Growing a successful investment boutique or family office

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Hiring a CFO/Finance Manager

Growing a successful investment boutique or family office

We are often asked to assist family offices 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.

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

Many boutiques aren’t quite sure of their own identity and who they want to be. A lot of soul searching needs to go on as to what type of business you want to be in five years’ time. What clients do you want to serve and how many to do you want to work with?

2. What services will you offer

Will the business offer investment opportunities across asset classes, or be an expert in one area such as hedge funds or equities. Will advice be given on an advisory or discretionary basis? Will the business offer additional “value add” services such as concierge services. In short, what firms offer must be based on expertise and quality. Family offices have the advantage of “being the client” themselves, and this thought process needs to be transmitted into creating an offering to attract others

3. Is your current team the right team to facilitate growth

Do you have an investment committee, or CIO, with the sort of biographies that will attract clients? If you are successful in attracting more ultra-high net worth clients to your business, do you have the right team to provide an exceptional service? Is your service better than the firms you’re attempting to take their business away from?

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4. Website and marketing materials

Even good salespeople will need strong marketing materials to assist them with the sales process. It’s often hard for family offices, as they want to retain a level of anonymity, but clients need to understand who is behind the business.

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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