Saturday, June 15, 2019

"Superyachts, Mixing Drinks: The Truth About Family Office Jobs"

That's the headline of a Bloomberg story from last week but first, a very perceptive piece from a couple years ago:  

Sunday, December 10, 2017
"Family Offices as the Apex Of the New Butler Class"
I was looking at a couple of the lifestyle management companies, Quintessentially and Ten Group (which just floated on AIM; TENG:LON) and thought "Huh, party planning and investment management, sounds like a family office" and remembered this piece.

From the Guardian, March 12, 2017:

How London’s booming ‘butler class’ takes care of the wealthy elite
The capital is home to 1,000 ‘family offices’, made up of lawyers and financiers who service every need of the super-rich
Behind smart Georgian facades in prime West End addresses a little-known industry that serves the growing numbers of the global super-rich in London is booming.

Boasting marble foyers and plushly carpeted meeting rooms, some of these companies might be mistaken for luxury hotels. In fact, they are private offices that manage family wealth that can compare with the assets of FTSE 250 companies such as Tate & Lyle and Debenhams.
Family offices have their roots in the sixth century when a king’s steward held responsibility for managing royal wealth, a model later adopted by many aristocrats, according to accountancy firm EY. But the modern concept of the family office – an organisation that manages private wealth and other family affairs – was developed by the financier JP Morgan and the Rockefellers in the 19th century.

The number of single-family offices in the UK has more than doubled to around 1,000 since the 2008 financial crash, and they manage more than $1,000bn (£700bn) in assets, with London now the premier global hub for the secretive organisations. The figures come as researchers from Goldsmiths, University of London and Newcastle University claim the proliferation of family offices is entrenching the rise of inherited wealth and income inequality in Britain.

They conclude that the industry has promoted “entrenched elitism”, with a growing butler class of financiers and lawyers handsomely rewarded to preserve the wealth and social position of the super-rich.
The number of single-family offices worldwide is estimated to have risen by up to 40% since 2008 to 10,000-11,000, with combined investable assets of up to several trillion dollars, according to industry experts. The exact total is difficult to calculate because they are structured in different ways and they are so secretive that some families may have two offices that are not aware of one another.

In the UK, those that only manage a single family’s wealth are unlikely to require registration with the Financial Conduct Authority. Therefore, they are subject to far less scrutiny than private banks and hedge funds, despite the size of their assets making family offices influential players in the global economy....MORE
And from Bloomberg, June 11, the headline story:

Recruiters say banking hotshots aren’t always the right fit for the sometimes unusual job of working directly for the world’s richest people.
Family offices are on the hunt for talent. Yet attracting ­financial hotshots to C-level positions at wealthy families’ investment offices is tricky work, mostly because not everyone is prepared for the culture change. Working directly for some of the richest people in the world brings perks such as trips aboard superyachts, but it can also come with family drama and offbeat personalities. Paul Westall and Tayyab Mohamed, directors at Agreus Group, a resourcing and recruitment company focused on filling roles at single-family offices, say they first make sure candidates understand what they’re getting into before putting them forward for a job. In an interview with Bloomberg Markets, they describe what it’s like to work for a family office and what families expect from their investment managers.

Bloomberg Markets: What are some challenges you face when recruiting for single-family offices?

Paul Westall: It’s not difficult to find qualified and talented people in New York or London, but the mindset and culture of a family office are very different. Teams are a lot smaller. Finding someone who is trustworthy and discreet and someone the family can rely on is a main concern because their fortunes, their livelihoods, and entire generations of wealth are at stake.

BM: What type of person does well in those settings?

Tayyab Mohamed: Someone who’s worked at a large corporate firm and managed a whole team and never done any menial work might not fit into the family office mentality. For example, there is this really big South Asian family office that we work with in London who had a CIO, and he said they didn’t even have a reception [area]. He was laughing about how sometimes he would let the visitors in and make them a drink—and this was the CIO. We’ve also had loads of scenarios where CIOs have spent years managing traditional asset classes, and then suddenly the principal has decided to go out and make investments in completely different things like racehorses. The guy had never dealt with that kind of stuff, but he went out there, got done what he needed to get done, and learned. Someone with a big ego might not necessarily work very well in that kind of environment.

PW: Because you have to manage different family members and different relationships and work with type-A people, generally people who work in a family office are personable, likable, with high emotional intelligence.

BM: What are some other culture shocks people might expect when working at a family office?

TM: The willingness and the attitude to be at the beck and call of the family can be a culture shock. When you work for the family office, you are there for the family to serve their needs at difficult times. For example, you might have a holiday planned, and you have to cancel that.....