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Strategic Collaboration
A well-established RIA firm faced a critical decision: whether to bring administrative family office services in-house or partner with external firms. They engaged our coaching services to gain clarity on their options, and after several meetings, they chose a strategic collaboration that enhanced their role in client relationships without taking on additional risk. Here is a bit of detail as to how they arrived at this conclusion.
The firm had a strong reputation in investment advisory services but recognized a growing demand for integrative family office services among their high-net-worth clients. They were hesitant about the risks associated with bringing these services entirely in-house and sought a solution that would balance client needs, risk management, and profitability.
Our coaching engagement commenced with a thorough assessment of the RIA’s objectives, client expectations, and the specific services they aimed to provide. This included understanding the firm’s risk appetite and current profitability levels.
Next, we evaluated the firm’s internal resources, including personnel, technology, and financial capabilities, to determine their readiness for in-house family office services.
Solutions
The tipping point for the firm was a cross between the understanding that they did not have the capabilities or bandwidth in-house and fee structure. Their current staff was already stretched due to firm growth in their investment advisory business and asking them to not only take on more was not a good option. The firm would also need to hire a new person to oversee the process & procedures, ensure compliance was followed and troubleshoot for the staff handling the workload.
We approached the fee structure conversation by looking at what they would charge and how many clients would need to pay to use the service. There was also some hesitancy in changing their AUM-only fee, though after discussing the human capital and time it would take to serve that many clients, it made sense to look for outside partners.
Once the decision was made, we assisted in identifying potential partner firms that could provide the required family office services based upon a set of client needs. This involved evaluating partners’ expertise, reputation, and alignment with the RIA’s client-centric approach.
Working closely with the firm’s leadership, we helped design a collaboration structure that allowed the RIA to maintain a central role in client relationships while leveraging the expertise of partner firms for specific services.
To address concerns about how the client would perceive the change, we developed a comprehensive risk management strategy. This involved legal agreements, insurance considerations, and clear delineation of responsibilities between the firm and their partners. We crafted communication plans to introduce the collaborative approach to clients whom they thought would be a good fit. This included emphasizing the benefits of the partnership, such as access to a broader range of services and expertise. As client’s began to indicate their interest, we worked with the firm and their partner firms to establish transparent expectations and defined roles to prevent misunderstandings.
Ongoing communication plan was facilitated among all parties to ensure alignment and prompt issue resolution. We then established key performance metrics to assess the partnership’s effectiveness and hold everyone accountable.
The RIA’s strategic decision to collaborate with partner firms for family office services, guided by our coaching services, was a significant success. They not only met their clients’ demands for integrated services but also managed risk effectively. This approach elevated their standing in the eyes of their clients, positioning them as a holistic and trusted wealth management partner.
The collaboration not only met the needs of their existing clients but also attracted new clients seeking comprehensive wealth management solutions. This expansion of their client base further solidified the firm’s position in the competitive RIA industry. They were able to strike a balance between expanding their service offerings and managing risk, ultimately resulting in delighted clients and a strengthened market position.
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