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RESEAR CH + RANKINGS


A


fter 2008, the commercial multi family office (CMFO) industry was anxious. More than a quarter of high net worth individuals (HNWIs) either pulled


assets out of their wealth management firms or left them altogether, according to a survey by Merrill Lynch and Capgemini. “In other words, given a global HNWI


population of 8.6 million, each holding an average of $3.8 million in investable assets, trillions of dollars of HNWI financial wealth were potentially shifting among firms in 2008,” the survey said. Not only that, but asset values were going


backwards in the face of struggling markets, and there was a lack of trust in wealth managers— spurred on by the fraudulent activities of Bernie Madoff and the actions of the banks during the US housing boom and bust that precipitated the global financial crisis. Nine years on, the mood is a little more


ebullient. The markets are at all-time highs in the US, and the number of HNWIs globally expanded 7.5% in 2016, and their wealth expanded 8.2% in 2016—significantly higher than 2015’s rates of 4.9% and 4%. The total wealth of billionaires rose by 17%


in 2016 to $6 trillion, double the rate of the MSCI World Index, according to the UBS/PwC Billionaires Report 2017. That is all positive news for CMFOs, with trust


in money managers rising to 85.5% from 83.5% in 2013. This wealth explosion has boosted the number of single family offices (SFOs) globally to about


5,300 according to The Global Family Office Report 2017. In turn, this has driven the trend of SFOs converting into private and commercial MFOs as families grapple with the costs and scale of running their own SFO. Many banks— both commercial and private—as well as other financial institutions have created dedicated units to provide commercial family office-style services, including HSBC Private Bank and Northern Trust. This article will focus on commercial MFOs who look after the interests of multiple families often with wealth of less than $150 million. Unlike private MFOs, they are owned by commercial third parties, not families, and have profit motivations, although importantly they are independent of large financial institutions. “We do believe that being majority owned by


those working in the business means that our interests are firmly aligned with the clients we serve,” says Guy Hudson, a partner at UK CMFO giant Stonehage Fleming, which has £43 billion ($46 billion) of assets under administration. Jens Spudy, the founder and principal of the


eponymous German MFO which controls $6.6 billion in assets, says one of the other ways of staying independent is to manage everything under one roof instead of farming services out. “As an independent MFO, we are only


obligated to protect the interests of our clients and do not need to fulfill the sales expectations of any other parties,” Spudy says. “We also consciously forgo managing our own


assets so as to remain independent of commissions or other contributions from third parties.”


> MULTI OF F I CE M&A TIME L INE


Multi family office mergers or acquisitions have been a regular occurrence since 2000 driven by low interest rates for acquirers, but also an eagerness for companies to compete with larger multi family offices via ‘economies of scale’. Here is a timeline of the most notable MFO mergers or ownership changes— the largest being the 2014 combination of Stonehage and Fleming Family & Partners which created a new entity with assets under administration of $46 billion.


SEPTEMBER 2017 (US): AMG takes majority stake myCIO ($8 billion in assets)


AUGUST 2016 (US): Tiedemann and Presidio merge ($13 billion


assets under advisement)


APRIL 2015 (US): AMG takes majority stake in Baker Street Advisors (Baker Street had $6 billion in assets under management)


MARCH 2015 (UK): Sandaire –Lord North Street merger (undisclosed terms)


NOVEMBER 2014 (UK): Stonehage– Fleming Family & Partners merger ($46bn


in assets under administration, $11bn in assets under management)


APRIL 2013 (US): CIBC (Canada) buys Atlantic Trust (US) from Invesco for $210 million


APRIL 2012 (US): BMO Financial buys CTC Consulting


NOVEMBER 2010 (US): M&T Bank buys Wilmington Trust for $351 million


DECEMBER 2008 (US): GenSpring merges with Cymric (merged firm has $17 billion under management)


JANUARY 2008 (US): GenSpring


buys Inlign Wealth Management (Inlight has $2 billion assets under advisement)


SEPTEMBER 2007 (US): GenSpring buys TBK Investments


(TBK has $1.5 billion in assets under management)


NOVEMBER 2006 (US): US Trust sold to Bank of America by Charles Schwab for $3.3 billion


2001 (US): SunTrust takes majority stake in GenSpring (undisclosed sum)


MAY 2000 (US): US Trust bought by Charles Schwab for $2.7 billion


ISSUE 72 SUPPLEMENT | 2017 CAMPDENFB.COM 19 >


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