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Introducing the multi-family office super-boutique

The 2021 Julius Baer Family Barometer survey showed health has become a major concern for wealthy families, adding to the complexity MFOs must manage. Families’ burgeoning needs are leading to the emergence of the super-boutique in a trend that looks likely to continue.

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It’s perhaps no surprise that health has become a priority for global families at a time when the world is suffering its first pandemic in 100 years. This finding is the most notable development discovered by Julius Baer’s 2021 Family Barometer survey of multi-family offices (MFOs), adding to the complexity of clients’ affairs in terms of where they choose to live and even wealth planning.

As has been the case in previous years, family governance and wealth-related topics were thought the two most important issues by a quarter of respondents, (at 25% and 26% respectively). But health was a close third for the first time, according to almost a fifth (19%).

This increases the layers of complexity affecting the 21st century ultra-wealthy. The key question is: how can MFOs meet wealthy families’ burgeoning needs, yet do so in a nuanced, personal way? The answer is that many will have to scale up, expanding their geographical footprint and product range while deploying technology to do so efficiently.

“One of the big challenges will be if and how MFOs are able to scale up,” says Reymond. “As your business grows and your clients’ needs become more diverse, how can you still maintain a bespoke approach for each client in a way that’s economic? How can you evolve from something that is small and highly personalised to something that’s larger and still retains the per­sonalisation that’s at the core of family office services?”

Beyond health, the survey shows wealthy families’ needs multiplying in other ways, too. Focusing on the core area of investment, MFO respondents state that clients have inquired more about direct private investments than any other topic in the last 12 months. Further, they say, sustainable investing has grown most in importance over the last five years. Both of these are specialist areas of investment, requiring expert knowledge.

MFOs come of age

Fuelled by business success in China and the tech sector, as well as relentlessly rising asset prices, the world’s ultra-high-net-worth class has flourished in the last 30 years. This success has spurred an expansion in the number of family offices to about 6,500. MFOs make up just under a quarter, or about 1,500.

Globally, the number of MFOs is fairly stable – with growth in Asia and the Middle East, supported by strong wealth creation, balanced by consolidation in Europe and the US. Yet Julius Baer’s experience suggests the size of assets they manage is rising. At the same time, clients have more holistic requirements – spanning different asset classes, family governance and philanthropy.

Greater size and greater needs mean that many MFOs must change. They require an international presence, as well as holistic capabilities spanning everything from investment and wealth management through to governance services. This should all be backed by technology-enabled operations that foster scale.

Some MFOs are already expanding internationally, both to service existing global family clients more effectively and to reach out to new clients. Broadly speaking, we can observe trends of Asian MFOs opening in other parts of Asia and Europe, Swiss MFOs opening in Europe and Asia, and UK MFOs opening in continental Europe as they adapt to Brexit’s inconveniences. Further, US MFOs are opening in all regions. By way of example, Singapore-based Taurus Wealth has offices in Dubai, Zurich and London, while among UK MFOs London & Capital is expanding to Barcelona, Saranac Partners to Madrid and Plurimi Wealth to Dubai.

Technology will play a huge role in the scaling up of MFOs, allowing them to manage larger and more diverse organisations yet still offer the highly personal service that defines them. “Technology may be boring to talk about, but the move to internationalisation and more holistic services means that MFOs are growing in size and complexity,” notes Reymond. “Manual administration is no longer good enough, so how do you deploy tech in a smart way? Elevating it is very important.”

Large enough to matter, small enough to care

It appears that MFOs are set for sustained growth in assets, especially in Asia where wealth creation remains as strong as ever. As the sector expands, a growing number of super-boutiques will emerge, differentiated by international presence, holistic capabilities and technology.

The Julius Baer 2021 Family Barometer confirms the need for this, as healthcare, direct private investments and sustainable investing ratchet up the demands on MFOs.

“The industry is clearly set for growth in line with the ever increasing population of wealthy individuals, especially in Asia,” says Reymond. “Being sufficiently large to matter but small enough to care will be essential for MFOs to differentiate themselves in such a competitive environment.”

Key takeaways

  • The 2021 Julius Baer Family Barometer survey revealed that health is now a major concern for major families, adding to the complexity of their affairs.
  • This trend calls for greater capabilities and offices in several different countries.
  • MFOs must be large enough to matter, yet small enough to care.

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