Family Office Capital Raising Advice
I often get asked how a fund should effectively work with a family office to slowly grow a relationship and be considered for an allocation. Many funds are interested in raising capital from family office wealth management firms because just a hand full of successful relationships may significantly raise the total assets under management for the firm.
Family Office Definition: A family office is a wealth and financial management firm setup to protect and grow the assets of single wealth family or group of families and wealthy individuals. Typical multi-family office clients have $30M or more in assets each, while many single family offices manage well over $250M in assets. The services provided by many family offices includes tax preparation and planning, wealth transfers, portfolio management, budgeting, real estate management, and insurance services. Many family offices exist because they offer a full spectrum of services which ensure that the client's total financial picture is taken into consideration before decisions are made.
Tips on how to work with family offices:
- Many family offices are called daily by asset managers looking to build relationships, try to be local, different, more professional or more organized while meeting or working with family offices.
- Focus on providing details on your team, competitive advantage and risk management process, a 7+ year track record or better will set you apart from many.
- Similar to many other types of investors, Capital preservation and consistency usually will take precedence over volatile high returns.
- High performance returns alone does not gain you any ground with a family office, in fact too high of returns may simply appear as risky and typically the most inexperienced fund mangaers concentrate their relationship development efforts on touting their high performance returns.
- There are over 2,000 family offices in the United States alone, if you have gained some traction within this space it would be wise to allocate 30% of your time to this distribution channel and assign someone to help grow assets within this space. There are so many family offices to grow relationships with that anything less than a concerted effort using a dedicated professional and database of family offices may not be worth it.
- Communicate through multiple channels. Sometimes sending a folder on your company, a well thought out but very concise email and then a phone call can be most effective while building a new relationship. Using these other marketing tools instead of just simply blasting out emails or calling everyone can make for a more productive relationship.
- Do not call a family office that you would like to work with on a daily basis, they are relatively small organizations and do not have the time to work with groups which do not provide them with the professional consideration and space to reply in time to incoming requests. While I raised capital from wealth management firms and family offices we would touch base and follow up with these firms every week and a half, this way we try to stay on top of their minds without bugging them too much.
For a database of family office contacts please see FamilyOfficesDatabase.com, for a free-to-access collection of articles on family offices please see FamilyOfficesGroup.com.