This news service talks to Family Office Exchange, and also reflects on the network of such groups and the role they play in the North American wealth management landscape.

Coping with the unexpected death of its president, succession issues, increased competition and an exodus of senior management leaders, the Family Office Exchange is “in the middle of a transition” and may look very different next year, according to its chief executive officer Peter Moustakerski.

“Who FOX is and what we do” is being “re-visited” and “may not be the same in the future,” Moustakerski told Family Wealth Report.

The 33-year old membership organization for family offices and service providers has had a bumpy ride recently. Glen Johnson, who was just named president one year ago, died unexpectedly over the summer and FOX’s two previous presidents, Bill Sullivan and Alexandre Monnier, both exited within the two previous years.

In addition, the organization is facing new and well-funded peer-to-peer group rivals such as Forge and R360 who are competing for the allegiance – and dollars – of ultra-wealthy individuals and families. And as FOX founder and CEO Sara Hamilton enters her mid-70s, the organization is in “the early to mid-stages” of a family business ownership transition, according to Moustakerski.

“Succession is a key issue for FOX right now,” said Brian Hughes, a veteran UHNW industry consultant who is also on the executive committee of the Southeastern Family Office Forum. “They still have credibility but I will be curious about their trajectory.”

Business model review
To replace Johnson, FOX named Gaby Griffin and David Toth, both members of the organization’s senior leadership team and former industry executives, as interim co-presidents.

The new senior management team is in the process of “restating” FOX’s mission, according to Moustakerski, emphasizing “private family capital” as an underutilized resource that wealthy families can effectively deploy for both social good and profit – with FOX’s assistance.

To date, FOX, which has 380 family and 120 service provider members, has relied on membership dues, which can range from approximately $20,000 to $80,000, and consulting fees for revenue. To diversify its sources of income and leverage its three primary attributes – resources, knowledge and connections – the organization is considering “building new businesses…and different delivery models,” Moustakerski said.

As examples, he cited new online electronic learning services and directories, and making service and product recommendations to members “at scale versus a one-off basis.”

Pay-to-play?
FOX has come under criticism for, as one veteran family office executive put it, “being, or at least appearing to be, a ‘pay-to-play’ platform for its advisor members.”

Moustakerski denied the charge, responding that advisors and vendors offering services were carefully screened and curated. “No one can come in without being worthy of attention,” he said. 

The new co-presidents also strongly defended the organization’s integrity. While “ideally we want to work with people within the FOX membership,” Griffin said, “not everyone we recommend is a member. We’ve never said ‘no’ if [a qualified service provider] is not a member.”

According to Toth, FOX’s “learning-based” environment isn’t conducive to salesmanship. “Coming in to hawk your wares doesn’t work in this space,” he said.

Bright spots
FOX has found success facilitating investing opportunities among members, including a new “direct investing network” and establishing connections for private market investing. 

And the organization’s research and educational and training programs remain in high demand. “There’s not another organization who can match the scope and depth of our membership-based services,” maintained Toth.

FOX “continues to be a valuable resource,” said Wally Head, principal of Personal Fiduciary Advisors, describing its “programming and facilitated interaction among family members and family office staff [as] being particularly beneficial.”

To counter mounting pressure from competitors, FOX has increased its leadership councils, which bring members together to exchange ideas on topics ranging from investing for family offices to running a business. 

“Peer networks are a significant part of what we do,” said Griffin. “Families are seeking more and more assistance. We’ve been around a long time and members know they’re in a trusting environment.”

Peer-to-peer challengers
Nonetheless, wealthy individuals and families are being courted more aggressively than ever. 

Forge, which began life as an initiative at Fidelity International a decade ago, now boasts that it is “the fastest growing peer-to-peer network of single family offices” with over 1,100 members – and pointedly claims that it “allows no play-to-play.”

R360, launched this spring by Michael Cole, former national director of Wells Fargo’s Family Wealth Group, and Charles Garcia, a former chair at Tiger 21, is banking on exclusivity to attract like-minded UHNW members who want to rub shoulders. The organization says it “isn’t right for most people” but claims to be by invitation-only “if you’re one of us” – and can afford a reported down payment of $180,000 to join and a net worth of $100 million.

And industry stalwarts including Family Wealth Alliance and Campden IPI offer families, advisors and vendors still more options.

While FOX is well positioned to fend off emboldened rivals, the organization can’t rest on its laurels, industry executives say. 

“FOX has been innovative, but to remain relevant they have to up their value proposition,” Hughes said. “There’s so much free information out there. The question they have to answer is: Why should families pay them?”