In the family office space, single-family offices frequently call upon the expertise of outside professionals for a number of functions and solutions. Strategic outsourcing is becoming increasingly the norm.
Angelo Robles, founder and CEO of the Family Office Association and author of Effective Family Office, notes: “It is evident that senior management at single-family offices turns to the professionals with whom they are presently working and already have a lot of faith in to identify and provide introductions” to family office directors and associates. Robles goes on to say “[b]ased on a study of 199 single-family offices, this is the case at about nine out of ten of them. The logic of relying on other professionals is both sound and straightforward. First, they have the personal and professional trust of senior management. They also – presuming they are highly competent – are very likely to be connected to various other professionals catering to the ultra-wealthy, the super-rich, and single-family offices.
Robles also notes that “[v]ery importantly, the fact that [outside professionals] are doing business with the single-family office, and are willing to recommend other professionals, is a powerful risk mitigation strategy for senior executives.”
Family offices also rely heavily on referrals from others in the space in order to source experienced professionals. Single-family office execs are vigorously researching their options and taking a proactive approach to sourcing and securing outside expertise. Some 30% of single-family office senior management turns to external individuals with whom they have had good previous experiences. Referrals from senior management at other single-family offices are instrumental to about a quarter of the senior executives surveyed.
On the other hand, referrals from others and unsolicited approaches by professionals outside the family office space are inconsequential to just about all the senior executives in single-family offices of any generation. That is why, for instance, when non-industry professionals obtain supposed lists of single-family offices with the intent of approaching them cold, their efforts prove to be most times completely worthless. Single-family offices are willing to put their trust in those in the industry because of these professionals’ breadth of experience and industry-specific knowledge.
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