Since 2017 there has been a rise in the number of family offices, as individuals and families of significant wealth increasingly seek wealth maintenance services to preserve, grow and administer their fortunes.
This growing sector is not only an attractive segment for private wealth management consultancies. In recent years it has also become the target of an increasing number of entrepreneurs seeking private funding and service professionals specializing in a range of disciplines who seek to become trusted suppliers in this space. Yet, due to the traditionally opaque nature of the family office landscape, it is often challenging to get introductions to key players in this space, never mind build and maintain relationships with them.
Targeting this wealth channel not only involves identifying the critical role players in the family office space. It also requires an understanding of the family office’s unique purpose and decision-making drivers to determine whether alignment exists and if it does, to create sufficient value and communicate it in ways that build relationships and close deals.
Identify and connect with key players in the family office space
To develop relationships with key players in family offices, they must first be identified. Networking in this space was once dependent solely on leveraging colleagues and contacts at family office conferences. Even then, getting the ball rolling on deals was difficult due to the discreet nature of family offices and the fact that potential deals were not openly discussed or even proactively sought from sources other than trusted advisors.
This, however, is a dynamic that is rapidly changing. Not only are many family offices now employing in-house origination staff to source unique investment opportunities and deals. This makes research and networking an increasingly important exercise for these teams.
Therefore, there are two ways to go about getting on the family office radar. The first is organically by gaining customer traction by providing a unique product or service or being best-in-class in a specific sector. The other is through digital outreach where various family office portals and data providers data providers could also be of assistance.
The primary goal of the latter should be to explore commonalities with these individuals. In addition to looking for things like shared alumni roots, similar career development pathways, employment at specific companies, and commonly supported interests and charities, entrepreneurs and consultants can also look for indications of hobbies or passions shared outside of work. According to FINTRX data, these factors can all serve as productive ways to start meaningful conversations when connecting online.
Understand the family office’s purpose and identify areas of alignment
Trends and strategies are continually evolving within the family office landscape. Each family also has a unique purpose, as well as many subtle intricacies that influence the internal decision-making process. All of which can present unpredictable factors that can affect the success or failure of entrepreneurs and professionals’ initial approach strategies.
It’s therefore essential for those seeking to engage with family offices to do extensive research on the family office of interest. Begin with a thorough analysis of the family office in question’s portfolios to determine where they invest and whether your interests are aligned in any way. Next is to understand their unique purpose. Knowing why a family office invests or operates the way they do can further help you to establish whether alignment to the same goals is present.
This is important because investors who are well aligned to their investments, ultimately play a significant role in success. Adapting an offering only to land the investment or business is a mistake because when this is the only motivation when challenges inevitably arise down the line, it can make the difference to the longevity and sustainability of the business relationship down the line.
Create value, communicate and close
Once alignment of purpose is established, entrepreneurs and consultants can identify unique ways in which they can add value to the family office in question.
In identifying these, it’s crucial not only to show how a service offering or investment opportunity is different from the rest but also how it can work for the family office. Can an investment help to diversify their portfolio or build their family legacy through supporting an impact cause? How does a product or service offering add value that others don’t – does it address a family-office specific problem or one that could arise in the future, or can it somehow improve deal flow? Does it encourage next-generation engagement? Don’t only think about present problems or issues but also potential future ones. Now more than ever, it’s vital to look into the future and find ways to create value.
Once an investment, service offering, or product’s unique value-adding qualities have been identified, this can be used as part of outreach efforts and pitches. Like any business, when a family office believes an offering could be of value and address a need or solve a specific problem, they are more likely to give it time and consideration.
It’s also vital that entrepreneurs, fundraisers and consultants develop communication strategies to present, deliver and follow-up on their initial outreach and pitch efforts. These should be tailor-made according to the family office’s profile. Establishing solid connections with those working in family offices on digital media can give some insight into what these are if they’re not initially evident during the research phase. Staying connected, memorable and relevant to all role-players post-presentation is often achieved by providing actionable information and resources that drive value and decision-making. It’s often also what helps an entrepreneur or consultant close on an investment or business opportunity.
While breaking into the family office fundraising space remains challenging, progressive growth within the private wealth sector, as well as significant shifts towards transparency, are making these entities more accessible than ever before. The key to connection lies within tailored, intelligent communication and adding value where others can’t.
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