Sunday, March 20, 2016

Family Offices as the Apex Of the New Butler Class

From the Guardian, March 12:

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.

These offices serve individual families with investable assets of at least $100m but typically more than $250m, with the top tier managing fortunes of several billion. There are 44,900 individuals with fortunes of at least $100m and 4,500 worth more than $500m, according to Credit Suisse. The average assets under management of 157 single-family offices surveyed by Campden Wealth in 2015 was $662m. The uber-wealthy known to have family offices include Bill Gates, former Google boss Eric Schmidt, Oprah Winfrey, the Duke of Westminster, the Sainsbury and Goldsmiths families, and inventor James Dyson. There are now about 1,000 single-family offices in the UK, compared with 400 in 2008, according to Sebastian Dovey of wealth consultancy Scorpio Partnership.

Keith Johnston, chief executive of the Family Office Council, which represents 100 single-family offices with combined assets of $100bn, estimated the total assets under management by all offices in the UK was $1,000bn. He added the figure could be higher as there could be as many as 1,800 offices in the country.

Johnston said the rise was spurred by the 2008 financial crisis because super-wealthy families were “very cheesed off with their private banks” because of the poor performance of their investments. “They decided to take more control and create a structure which they felt was … entirely doing their bidding,” he added....MORE
And as noted in the intro to 2013's "The Robots Are Coming (To Mow Your Lawn)":
I understand that domestic employment for positions ranging from butler to valet to cook to gardener is booming but some people aren't able to afford servants.
For them there are robots.*...

...* I couldn't resist the supercilious tone. Sorry.
Here's The Guardian:
Who wants to serve a billionaire?
The rich are getting richer – and that means jobs on superyachts for those who can meet their employer's every whim. But first trainees must learn how to fold a towel ...

"...At the more arcane end of the spectrum are the people who staff superyachts, who need to be equipped with discretion, 
Which was followed by the slightly down-market "Robo-advisors: A Family Office For Everyone!".

See also:
Family Office/Outside Managers Not Quite Cutting It? Maybe What You Need Is A Family Bank
Competitive Intelligence Macquarie Style: First Establish a Fake Family Office...
Foreign Family Offices Are Opening U.S. Branches
Family Office Assets-Under-Management League Table
UPDATED--Wha? "Family Offices Look to Invest More Than $30 Billion in Hedge Funds in Next Year"
Family Offices Showing Greater Appetite for Agriculture/Farmland Than Institutions
Sidestepping Private Equity With a Family Office

Somehow related:
Proctor & Gamble: "Make Your Home Smell Like You’re Rich" (PG)