The multifamily wealth management business is booming as the rich continue get richer but grapple with increasingly complex market conditions.
These businesses advise multiple generations of families with around $47.9 million of assets on average, according to Family Wealth Alliance LLC, a Wheaton, Ill., research firm.
Thomas R. Livergood, the chief executive officer of Family Wealth Alliance, said that it would not make financial sense for a single investor who has $60 million in investable assets to hire a dedicated office.
These types of offices need expensive executives like a chief investment officer, to do everything from running a family trust to helping set up a foundation to arranging the personal security to help the children of high-net-worth individuals travel.
"There's a need in the marketplace to serve people who are too big for traditional services and too small for a family office," Mr. Livergood said. "The marketplace has rushed to fill it."
His company's Multifamily Office Study, released last month, found the number of firms that are serving this market grew 20% in 2006 from the previous year, to 80, and these firms had $305.2 billion of assets.
More financial services companies, including banks, are entering the field as they look to develop revenue streams.
Wells Fargo Bank of San Francisco, which was not listed in the study, said last week that it was offering its family wealth group nationwide.
Wells had tested the group's programs for wealthy families in Minneapolis, San Francisco, and Los Angeles offices for the past couple of years.
"The ultra-affluent base is the fastest growing wealth segment in the world," Michael Cole, a Wells executive vice president and national director of the family wealth group, said in an interview last week. "We saw it as an opportunity."
Mr. Cole said that his team already has 58 people, and he expects it to expand to between eight and 10 offices during the next few years.
He plans to expand into markets with high concentrations of wealth, including Seattle, Denver, Houston, Dallas, San Diego, and Chicago.
Wells is up against competition from companies like GenSpring Family Offices LLC in Palm Beach Gardens, Fla.
Hap Perry started GenSpring under the name Asset Management Advisors Inc. in 1989 for himself and other members of his family. Now the company serves around 600 families that collectively hold nearly $15 billion of assets.
GenSpring is continuing to expand through acquisitions. For example, in February it said it had bought Inlign Wealth Management LLC, a Phoenix firm with more than $2 billion of assets under advisement. In September, GenSpring said that it had acquired TBK Investments Inc., a Miami high-net-worth manager with nearly $1.5 billion of assets that serves more than 60 families, most of them in Latin America and Southern Europe.
There are "forces in the marketplace that are driving people to choose family offices as a way to manage their wealth," Michael Zeuner, GenSpring's chief strategy and client experience officer, said in an interview last week. For example, there are more investment options now, ranging from private equity to structured products to commodities. "It has everything to do with the complexity they face. They're looking to hire someone to help."
New York's Rockefeller & Co. Inc. has evolved from the office that the oil tycoon John D. Rockefeller established in 1882 to serve his family.
Now the company's multifamily office services are only a part of its wealth and investment management business.
In 2006 Rockefeller & Co.'s assets under advisement increased more than 60% from a year earlier, to $29.3 billion, more assets than any of the other firms named in the Multifamily Office Study.
Rockefeller & Co.'s products and services include its RockIT technology, which supports activities that range from tax compliance to bill payment and trust administration.
"One of the secrets of our success has been that we're big enough to have the full range of expertise and sophistication required to do this well, but we're small enough to pull it together for a single family," said Rockefeller & Co.'s CEO, James S. McDonald. "We're happy to be helpful."
