A good problem to have: Expanding wealth and growing families
As global wealth continues to grow and families expand both in size and interests, the most successful trusted advisors of family office clients will be those who can evolve and find new ways to provide resources, services, and value that help successful families meet their changing needs.
Global wealth is growing and creating complexities that are especially relevant to family offices. From 2007-2017, wealth grew 27% worldwide,1 and more than 74% of families indicated an increase in family wealth in the last year alone.2 This expanding wealth results in more investments and assets to manage and leads many families to recognize the benefits of forming a family office. In fact, more than half of the 10,000 family offices that exist globally have been established in the last 15 years.3
The trusted advisor role
While growing wealth is generally seen as a positive trend, it is an issue that affects the changing face and management of risk, and many family offices and their trusted advisors are challenged with it as a result. In our Family Office Benchmarking Study, Marsh McLennan Agency Private Client Services (MMA PCS) found that the majority (62%) of our family office clients anticipate the need to add services or provide additional support to families in the next three to five years, with more than two-thirds indicating family growth and expansion in both size and wealth as the reason.
As younger generations age, they expand their asset bases, become more involved in the family business or their own businesses, buy more properties, expand their families, and generally may have differing views on how to manage their risk than their predecessors. Yet, these growing families continue to see the importance of protecting their assets and wealth through comprehensive insurance programs, as indicated by the substantial growth among family office clients with MMA PCS in the last five years.
Family office clients do find benefit in working with an insurance broker who can provide advice and consultation related to their myriad risks as well as strategies to manage, mitigate, transfer, and/or avoid risk. In our Study, MMA PCS clients indicated that having a point of contact to address the full spectrum of personal risk and the expert advice and consultation around those exposures were the two most important aspects of the services provided by our firm.
A critical need
As global wealth continues to grow and families expand both in size and interests, the most successful trusted advisors of family office clients will be those who can evolve and find new ways to provide resources, services, and value that help successful families meet their changing needs. If risk management is not already part of a family office’s overarching financial plan, incorporating an expert insurance advisor into your team is a good place to start.
