Planning and Fees: Technology’s Impacts” provides insights into various financial planning service models and fees based on AUM, retainer, and hourly services.
“By being more of a multi-family office (traditional lingo) while focusing on financial planning, we can provide a similar family office structure at lower costs while adapting certain services to the client's needs,” said Hall.
The budget for technology also often distinguishes the level of services provided by financial planners and family offices to organize and integrate extensive financial data and deliver comprehensive wealth management services. The financial services industry continues to grapple with integrative fintech solutions to simplify engagement among clients, financial advisors, and allied professionals. Michael Kitces’ FinTech map paints this fragmented landscape.
Treating Wealth as a Family Business
Like the family office model, holistic financial planning treats wealth as a family business by adopting a structured, collaborative and strategic approach to managing financial resources. The dynamic engagement embraces a client’s evolving life and goals and guides the client’s financial future anchored in a dynamic financial plan with the support of fiduciaries.
Financial planners have an opportunity to help households strengthen their financial base, manage sudden wealth and equip them with tools to assist with financial education and family governance across generations. As with family offices, financial planners strive to help families continue wealth beyond three generations, a challenge unearthed by the well-known Williams Group study.
“We are currently seeing this shift, and to me, that shift in financial planning is the “Modern Family Office,” said Hall.
Lazetta Rainey Braxton is the founder/CEO of Lazetta & Associates and CEO & President of The Real Wealth Coterie.
