A New Company Highlights the Compliance and Governance Implications of Serving the UHNW Segment

Launched Earlier this Month, Family Office Resource Group Seeks to ‘Disrupt’ the Industry

In recent years, a growing cavalcade of advisors have sought to increase their appeal among ultra-high-net investors. It doesn’t take a genius to figure out why. 

For one, such clients represent an enormous opportunity that, if handled properly, could shift the fortunes of any firm. 

Secondly, the demographic is growing explosively. According to a recent report, the number of UNHW individuals grew by more than 4% in 2023 and is estimated to expand by nearly 30% over the next five years. 

Yet, it’s one thing to want to serve clients like that but quite another to actually be able to do it. A recently launched company says it can help the industry solve this complicated dynamic.

The Family Office Resource Group, or FORG, is led by Brian Weiner, who has decades of experience in the space. Aside from being the founder and CEO of FORG, he holds the same titles at ExCel Global Family Office and has served as a family office consultant for decades. 

In a release earlier this month, Weiner said the company “will disrupt the wealth management industry,†claiming that it fills a “huge void†in the market created by demanding wealthy clients with complicated needs and the relatively few wealth management professionals working today who can meet them. 

Having spent most of my career supporting compliance and regulatory governance across the industry, I’m intrigued by the compliance implications posed by trying to serve UHNW investors and how the company may be able to partner with advisors and firms to navigate them. I had a chance to chat with Weiner about these issues. 

What are the biggest governance, compliance and risk (GCR) priorities for family offices and multi-family offices?

Weiner: It seems to me there are some differences between the biggest GCR priorities for family offices and those for more regulated entities such as multi-family offices. For instance, in the past 12 to 18 months, the SEC has established more stringent rules and guidelines on aggregated reporting as well as operational due diligence reporting requirements. 

These new requirements will make it more difficult for most multi-family offices to provide certain customized reporting solutions to their clients in the same way they have done in the past. One of the more important areas of this intersection in terms of GCR priorities for family and multi-family offices is in the area of tax mitigation. 

For example, depending on the election results, the possibility exists that the current estate tax limits will sunset in 2025. This could have broad implications for multi-family office and family office clients. We have also seen the IRS re-evaluate intentionally defective grantor trusts. As a result, multi-family offices and family offices must prioritize identifying alternative tax mitigation strategies before any changes occur.  

How does this contrast with GCR considerations for RIAs and other wealth management businesses, which have historically focused more on high-net-worth and mass-affluent clients? 

Weiner: For one, UHNW families have much more to mitigate from a tax perspective. For example, while removing the step-up in basis would undoubtedly impact high-net-worth families, such a move would have a much more dramatic impact on UHNW families, whose estates are larger. 

Further, unlike HNW clients, UHNW clients generally have exposure to multiple jurisdictions, resulting in additional government filing requirements as well as regulatory regime compliance. 

Further, UHNW clients tend to have outsized exposure to alternative investments. In fact, I would say that the majority of family office investments are not held in stocks and bonds but in alternatives, such as real estate, companies, funds, etc. 

How does FORG help RIAs, IBD-backed corporate RIAs and other businesses ensure they have everything they need to partner with UHNW advisory professionals regarding GCR-related considerations?

Weiner: FORG is an industry game changer that collaborates with wealth management firms to provide the services and advice that UHNW clients want and need the most. The company is a leader in providing those services to RIAs and broker-dealers that have neither the expertise nor the bandwidth to build in-house. 

Up until now, these types of services have only been offered by organizations and people with different skill sets, compensation structures and job titles. Some of the individuals also are not securities-licensed, which only further complicates housing these vastly different resources in-house. 

From outsourced accounting and CFO services, comprehensive reporting, risk mitigation, estate and philanthropy consulting, next-generation financial literacy education, identity theft and cybersecurity protection to SPV administration, FORG is there to provide all those services our clients need in an easily scalable private-labeled partnership.