Multi-family office model suits Asia: Julius Baer

Dave Reymond, a senior executive at the Swiss private bank, takes issue with comments by Pictet’s Grégoire Imfeld that the multi-family model may not work so well in the region.
Multi-family office model suits Asia: Julius Baer

Earlier this year, Grégoire Imfeld, senior relationship manager for family offices at Swiss private bank Pictet, argued that multi-family offices are unlikely to gain as much traction as their single-family counterparts in Asia.

The Geneva-based executive cited a number of reasons for this, such as concerns over confidentiality, centralising of data and high staff turnover in the region’s wealth management sector.

But Dave Reymond, Asia head of independent asset managers at rival Swiss firm Julius Baer, takes a different view. He believes the MFO model is well suited to the region and is likely to prosper, for a number of reasons – most notably, efficiency.

“You need a certain size of operation to oversee different asset classes and investment types," says Reymond. “Here in Asia, where the licensing and regulatory requirements are quite demanding, there’s no way you can run a multi-family office with two or three people [as is often the case in Europe].

“Also, the more large and complex the wealth is that you’re looking after, the more staff you need in terms of expertise. If you don’t have the size as a single-family office, you might find yourself somewhere in-between.”

Moreover, outsourcing has certain limitations, says Reymond, such as private banks providing investment intelligence on a case-by-case basis.

“If I were to run a family office, I would want to keep a certain independence from banks, so I would not necessarily rely on one bank feeding me intelligence. I would prefer to have firms screening the market for opportunities and then do an assessment in-house as to where to put my money."

Reymond concedes that Pictet's Imfeld made a valid point that clients might be concerned that confidentiality could be compromised by the MFO model. However, he argues that confidentiality is not necessarily always crucial – but that privacy is a more accurate term for clients’ worries.

“Everyone deserves a certain level of privacy in their financial matters. But that can be perfectly achieved by having an MFO; you don’t need an SFO for that.”

But the key advantage of a multi-family model is greater efficiency, asserts Reymond. Having a scalable organisation makes it easier to oversee multiple partners such as custodians and brokers more effectively. An SFO, however, might lack the depth of resources to be able to monitor service providers so effectively and must also rely on more of them.

And the more partners an FO, the more it resembles simply a wholesale buyer. “To me, that doesn’t lead to efficiency in your own office, but rather to inefficiency, as there's such a large number of interfaces.”

Reymond cites the example of M&A expertise. “I don’t know if I’d want to employ a team of five M&A specialists if I'm only doing a deal every five years. But if you are looking after a number of families who between them might do one or two deals a year and can cross-fertilise and match-make deals internally, that's how an MFO can add value.”

In fact, the European MFO/IAM model – which often means one- or two-man bands with $100-200 million in assets – may be shifting more towards the Asian approach, says Pamela Phua, Hong Kong head of IAMs at Julius Baer (pictured left). Some of the European setups are feeling the pressure and are starting to consolidate, to find ways of sharing resources.

That said, the Asian family office segment itself is a nascent and evolving one, as was clear from a roundtable hosted by AsianInvestor that appeared as an article in the February issue of the magazine. One change is that they are realising the need for more diverse in-house capabilities, such as corporate finance expertise.

¬ Haymarket Media Limited. All rights reserved.