Private banks swarmaround family honey pot


Private banks are setting up specialist teams to target the growing number of family offices, but must better align their structures to accommodate this demanding client segment


uropean, US and Asian private banks have been busy strengthening relationships with their wealthiest clients

during the Covid-19 pandemic, as international families identify an “inner sanctum” of advisers. Of the 10,000 single family offices

(SFOs) estimated to exist globally in a recent report fromDBS Private Bank and consultancy EY, at least half were set up in the last 15 years, with Asian families increasingly seen as the rising sources of wealth. Not surprisingly, private banks

are all setting up specialist teams to target this expanding segment. Clients in this space typically start with $250m in assets for offices seeking outsourced solutions, rising to $750m for those with their own staff, according to Citi Private Bank. “In a crisis, the ‘big money’

seeks a single, consolidated book of record, so with the touch of a button, they can track exposure to certain industries or geographies,” says an ebullient Dave W. Fox Jr, head of the global family business unit at US wealth manager Northern Trust. “We also sawthis flight to quality

in 2001 and 2008,” says Mr Fox, whose unit oversees $600bn of client assets, recalling clients’ response to the 9/11 atrocities and the global financial crisis.

UPTOTHETASK? Covid, says Mark McMullen, head of the family office division at Stonehage Fleming, administering £50bn ($70bn) of client assets, has proved amajor test of bonds binding advisers to families, which are asking two simple questions: “Are the people who look after my money now in my inner sanctum? Will I really value them in the future or are they now just a commodity?” One of the ways these wealth

managers have been proving themselves in 2020 is through their ability to discuss sensitive nuances around succession planning. “Mortality and incapacity have become important issues for people thinking about the next generation,

with more conversations about transfer of wealth and its associated risks,” suggests Mr McMullen. This theme of wealth transfer

is also linked to reputational management, with sophisticated families starting to care more about legacy, keen to be seen as “good citizens” by the surrounding society. “The attention to the recent pandemic and social revolutions has opened the door for many banks to take action around issues that may not have been on their radar in an impactful way before,” says Rochelle Clarke, CEO of US business transition specialists Succession Strength. “Increased societal focus on these matters has also proved the catalyst for unlocking previously unallocated funding for supporting initiatives and re-examining internal policies.” These catalysts have heralded a

newrole for the financial adviser, believes Ms Clarke. “The pandemic has highlighted the need for financial service providers to be more than executors,” she says. “Entrepreneurs are now looking to these providers for advice and guidance in navigating the uncertainty.” These evolving conversations


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