In times of volatility, it’s prudent for investors to over-index on risk management, and that’s where real estate stands apart compared to other private market asset classes of private equity and private credit. According to a recent analysis by the Pension Real Estate Association, real estate was the only private asset class studied that helped portfolios maintain diversification during severe equity market downturns. It also often delivers stable or positive returns during bond market sell-offs. For RIAs, often the challenge is being able to select investment managers that have the ability to manage for downside risk across market cycles in a way that also captures long term value and aligns with the client’s alternatives allocation. Select sophisticated family office investment platforms are emerging as one compelling avenue to accomplish this objective. By combining institutional rigor with long-term, flexible mandates, these types of platforms can offer RIAs access to high-quality private real estate portfolio strategies that support income generation, capital preservation, growth, and multi-generational wealth planning.
To navigate this space effectively, below are five important questions that RIAs should consider when evaluating a potential private real estate investment management partner.
1.What is your investment philosophy?
Deeply understanding investment philosophy is important. Committing time to exploring the nuances will ensure complementary allocations for private real estate and achieve a wider range of the client’s targeted outcomes. For example, some family office platforms operate with a “total return” versus a “buy and hold” strategy. A total return approach balances capital preservation and income with opportunistic growth as compared to a buy and hold strategy focused on generating steady income and long-term capital appreciation. Both might play a role in generational planning but require different management styles (i.e., active vs. passive) and have different liquidity and tax implications in client portfolios. Because they are often not subject to the same types of fund constraints as traditional managers, family office platforms will often perform more frequent “hold or sell” analyses, optimizing their flexibility to exit investments and capture value within and across cycles, geographies, and the capital structure on behalf of your clients.
RIAs should ask whether the platform emphasizes long-term alignment, disciplined underwriting, and active management. They should also ask if the approach is tactical or strategic. Do they aim to preserve wealth through conservative positioning? Are they seeking to capture outsized returns through opportunistic investments? Both? Those types of questions are important to figure out because an investment philosophy that is transparent, consistent across market cycles, and driven by research, is generally a good sign of a well-structured platform.
2. How do you source, underwrite and structure deals?
In private real estate, access and execution matter just as much as the strategy does. A strong platform typically relies on deep relationships with operators, developers, and regional sponsors to source deals. Often times, opportunities can be identified before they even reach the broader market.
Underwriting practices should be robust. They should incorporate detailed asset-level analysis, market fundamentals, and also should focus on downside scenario planning. A family office platform can often offer expertise in underwriting and structuring the often dynamic – and tax sensitive – elements of a thoughtful real estate allocation from public and private REITs, Delaware statutory trusts (DSTs) or qualified Opportunity Zone (QOZ) funds to direct investments – and simultaneously identify additional ways to provide downside protection in an allocation.
RIAs need to know and understand how deals are selected and vetted. Also knowing how deals are structured will help provide insight into the level of risk management, diligence, and discipline behind the portfolio.
3. How do you balance risk and return?
Balancing upside potential and downside protection are the two things that define what successful short and long-term investing looks like. Sophisticated family office platforms, for instance, can lean into strategies that offer asymmetric return profiles, where potential gains outweigh downside risk. This can include focusing on well-located assets with distressed capital structures or investing across different points in the capital stack to optimize for both income and resilience.
Platforms that operate without the pressure to deploy capital on a fixed timeline can also be positioned more positively because they can wait for the right opportunities, rather than chasing returns in overheated markets.
RIAs should also evaluate how a partner defines and measures risk and whether they actively diversify across asset types and geographies. Understanding answers to questions like how they adjust strategy in response to market cycles is key. The ability to think both tactically and strategically is often what sets family office platforms apart.
4. What is your governance and reporting structure?
The inherent nimbleness and flexibility of family offices is a key advantage when shaping investment strategy. This philosophy should not apply when it comes to the structures and processes that guide family office management, but balancing agility and good governance is something that many leaders within these entities continue to struggle with. In fact, the majority (86%) of family offices in a 2024 Ocorian study state that “having the right governance in place” is their number one challenge.
Therefore, RIAs should look for family office platforms that offer institutional-grade governance, which should include:
- Registration with the SEC
- A dedicated compliance officer
- Formal investment committees
- Third-party fund administration
- Third-party audits and valuations
- Independent advisory boards
- Robust due diligence materials at the firm and fund level
- Real-time, secure portal-based access for timely reporting.
5. How do you ensure that your investment strategy and structure align with my clients’ values and investment goals to preserve and grow their generational wealth?
Intentionally structured RIA-family office platform partnerships can add value to all stakeholders and deliver strong risk-adjusted returns for investors. For RIAs with high-net-worth clients, being aligned goes beyond risk and return; it’s about creating a legacy for successive generations and making an impact on causes that are important to them. Family office platforms are uniquely structured to take these goals into account because they were founded on these very principles
RIAs then should look for a well-rounded family office platform that can tailor portfolios to their client specific objectives, whether those objectives are to generate durable income, to minimize tax burdens, to support community development, or to preserve capital for future generations.
RIAs should also ask how a prospective partner integrates all of these considerations into their investment strategy and understand how they remain flexible in order to adapt to client preferences that might change over time.