Family Wealth: Beyond the ‘First Class’ Lounge
There are substantial differences between commoditised financial services and true fiduciary advice—between being treated transactionally like a VIP and being embraced as a long-term partner, and between stories that sell and strategies that serve.
Overview
Many of the investment disasters of recent years have exposed the risks to family wealth from being dazzled by offers of exclusivity, as glossy brochures and pitch decks lure buyers with a sort of ‘first class’ lounge of financial services.
The frequent pitch to wealthy families is that on the other side of those imaginary velvet ropes of the finance industry are unique products that offer privileged opportunities to generate additional return (albeit at a substantial price).
But when it comes to appearances, Shakespeare’s observations remain as true today as when he wrote them more than four centuries ago: “All that glitters is not gold” and “the world is still deceived by ornament”.
In other words, beware of the shiny. Even the swankiest first class lounge won’t compensate for a miserable journey marred by flight delays, lousy mid-air service and an airline’s inability to get you to your destination safely.
The analogy equally applies to wealth management. Just as who you fly with is as important as where you want to go, who a family chooses to entrust with its wealth is as important as how that wealth is invested.
Let’s look at what all that means in practice:
Substance Over Sizzle
It’s depressingly true that in a marketplace awash with slick sales talk and polished pitch decks, it can be difficult to tell the difference between a truly aligned advice partner and a firm that simply plays the part.
By holding out the promise of exclusivity and the chance to be part of an inner circle, private banks and institutional wealth managers will often appeal to wealthy families who are accustomed to so-called ‘premium offers’ in other areas of life.
But good looks and good outcomes are not necessarily the same thing, particularly when it comes to preserving and growing generational wealth.
So often we see investment programs that lack coherence, strategy, or alignment with a family’s actual needs and long-term goals. These programs tend to be reactive, built from the bottom up around the stories and themes of the day, rather than being anchored in an evidence-based investment framework.
An Approach that Works
A better way of serving families in wealth management is to begin with the people themselves – who they are, what they need and where they want to go. The horizon is by necessity long-term, not the next year or what’s hot right now.
In contrast with the flashy sales approach, the advice should start with a set of principles and beliefs and it should adhere to them. For instance:
- Your capital is a legacy, and should be treated as such. That demands that you take a disciplined, patient, and intergenerational approach.
- Investment governance matters. Defining your purpose, principles, and objectives should be the foundation of a sustainable investment program.
- Evidence beats instinct. Academic research tells us that long-term returns are primarily driven by your asset allocation—not market timing or stock picking, despite what the glossy brochures may tell you.
- Costs count. High fees create a performance drag that even the smartest managers struggle to overcome.
- Volatility is not risk, when you have the time and temperament to ride through it. Use the advantages of a long horizon and financial resilience to lean into durable, efficient portfolios that leave the markets to do the heavy lifting.
- Private markets have a role, but only when aligned with your program and when you are properly diversified. Illiquidity, complexity, and long timeframes demand a sober, considered approach, not excitability.
Beyond Investment Advice
Of course, family wealth, effectively managed, is about more than investment advice and the construction of a portfolio. Advisers ideally should be sounding boards for families, providers of structure, and guides across generations.
Advisers need to understand your goals, values, and aspirations—not just for this year, but for decades to come. From this discovery process, they can help you articulate your family’s investment beliefs, design a governance framework, and implement an investment program that aligns with your purpose.
For families with complex needs in areas like intergenerational decision-making, philanthropic aspirations, or shared assets, clarity is needed as much as advice. Everyone needs to understand the “why” before the “how”. Doing this means your wealth has the best chance of supporting both financial and family continuity.
A Checklist on Family Wealth
From all this it should be clear that there are substantial differences between commoditised financial services and true fiduciary advice—between being treated transactionally like a VIP and being embraced as a long-term partner, and between stories that sell and strategies that serve.
We understand that it can be confusing trying to compare wealth management offers. But if you are considering your options or reflecting whether your current arrangements truly support your family’s best interests, there are a few questions you might like to ask yourself:
- Do I understand the purpose behind our investment strategy?
- Is our capital being managed within a coherent, disciplined framework?
- Are we focused on what works—or what feels good in the short term?
- Are we being sold products, or receiving advice?
- Are we working with a firm that listens first, and acts second?
As always, finding the right partners and generating the best outcomes usually starts with asking the right questions, like those above.
With all that in mind, why not give Minchin Moore a call? We would be pleased to explore these questions and others with you. At the very least, talking with us should give you greater clarity than what you have now.
Perhaps it’s time to think beyond the first class lounge to your whole journey.
