Ian Slack and Richard Joynt speak to Hannah Downie about the
changing dynamics of the single family office and multi-family
Is there a trend emerging of single family offices joining with
other firms to become multi-family offices?
Ian: There is not yet enough evidence to call
it a trend, but we have seen a number of single family offices
(SFOs) either combining with other SFOs or joining a larger
regulated trust company or bank to create a multi-family office
Richard: In January 2013, we merged the SFO
that we had run for ten years with a trust company headquartered in
Jersey. We retained our client and all our staff and are now able
to offer family office services to a select number of other clients
by virtue of being regulated. So we have direct experience of this,
and we are talking to a handful of other SFOs about doing the same
What are the drivers behind this?
Richard: There are a number of potential
drivers. From the clients perspective, it may be a way of saving
costs. This maybe due to a reduction in investment income in the
current low interest rate environment. It may also be a way for an
SFO to benefit from an MFO platform, including access to colleagues
with knowledge in other areas, access to networks of professionals,
increased buying power and access to better IT and central HR and
For the staff in the family office, it may be a way of expanding
the variety of work they do and reducing their reliance on a single
client. It may also help with their overall career progression and
help them to ensure that they do not become sidelined or
out-of-date compared to their peers.
What are the key areas that these new MFOs need to focus on to
attract new families?
Ian: There are several key areas that need to
Independence: it is critical that their clients continue to
receive advice that is independent and in their best long-term
interests. Unfortunately, there remains a perception that some
bank-owned MFOs are more interested in selling financial products
than looking after their clients' best long-term
Confidentiality: the MFO needs to be able to make the client
comfortable with the level of confidentiality and privacy that they
will receive. This may be achieved by locking down physical and
electronic files and providing a separate area for the family
office to operate from.
Client service: clients will often still want to have some
members of staff who are dedicated to them 100 per cent of the
time, while accepting that other roles may not need to be. This way
the client can receive the continuity of knowledge and service that
they have become accustomed to, while potentially reducing the cost
of full-time dedicated staff.
Cost certainty: especially if the rationale for the move is a
reduction in cost, the client will want to have a fixed fee
(possibly for several years) for a fixed range of services.
Flexibility: notwithstanding my comments above about fixed
costs, one of the major advantages of having a larger MFO providing
family office services is the ability to draw in additional staff
quickly (and without the risks of employing staff) for transaction
work, or, conversely, to reduce staff and fees in quieter
Regulation: it is almost inevitable that an MFO will be
regulated, whereas many SFOs can avoid the need for regulation.
Done well, the regulation is there to protect the client first and
foremost, and the prescribed policies and procedures that the
regulation requires are good business practice to achieve that
protection. In larger organisations, the cost involved with
retaining dedicated compliance staff who are not client-facing is
already spread across a wide client base, so this is by no means a
burden for the MFO.
What are the advantages to firms such as Bedell of joining with
a single family office?
Richard: For Bedell, it provides another way of
looking after its existing clients in an area where there is
growing interest that is not tax-driven but rather
Published in STEP Journal – April 2014
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