Strengthening Your Advisor Ecosystem

Every family office works with a variety of external advisors. In this 2011 FOX Fall Forum presentation, a multi-family office CEO and a single-family office CEO shared their perspectives on managing a family’s advisor ecosystem.

• The advisor ecosystem is defined as the network of personal and professional advisors who work to help the office staff and family members meet the family’s goals. An evolutionary model for this concept is explored. 
• Distinguishing between fiduciaries and product providers, understanding their roles, and managing relationships appropriately is key. Fiduciaries include financial advisors, accountants, and attorneys. Product providers include trust companies, brokerage firms, money managers, insurers, real estate investment trusts, mutual funds, commercial banks, private banks, and hedge funds. 
• The need to re-establish trust means that secular trends driving the separation of advice and product will continue. Demand for world-class, unencumbered products and services will continue. Demand for uncompromising, unconflicted advice will accelerate. 
• Strategies for evaluating advisors vary depending on the services provided and the nature of the relationship. The importance of a solid process for selecting an advisor in the first place is underscored. 
• Ecosystems are dynamic interactions among different individuals working together as a functional unit. Ecosystems will fail if they do not remain in balance. Every individual within an ecosystem has a role to play. 
• For individuals dedicated to the sustainability of the family enterprise, the focus should be on optimizing the ecosystem to achieve balance and sustainability. Optimization involves “leveling the playing field” by filling the knowledge gaps between sellers and family need.