Investment advice and family office services and solutions

We work with single family offices and multi-family offices worldwide to provide investment research, tools, advice, and implementation solutions that are designed to achieve investment goals. Whether your objective is to diversify through private markets, invest more sustainably, or minimize your family’s investment risk, our team can help you meet these goals. 

No two families are the same and each family office faces a unique set of investment challenges, differing goals and timelines. Servicing these needs requires utilizing timely research on investment opportunities and managers, accessing top quality private market investment opportunities, sourcing opportunities to invest, all while keeping up with evolving reporting requirements and maintaining robust governance. 

Central to this is a deep understanding of the complexities around managing family wealth and recognize that you require a high-level of customization and flexibility. Building a more enhanced portfolio structure begins as Mercer works with the family office and each individual family member to understand specific needs and develop customized investment plans that align with specific objectives, risk tolerances, and time horizons. Our advice and family offices services and solutions span a range of asset classes and strategies – including traditional investments such as equity and fixed income, or alternative assets such as private equity and real-estate – and are designed to manage risk-adjusted returns and aim to preserve your capital over time. 

Leveraging Mercer’s global research capabilities and market insights, we can help you identify investment opportunities that may otherwise be unavailable. With a focus on transparency, risk management, and performance monitoring, we strive to deliver exceptional programs that helps you navigate the ever-changing investment landscape and help achieve your financial objectives. 

Common goals for family offices

By incorporating environmental, social, and governance (ESG) factors into your investment strategy, you could potentially achieve both financial returns and positive societal impact. This could involve investing in sustainable and responsible companies or supporting impact investing initiatives.

Implementing strong governance structures is essential for the effective management, oversight, and evolution of a family office assets. By prioritizing best practice governance that is aligned with their specific needs, family offices can help manage the long-term success and sustainability of their investment strategies. 

Growing and preserving wealth for future generations requires a long-term strategy.  Consider opportunities with stable cash flows, such as real estate or infrastructure, and allocating capital to long-term growth opportunities, such as private equity or venture capital.

Diversifying investments across asset classes, sectors, and geographic regions can help reduce risk and protect the family’s wealth from market volatility and economic downturns, while allowing for potential gains from different investment opportunities.

Engaging an external investment manager or advisor could help you fill the gaps in expertise or resources and provide you access to investment opportunities otherwise not available. It can help you navigate the complex investment landscape, ever evolving regulations and cumbersome reporting requirements.

Conducting thorough research and due diligence can help each family member understand potential risks of any investment opportunities. Investors should understand the health and stability of the investment opportunity, evaluate the management team, and understand market dynamics.

It is important to regularly analyze the performance of individual investments, assess the overall portfolio diversification, and identify necessary adjustments or rebalancing. You should stay informed about market trends, economic conditions, and regulatory changes that may impact your investments.

Common questions from family office investors

When evaluating a potential investment opportunity, there are several key factors to consider. These include the financial health and stability of the investment process and team, the track record (and probability of future outperformance) and expertise of the management team, the market dynamics and competitive landscape, and the potential risks and returns associated with the investment. It is also important to assess how the investment aligns with your long-term goals, risk tolerance, and values. Conducting thorough due diligence and seeking advice from investment professionals can help you make informed investment decisions.

Diversification is a crucial element in managing investment risk. To effectively diversify your investment portfolio, you should consider spreading your investments across different asset classes, sectors, geographic regions and levering many different return drivers. This helps to reduce the impact of any single investment on your overall portfolio performance. It is important to analyze the correlation between different investments to ensure they provide true diversification. Additionally, regularly reviewing and rebalancing your portfolio can help maintain an appropriate level of diversification over time.

Risk management is a critical aspect of investment decision-making. It involves identifying, assessing, and mitigating potential risks associated with investments. By implementing robust risk management strategies, you can help minimize the impact of adverse market conditions. This may include setting risk limits, diversifying your portfolio, using hedging strategies, and regularly monitoring and reviewing your investments. Effective risk management helps to ensure that your investment decisions align with your risk appetite and long-term goals.

Aligning investments with your family’s values and mission can be achieved through incorporating environmental, social, and governance (ESG) factors into your investment analysis and decision-making process. This may involve investing in companies that demonstrate strong ESG practices, supporting impact investing initiatives, or engaging with companies to drive positive change. Working with investment managers who specialize in sustainable and responsible investing can also help you align your investments with your values. By integrating ESG considerations, you can pursue both financial returns and positive societal impact.

