Family offices are ‘in fashion’. A growing number of affluent families are considering the use of a multi-family office, and an ever-increasing amount of companies are starting to offer multi-family office services.
Globally, several trillion Euros are managed by single- and multi-family offices. A good part of those assets are managed by single-family offices located in the United States. Within Europe, most family offices are found in Switzerland and the United Kingdom. In their offices in the heart of Zurich, we discussed the latest trends in the family office industry and the challenges of selecting a proper financial counterparty with Jan van Bueren and Thomas Ming of FOSS Family Office Services Switzerland.
WHAT IS THE DIFFERENCE BETWEEN AN ASSET MANAGER AND A MULTI-FAMILY OFFICE? Assets can be managed by a bank, an independent professional outside a bank (an independent asset manager) or a multi-family office. The difference between the first two and a multi-family office is that most multi-family offices offer a wider range of services than just managing free investable assets. They also can provide support with lifestyle services, philanthropy, real estate and tax and legal matters. In practice, we find firms with only a limited number of services as well as the absolute opposite.
WHAT ARE THE FAMILY OFFICE TRENDS YOU OBSERVE? There is an ongoing trend of new multi-family offices launching their services. This is really happening on a weekly basis and is taking place all across the world, although we do feel that South America is lagging a bit behind. We also notice an ever-increasing interest of affluent families in the services of family offices.
DO YOU EXPECT THIS TREND TO CONTINUE? Yes, definitely. Our conviction that this trend continues was one of the main reasons for launching our dedicated multi-family o ce selection service in 2014. In Switzerland alone we now count already more than 400 multi-family offices, and new providers keep constantly entering the market.
HOW WEALTHY DO YOU NEED TO BE?
That is a question we are often asked, but as there are so many family office flavours, it is impossible to answer. It would be better to carefully consider which services you really need and how much you are willing to spend for those services. You can find providers who already take clients with a global wealth of 20 million Euros, which we believe to be quite low. Most families using a single-family office have a wealth of at least several hundred million Euros.
WHY IS SELECTING A MULTI-FAMILY OFFICE SUCH A CHALLENGE? In a nutshell; most jurisdictions neither protect nor regulate the use of the title ‘family office’. Any company can call itself a multi-family office and offer multi-family office services without having any specific qualifications or experience. The type of client focused on, the services provided, the size of family wealth or the region out of which clients are serviced also vary widely per provider. Some offer a wide range of services in house; others primarily coordinate a number of external providers.
DO YOU HAVE A TIP IN THIS RESPECT?
The services offered by multi-family offices often are strongly tied to the expertise of its founding partners. A former tax lawyer setting up a multi-family office primarily will focus on structuring assets, while a former banker primarily will provide investment services. It therefore is important for families to follow a thorough selection process and to at least visit and analyse several providers before choosing a multi- family office with which to work.
Thomas Ming and Jan van Bueren are Wealth Planners at Union Bancaire Privée and co-founders of UBP's FOSS Family Office Services Switzerland.