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Is ‘pure play’ the best model for the ultra-rich?


THE GREATDEBATE


Union Bancaire Privée’s Michael Blake and John Younger of RBC discuss the importance of an integrated investment banking and wealth management model for servicing wealthy families


YES - MICHAEL BLAKE T


heinvestmentadvisory needsof themodern familyofficereflect families’ diverse objectives as they


preserveandgrowwealth across generations; fromprivateequityto business financing, fromconsolidated performancereportingto family governanceand, ofcourse, planning forasmoothsuccession. Whilethe ideaofanintegrated


investmentbankingandwealth managementmodel thatcanmeet all of theseneeds ina‘onestopshop’ is alluring,manyfinancial services firms fall short of deliveringtheexacting standardsdemandedbyfamily offices across all investmentdomainsandall geographies. Chiefamongthesechallenges is that


wealthmanagementandinvestment bankingarefundamentally different in structureandrarely turnout tobe amarriagemadeinheaven.Services areprovidedbydifferent teamswhich


oftenoperateaccordingto different cultures, incentive structuresand leadership. In addition, bigandintegratedis


nolongernecessarilybeautiful.The global financial crisisshowedhow aliquidity crunchinonepart ofan integratedbankcanquicklyspread to another. Prudential regulationhas evolvedin response,but thepages of theFTprovidemorerecent reminders that integratedinvestmentbanking businessmodels carrycontagionrisk. Onthe otherhand,pureplayers


offeranalternativewayforfamily offices toaccess thevery best inadvice andexpertise,anchoredbythree principles. Thefirst isopenarchitecture.Pure


playadviserscombinein-house investmentexpertise with fullaccess to investment solutionsfromleading external providers.Arigorousand impartial selection process provides familyoffices with best-in-class productoptionsandvaluable insights into thefull rangeof investment solutionsavailable. Thesecondis specialisation.


Focusingexclusivelyonwealthand assetmanagement for privateand institutional clients, asUBPdoes, isanaddedvaluefor familiesand theirfamilyofficesbecauseit favours thedevelopment ofdeepexpertise in relevant topics–suchas tailored


portfolioconstruction, alternatives andasset structuring–tocomplement the investmentexpertisefamilyoffices havedevelopedin-house. Thirdly, combining long-term


thinking with fast execution is key. Family offices planacrossmultiple generationsandyet rightly expect institutional speed of execution. The flat hierarchy ofmany pure-play firms enables quick decision-taking,and the family-ownership or partner-led model encourages development of long-termrelationships. Family offices have unique needs


∙Wealthmanagement and investment banking are very different in structure ∙Integrated models carry contagion risk ∙In-house expertise can be combined with external providers ∙Family offices choose advisers based on specialist expertise not convenience MICHAELBLAKE CEOWEALTHMANAGEMENTASIA,UBP


and, inmyexperience, choose their advisers basedonspecialist expertise rather than convenience. The job of a family office adviser is tounderstand those needsandadvise accordingly. It is not to cross sell. Financial firmsof all shapes


andsizes support family offices, but apure play provides the stable foundations necessary to play an effective long-termadvisory role for familiesandtheir family office leadership teams.


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