Growing a successful investment boutique or family office
According to researchers at Goldsmith’s University, it is believed that the number of family offices doubled in London between 2008 – 2016 to circa 1,000. Although the figure could be much higher and like layers of an onion, we keep on uncovering more and more. EY estimates there could be 10,000 single family offices alone and according to Campden Wealth family offices may hold assets in excess of $4 trillion. The influence of private, family wealth, in our every day lives shouldn’t be under-estimated. These offices fund start-ups and promote innovation, support huge levels of employment, and of course are leading forces in charitable giving.
In our experience, family offices can be very different in their composition and investment style, and it’s sometimes hard to distinguish whether a firm is a true family office or a boutique asset manager. I suppose the common factor is that they all focus on catering for the super rich, rather than the simply very wealthy. As an example, average assets under management of 157 single-family offices surveyed by Campden Wealth in 2015 was $662 million. These single family offices often face far less regulation and often are deliberately low profile. However, sometimes they want to grow and to attract other wealthy clients.
It’s at this point we are often asked to help to assist them in achieving their long-term plan through hiring experienced professionals. This gives us some insight into how firms plan for this growth and below are some of our observations on the process a firm should go through before embarking on hiring:
1. Define what sort of business you want to be
2. What services will you offer
3. Is your current team the right team to facilitate growth
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4. Website and marketing materials
5. How long and how much are you prepared to commit to the growth phase?
Acquiring ultra high net worth clients can be slow and expensive and firms need to be understanding and committed to this. Relationship managers may need to attend events and to travel extensively to meet prospects. As mentioned, there is often a period where they are persuading clients to leave their existing provider and this creates a j-curve on the P&L. Are firms comfortable with this? Now is a very good time to attract talent from leading banks and fund management businesses. However, top people are often expensive and are reluctant to give up on all their perks to help someone else build a business. They need to be enticed and rewarded for their skill and experience.
Fram Search can help clients hire Family Officers, Private Bankers, Portfolio Managers, Real Estate experts, Researchers, Financial Planners, and Advisers. We can also advise on remuneration structures and the financial services employment market in general. If we can be of assistance, then please don’t hesitate to call us on +44 (0)1525 864 372. Learn more about our wealth management practice here.
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