Understanding Two Common Approaches to Third-Party Service Integration in a Family Office Environment

In the world of family office services—especially at the administrative level—it’s common to encounter situations that require specialized expertise outside the core competencies of your internal team. Whether it’s tax preparation, cybersecurity, payroll, or private medical access, families rely on a network of professionals to address their wide-ranging needs.

This leads to a key decision: Do you refer the client to an external provider, or do you outsource that function on the client’s behalf?

While both approaches involve third-party involvement, they are not the same, and the difference has significant implications for the client experience, accountability, and outcomes.

Let’s explore what each model entails—and why choosing the right approach matters.

What Is “Referring Out”?

When a family office or advisory firm refers out, they provide the client with recommendations—usually a list of names or firms—and leave the next steps to the client.

For example:
“We don’t do tax preparation, but here are three CPAs we trust. Let us know who you decide to work with.”

In this model:

• The client contacts and hires the provider independently
• The family office may or may not be involved in ongoing communication
• The client manages scheduling, deliverables, and expectations
• Responsibility for the outcome rests with the client

Pros:

• Simplicity for the service provider
• Clear division of responsibility
• Allows the client to make their own choice

Cons:

• The potential for fragmented communication
• Risk of misaligned timelines or incomplete information
• The burden of coordination shifts to the client
• Lower control over quality and consistency

This approach works best when the task is low-risk, one-time, or when the client has the time and inclination to manage the relationship directly.

What Is “Outsourcing”?

When a family office outsources, they remain at the center of the process. The office identifies and contracts with a vetted provider but manages the relationship on the client’s behalf.

For example:
“We’ve engaged a CPA from our vetted network. We’ll coordinate tax document delivery, scheduling, and ensure the filing aligns with your broader financial strategy.”

In this model:

• The family office is the point of contact for both the client and the service provider
• The office oversees timelines, communication, and deliverables
• The client may never need to speak directly with the external provider
• Responsibility for experience and outcome is retained by the family office

Pros:

• Seamless experience for the client
• Greater consistency in service delivery
• Higher level of integration with other advisors and workflows
• Increased trust and perceived value

Cons:

• Requires more internal capacity and oversight
• Greater responsibility if expectations aren’t met
• May require clear delineation of liability or service boundaries

This approach is ideal when the service is ongoing, sensitive, or integrated into broader financial or administrative functions—such as bill pay, tax planning, or project management.

Why the Distinction Matters to Clients

From the client’s perspective, the difference is friction. Referrals create tasks. Outsourcing removes them. 

Families often turn to a family office precisely because they’re seeking to reduce complexity, avoid gaps in communication, and focus on the big picture. When they are left managing third-party relationships on their own, it can undermine that goal.

Clients may experience:

• Missed deadlines, when no one is clearly managing the timeline
• Duplicated efforts, such as re-explaining their financial history
• Advisor silos, where professionals operate in isolation
• Unclear accountability, when expectations aren’t met

By contrast, when outsourcing is done well, clients experience:

• A single point of contact
• Coordinated decision-making
• Fewer requests for information they’ve already shared
• A sense that “someone is managing this”

How to Decide When to Outsource vs. Refer Out

Ask the following questions:

1. How critical is the service to the family’s financial or personal continuity?
   • Tax filings, payroll, and cybersecurity may require closer coordination.
2. Does the service intersect with others you’re already providing?
3. If reporting, bookkeeping, and CPA services all overlap, outsourcing improves alignment.
4. How much time and effort will the client need to invest if you refer out?
5. For busy or overwhelmed clients, even simple tasks feel burdensome.
6. Do you have trusted providers who already understand your clients and workflows?
7. A vetted outsourcing network can maintain quality while keeping the family office at the center.
8. What level of control or risk are you willing to take on?
9. Outsourcing implies responsibility, so be sure you have the structure to support it.

In Summary

Both referring out and outsourcing have their place in the delivery of family office services. But when it comes to client experience, consistency, and long-term trust, outsourcing often provides a more seamless and integrated solution.

Ultimately, the choice comes down to what best supports the family’s goals—and whether your team is prepared to own the outcome or simply make the introduction.

As families grow in complexity, their desire for fewer touchpoints, fewer decisions, and fewer loose ends only increases. At White River Consultants, we focus on making our clients’ lives easier so they can focus on the things that matter most to them.The more that firms can meet that expectation with thoughtful outsourcing, the more valuable—and indispensable—they become.