Executive summary

Scope

• Many advisory firms, including genuine “independent” financial advisors (IFAs), function in precisely the same way as Single and Multi Family Offices (SFOs, MFOs), albeit not necessarily with as affluent a client base.
• The water is muddied even further by the increasing demand for conventional wealth management firms, and especially the private banking or wealth management arms of big integrated banks, to form specific units that function in the same manner.
• This leads to the heart of the problem - What precisely are Family Offices?
• The report will provide an assessment of the extent to which SFOs and MFOs really do provide a viable alternative to “conventional” wealth management firms in terms of performance and service quality as well generating appropriate returns for their owners.

Key highlights

• The aim of this report is to provide an overview of the taxonomy of SFOs and MFOs and the wealth management services that they provide.
• In essence it is possible to identify four main types of MFOs: Family-owned MFOs, independent “commercial” MFOs, bank-owned “commercial” MFOs that function on an autonomous basis and MFO divisions of private banks and wealth management firms.
• Each MFO category can exhibit considerable hegemony. Some independent commercial MFOs confine themselves to investment management, for example, and use the “Private Investment Office” moniker.
• Others attempt to provide a much more comprehensive wealth management service. Indeed some MFOs have diversified their activities to target retail investors.
• Moreover the categories are not mutually exclusive. SFOs have a habit of evolving into MFOs and eventually into “conventional” full service wealth management firms.

Reasons to buy

• Analyse the fastest growing segment of the wealth management market
• Investigate family office profitability
• Discover reasons for the increasing prevalence of multi-family offices (MFOs)
• Learn why MFOs are able to provide a more cost effective service than conventional alternatives
• Identify future market opportunities for MFOs

Table of contents

Executive Summary
Chapter 1: The Multi-Family Office Opportunity Set
Chapter 2: The Family Office Conundrum
2.1 Definitional difficulties
2.2 Marketing opportunism
2.3 A basic definition
2.4 Family office life cycles
2.5 The multi-family office (MFO)
2.6 MFO v Private banks
2.7 A regulator’s definition
2.8 Conclusion
Chapter 3: Multi-family Office Differentiators
3.1 More than an investment manager
3.2 Ownership and control
3.3 Alternative MFO providers
3.4 The MFO distinction
3.5 Implementation
3.6 Bespoke holistic wealth management
3.7 SFOs v MFOs
3.8 Conclusion
Chapter 4 Multi-Family Offices: An alternative service model
4.1 Introduction
4.2 Demand factors
4.3 Supply factors
4.4 Virtual Solutions
4.5 Merrill Lynch Cap Gemini provide an example of a VSN at work.
4.6 Enter the MFO
4.7 Conclusion
Chapter 5: Family Office Demographics
5.1 The SFO and MFO universe
5.2 The United States
5.3 SFOs
5.4 The UK
5.5 Independent European and Swiss Multi-Family Offices
5.6 Conclusion
Chapter 6: Multi-family office dynamics
6.1 Profitability
6.2 Costs
6.2 Conclusion
Chapter 7: Case Studies
7.1 Bessemer Trust: The biggest and best?
7.1.1 Pivotal event
7.1.2 Service offer
7.1.3 Client focus
7.1.4 Alignment of interest
7.1.5 Investment management
7.1.6 Financials
7.1.7 An indendent future
7.2 Convergent Wealth Advisors: Ahead of the curve
7.2.1 Growth and development
7.2.2 Service Proposition
7.3 Crossbridge Capital: Rapid growth and profits for new entrant
7.3.1 A propitious time to launch
7.3.2 Entrepreneurs
7.3.3 Rapid growth
7.4 Elystone Capital: So good a satisfied client acquired a significant stake
7.5 Fleming Family & Partners: Advancing rapidly through the MFO life cycle
7.5.1 Rapid growth and expansion
7.5.2 Consolidation and retrenchment
7.5.3 The client service offer
7.5.4 Portfolio management
7.5.6 Performance and service quality
7.5.7 Conclusion
7.6 Hanson Family Holding: a family office, a corporate finance house and a new asset
management firm
7.7 Hawthorn: Protection and an extensive range of services from a bank-owned MFO
7.7.1Establishment and Growth
Services
7.8 Harald Quandt Holding: A burgoning investment management conglomerate
7.8.1 Growth and development
7.8.2 HQ Trust
7.8.3 Auda International
7.8.4 RECAP
7.8.5 Equita Management
7.8.6 Penjing Asset Management
7.9 Iveagh Private investment House; A family office targets new markets
7.9.1 Targeting the retail market
7.9.2 Performance
7.9.3 Financials
7.10 Lord North Street - London’s pioneering private investment office
7.10.1 Filling a gap
7.10.2 Discretionary investment management
7.10.3 Growth and expansion
7.10.4 Performance and profitability
7.10.5 Conclusion
7.11 Partners Capital LLP: The money managers manager
7.11.1 Growth and Development
7.11.2 Investment Management
7.11.3 Financial Performance
7.11.4 Conclusion
7.12 Rockefeller Financial: From SFO to diversified financial services company
7.12.1 Evolution
7.12.2 Products and Services
7.12.3 Rockefeller Wealth Advisors
7.12.4 Rockefeller Capital Partners
7.12.5 Rockit
7.13 Sand Aire: The UK’s pioneering commercial multi-client office
7.13.1 Establishment and Growth
7.13.2 Investment management
7.13.3 Financial performance
7.13.4 Conclusion
7.14 Silvercrest Asset Management: Building on and exploiting a legacy
7.14.1 Establishment and Growth
7.14.2 Service Offer
7.14.3 Conclusion
7.15 Stanhope Capital:
7.15.1 Evolution
7.15.2 Business ethos
7.15.3 Services
7.15.4 Performance
7.16 Talisman Global Asset Management: A private investment office targets external clients
7.17 Signia Wealth: Explosive growth for new commercial MFO entrant
7.17.1 Growth and Development
7.17.2 Services
7.17.3 Conclusion

List of tables

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List of figures

Figure 1.1 : Number of Ultra-High Net Worth Households with more than $100 million of assets under management
Figure 1.2 : UNHW Households as a proportion of total households (percent)
Figure 1.3 : Number of Millionaire Households (thousands)
Figure 1.4 : Proportion of millionaire households by market (percent)
Figure 1.5 : Personal Wealth Growth Forecasts, 2010-2015 (constant exchange rate)
Figure 3.1 : Top US Multi-family offices (year end 2008)
Figure 5.1 : UK-based MFOs and private investment offices
Figure 5.2 : Independent Swiss-based “commercial” family offices
Figure 5.3 : European MFOs Family Office
Figure 6.1 : Return on Assets (RoA) By Business Model (basis points) 2009
Figure 6.2 : European Offshore Institutions: Weighted RoAs by Client Size