Is list of elite wealth managers a model for the future?

Preferred-provider roster from FOX based on quality, not size of firms; must pass muster on 22 metrics
AUG 01, 2012
The Family Office Exchange, which counsels some of the wealthiest families in the world, has assembled a preferred-provider list of wealth managers for families with more $20 million in investible assets. “There isn't an easy way for wealth owners — particularly those with new wealth — to get a list of quality advisers to choose from,” said Sara Hamilton, founder and chief executive of the Family Office Exchange Ticker:(FOX). “The existing rankings of firms in the market are typically based on size, not on the quality of the advice being offered.” The idea was inspired in large part by some of the more than 300 members of FOX. “Our members are interested in having more-informed clients,” Ms. Hamilton said. “Many families are confused by the offerings in the financial industry.” The rankings are based on 22 metrics organized around 10 criteria, including the financial stability of the firm, the competence of senior management, the experience of adviser teams, the ability to invest globally and the discipline of the firm's investment process. It's unclear whether FOX's approach might catch on in other areas of the financial industry. Indeed, Ms. Hamilton noted that families with extraordinary wealth need extensive guidance from their financial advisers, including help with estate and tax planning, with philanthropic activities, bill-paying service and financial education for their children. Several studies have shown that a high percentage of very wealthy families lose their wealth by the second or third generation from the original wealth creator. The key to making the grade, according to Ms. Hamilton, is not just that firms have the capabilities to serve wealthy families but that they integrate them in a way that meets expectations. The directory currently comprises 30 firms — 22 of which are members of FOX. Ms. Hamilton anticipates that the list will grow larger as her organization analyzes more wealth management firms and more firms seek reviews. “We expect to have over 100 firms on the list as word gets out about what we're doing,” she predicted. Basic profiles of firms on the list are created for free. However, firms with more-extensive listings, including video material and question-and-answer sessions with senior management, will pay a small fee to FOX” — less than the cost of an ad in a magazine,” Ms. Hamilton said. The oldest firm on the list of 30 is Credit Suisse Group, which was established in 1856. The newest firms that made the grade are Covenant Multifamily Offices LLC and Pathstone Family Office LLC, both launched in 2010.

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