The Value of Outsourcing in Multifamily Offices

A multifamily office is a firm that uses both internal and external resources to deliver comprehensive services to the select groups of wealthy individuals and families it serves.

The multifamily office model enables a firm to deliver value to its clients by focusing on the strengths of its own in-house professionals and delegating other business services and products to outside professionals who are better equipped to perform those functions at a higher level of expertise, a potentially lower cost, or both. You are under no obligation to use the services of any of the entities referred, and may choose any qualified professional to provide tax, CPA, legal, real estate, insurance or trust services. These entities and their services are not affiliated with LPL Financial and Impact Financial Wealth Management.

Similarly, a virtual family office is a single office with a small core of professionals, who supplement their own expertise with a diverse network of specialists who are on call to handle a broad range of client needs.

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Common Outsourced Solutions

According to 2018 data from the Family Office Association, 85% of multifamily offices say they have significantly increased their use of outside resources to supplement their in-house capabilities over the last five years.

Some of those outsourced services include:

  • Outside money managers for wealth management (used by 93% of multifamily offices)
  • Wealth planning (used by 55% of multifamily offices)
  • Life insurance commissions (accepted by 88% of multifamily offices)
  • Administrative services (used by 83% of multifamily offices)

By leveraging the strengths of its own team and capitalizing on the expertise of outside resources, a multifamily office can seek to maximize efficiency, lower costs, and give its clients access to a broad range of expertise and services, centrally managed by one firm, to pursue desired outcomes and help them address their goals.

The Future of Multifamily Offices

According to the Family Office Association, 82% of multifamily offices expect to use external experts “very extensively” in the future as a way of delivering more diverse services and financial product offerings to their clients.

That’s good news for the entrepreneurs and investors that use multifamily offices, because they will continue to deal with the advisory firm they know and trust while simultaneously gaining access to a broader range of financial products and services, delivered by people and companies with specialized expertise in each specific area.