Engaging professional investment advisors and managers can bring several benefits to family offices. These professionals have expertise, experience, and access to a wide range of investment opportunities. They can help you navigate complex investment landscapes, conduct thorough research and due diligence, and provide ongoing portfolio management. Professional investment advisors and managers can also offer valuable insights, market intelligence, and risk management strategies. By working with trusted investment partners, you can potentially refine your investment strategies, broaden your investment universe and make informed decisions based on your unique needs and goals.

Implementing best practice governance in your family office can enhance its effectiveness in several ways. It ensures clear organizational and committee structures, including external members for diverse perspectives. Best practice governance involves developing comprehensive policies and documentation, such as investment and risk policies, to ensure transparency and accountability. Peer review analysis and operational due diligence reviews of third-party managers and custodians help maintain high standards. Having a well-functioning investment decision process, family offices can improve returns, mitigate risks, and ensure long-term success and sustainability.

Investment advice for a single-family office

An anonymized example of how we worked with a single-family office in the US.

This single-family office started with an investment pool of US$2 billion, supporting 3 generations. The family office was responsible for managing a significant asset pool consisting of a foundation, as well as the interests of individual family members. The asset pool was initially funded by a bequest primarily consisting of a single stock position, resulting in a concentrated portfolio. 

As the family moved into its third generation with additional stakeholders, the governance demands of the family office increased significantly. The individual family member investment objectives began to diverge.  In addition, their investment beliefs emphasized concentrated positions,  high conviction, and active management, which further added complexity to the portfolio management process. 

Working with the family office for more than fifteen years, we designed a manager of managers structure, differentiated by asset class, to provide a menu of options for the family and foundation to build a custom diversified portfolio while limiting the number of new managers to monitor. Our approach involved leveraging our capabilities and selecting managers for the family office’s traditional asset class pooled vehicles by reviewing legacy managers and proposing new managers.  

The investment strategy evolved and now includes direct private equity and private real assets. Mercer supported the family office in implementing its new investment strategy with a diverse set of “highly rated” specialist investment managers. We have also supported the foundation’s evolution in governance, the addition of external advisory committee members, and designed a diversified portfolio to complement the concentrated equity position.  

We have developed bespoke reporting elements and model portfolios for the family office to monitor and inform the family members of individualized investment options, investment performance and Mercer’s views on all managers.

How we helped with governance:

  • Set the agenda and help drive the discussion at investment committee meetings.
  • Advise on strategic planning, governance, and asset allocation decisions.
  • Help construct pooled manager of manager vehicles. 
  • Monitor current asset managers and source and review new opportunities, including private funds.  
  • Provide monthly and quarterly performance reports.
  • Offer operational support for private fund subscriptions.

What has the family office achieved:

  • Successfully implemented a flexible governance structure whereby the family members have inherent flexibility in their approach and adapt their investments according to their individual preferences. 
  • Reduced their risk by improving diversification of the portfolio.

Investment solutions to suit your needs

  • Implementation and OCIO

    We can help you define, develop and implement your investment strategy by addressing areas such as governance, risk, sustainability and diversification. We flex our services to suit your needs and help you achieve your investment goals.
  • Sustainable investments 

    We help you build a sustainable investment strategy that integrates environmental, social and governance (ESG) considerations; diversity, equity and inclusion (DEI) factors and seeks an optimal mix between positive change and favorable returns.
  • Alternative investments

    Leveraging our existing relationships with hundreds of asset managers around the world, we can help you identify and source new investment strategies, opportunities, ideas and innovations across private markets and hedge funds. 
  • Strategic research 

    Become a member of the MercerInsight® Community today to get access to strategic research from hundreds of thought leaders around the world, including Mercer and third-party publishers. It’s complimentary and easy to join.
  • Asset manager research 

    By subscribing to MercerInsight®, an alliance with eVestment, you can gain access to data, analytics and our forward-looking research on asset managers and thousands of investment strategies across both public and private markets. 
  • Managing investment risk

    Our Mercer Sentinel team can help you conduct due diligence and mitigate operational risks across your portfolios and strategies. We assess asset managers, custodians and other service providers to help you deliver on your governance objectives.
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