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RECRUITMENTCOVERSTORY


Wealth industry adjusts to meet growing appetite for alternatives


RECRUITMENT WRITTENBY YURIBENDER


With private equity the asset class of choice for the wealthiest clients, private banks are having to boost their internal skillsets


weightedtowards privateequity, experts in illiquid assets arebecoming increasinglysought-after. “Thereisalong-termtrendof


A


increasingallocations to alternatives,” reports JamesHolder,headof global familyclients at Citi PrivateBank. “Within that, there isamulti-cycle trend,whereallocation to private equitycontinues to growthrough Covid.” This includes singleasset


transactionsin different parts of thecapital structure, withfamilies increasinglysteppingin to individual corporatedeals. Aprolongedperiodof lowinterest


rates, theadoptionofdisruptive technologiesandafast-changing commercialenvironment, allowing investors access toalargernumber of growingcompanies,haschangedthe mentality ofmanyprivatebanking clients, believesMrHolder. Theyhavebecomemuchmore


opentonewstructures, suchas theemergingUSspecialpurpose acquisitioncompany(Spac)market, nowalsocomingtoEurope.“Thereis $100bnsat inSpac vehicles, looking for targetopportunities to bringto themarket,” saysMrHolder. “Ifyou aretheowner ofafamilyenterprise withaconsumer growthbias to that business,youareareally attractive target forsomeof thatcapital.” Giventhat fast-growingcompanies


s familiesmovefrom traditional balanced equity-bondportfolios tomuchlarger alternative allocations


areincreasinglyremainingprivate or raisinggrowthcapitaloutside thepublicmarkets, itshouldbe nosurprisethat threequarters of investors prefer privateoverpublic investments as returngenerators, accordingtoMatthiasLehmann, headof the global familyofficefor WesternEuropeatUBSGlobalWealth Management.


GOINGITALONE Amongfamilyofficesandultra- highnetworthclients,a“definite shift” into privateequityhasledto disintermediationofbanks, notes GerardAquilina, partner at familylaw firmConeMarshall. “Theseparties arenowtalkingto


oneanother–ratherthanto their banks–in termsofsourcingdeals, andco-investing. Privateequityis reallythe flavour of preferencefor ultra-highsandfamilyoffices.” Suchdeals requireaspecific set


of skills,currentlyinhugedemand. “Thisneedssomebodywitha corporatebackground,comingfrom the institutional investment sideof the bank,” saysMrAquilina.Butmoving toafamilycanlead to itsownset of problems. “Ifyouhaveaninstitutionlike


GoldmanSachsorMorganStanley behindyouandmovetoafamily, with sectoral bias aroundpharmaceuticals orhealthtech,youmayfindyourself withamorenarrowfocus,”he suggests. “Inafamilystructure, chances of disagreement aremuch higherthaninaninstitution, asyou aredealingwithpersonalities,which isagreaterchallenge.” Compensationcanalsobe


problematic, withemployees requiringcheaploans or participation in investmentopportunities.“Finding goodtalent is currentlythe biggest hurdlewhichprivatebanksandfamily offices face,” saysMrAquilina.


Competitionfor staff is fast


intensifying,accordingtoLee WoonShiu, regionalheadofwealth planning, familyofficeandinsurance solutionsatDBSPrivateBank. “Inthe lastcouple of years,wehave


seenseniorbankers withyears’ of experiencefrom“establishedplayers, crossing the line to join singlefamily offices as eitherchief investment officer orCEO,”saysMrLee, with talent frombothbankingandprivate equitybackgroundsbeingluredto Singaporefrom“establishedfinancial centres”suchasHongKongand London.“This reallyshowcases the intensecompetitionfor toptalent.” Direct investmentandprivate


equityexperience arenowthekey dimensionsformanyleadingfamily officestructures globally, says MatthiasSchulthess,managing partner atSchulthess Zimmermann &Jauchrecruitmentconsultancyin London, pointingto theappointment of theco-headof investmentbanking fromGoldmanSachs atMichael Dell’s familyoffice.“Thetransitionfor top industry professionals intoafamily officeenvironment iscomplexbut canbehighly rewardingas structures mayallowattractiveandexclusive co-investments of privatecapital,”he suggests. Butthere is alsoachangein thetype


ofadviserbeingsought right across the industry, reflectingthe social revolutionsweepingmanycountries, at the sametimeas thepublic health emergencyandCovid-19-induced financial crisis.“At individual level, candidates’abilityto fosterand buildaninclusive cultureandtrue meritocraticwork cultures,where collective intelligenceisencouraged andgroupthinkingischallenged,has beenre-emphasisedduringrecent years,”saysMrSchulthess.“The ability to lead withpurposehasnever beenmoreimportant.”


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