Ty pe ‘ family off ice’ into Twitter and you can see the conversation is alive. There are comments on issues such as wealth management, wealth struc-turing, trust and estate planning and family governance. However, much of this is generated by the accounts of firms that service the sector, such as private banks and private client lawyers.
Coutts Private Bank (@coutt-sandco), for example, is a regular tweeter with over 9,000 followers and Barclays Wealth (@barclay-swealth) has over 15,000. Spe-cialist news outlets such as Wealth Briefing and Wealth Net tweet and of course the publishers of Family Office Global, Global Partnership, have an account (@familyoffice\_).
But as yet the trend seems to have stopped short of family offices cre-ating and embracing their own accounts. A search for Multi family offices (MFOs) such as Fleming Family and Partners, Hassium and Genspring will find that yes they are being discussed on Twitter, but no, they do not yet have their own accounts. Are they missing out?
According to wealth researchers the answer increasingly appears to be ‘yes’ if they are seeking up-and-coming wealthy clients. In a study by MyPrivateBanking Research, managing director Steffen Binder described the development of social media in the wealth sector as nothing less than a ‘Digital Revolu-tion’. He found that client demand was the most important driver behind the industry’s digital revo-lution, and a lot of this is down to simple demographics.
The next tranche of HNW cli-ents are reliant on electronic com-munications, imbued with social media culture and never without a mobile device. So while these clients may still value traditional meetings and calls, they also “demand that they can communicate with their advisers through digital media,” said Binder. One route to do this is through Twitter and LinkedIn.
Communication
MyPrivateBanking’s research also found the need to communicate with B2B stakeholder groups like ana-lysts, private client lawyers, jour-nalists and job applicants is driving social communications. “If you want to make sure your brand message and your corporate communica-tions reach these stakeholder groups you have to make sure you are using digital platforms,” Binder said. Lev-eraging new technologies is a par-ticular consideration for the “bigger, more global players wanting to be perceived as a modern, technology-affiliated brand.”
However, as yet the hesitancy of MFOs suggests they are more alive to the risks than the benefits. One issue is resources. A firm I spoke to who serves UHNW clients was privately shocked at the implication social media would require the investment of a full-time member of staff to manage accounts. And historically smaller firms in the private wealth sector seeking clients have focused more on business development than corporate communications, which has meant placing value on knocking on doors and organising sales seminars, than tweets and invitations to connect.
There are also privacy and business risks. One bank’s primary worry was that if they set up a Twitter account, their UHNW clients would follow them, unwittingly giving away client information to competitors and even kidnappers. Sandy Loder from AH Loder Advisors said: “The problem with Twitter is that you also get fol-lowed by people who are like you - your competitors.”
There is also the fact that, as Steffan Binder explained, the “very different and differentiated needs” of the various client segments served by wealth managers makes it difficult to know exactly what HNW clients want. Private wealth service providers “are in a trial and error phase and nobody has the ‘magic bullet’ yet in the wealth management space,” he said.
But the mounting evidence that it is client engagement that will con-vince the doubters is echoed by Seb Dovey of Scorpio Partnership. His research, the Futurewealth Project, based on the views of over 3,000 of the world’s up-and-coming wealthy, found 29% use social media site Twitter and 31% use LinkedIn.
S h ay n e Ne l s o n , C EO o f Standard Chartered Private Bank and sponsor of Scorpio’s report is also a digital convert. “The uptake of digital channels among high net worth clients and the increasing i n f luence of t he se cha n nels on decision-ma k ing cannot be ignored,” he said.
So those larger MFO’s who are seeking new clients might be best placed to keep Twitter under review. It will be interesting to keep an eye on Stonehage group (@Stonehage\_ Group) who are dipping their toe in the water with a ‘reactive’ account, one which exists but has not issued any tweets. These accounts allow firms such as Stonehage to monitor what is being said about them and the market without yet committing to regular activity.
So while many MFOs remain to be convinced, what then of single family offices (SFOs)? For Loder there is simply a lack of a busi-ness case: “There are two parts of the family office, the office itself and the family business. It’s easy to see why a family business, like any other, would use Twitter, but I don’t know why a family office would want to unless it’s to encourage third parties to co-invest.”
Co-investment can be a powerful motive, as can finding the right investments in the first place. Used properly Twitter could help mon-itor, gauge interest, make connec-tions and find partners.
Of course privacy is at a premium for those SFOs who want to keep the family out of the limelight and ensure they don’t get bombarded by sales professionals. Unsurprisingly they are more reluctant to reveal whom they work for on Twitter or to connect anyone on LinkedIn they don’t know well.
Despite this, it is worth remem-bering that people tweet, not com-panies. This means family office employees will be on Twitter, even if they don’t identify themselves as such.
After one meeting with an SFO’s CIO I was invited to connect on Twitter. The account betrayed no outward sign of being associated with a SFO and if I had searched for the account looking for any connec-tion, I would not have found it.
A better option?
LinkedIn by contrast to Twitter is seen as a less public medium with a more business-focused pedi-gree. Family office employees who may be unfamiliar with Twitter will often bring their LinkedIn accounts with them from previous jobs. And so, alongside professional advisers, a substantial and rapidly growing community of family office employees and family office groups has developed on LinkedIn.
By far the largest is the family office group, managed by Richard Wilson of Oregon with over 65,000 members worldwide. They are a forum for discussion and can be one way of identifying relevant profes-sionals, potential co-investors and family office employees.
You can find them by typing ‘family office’ into the search func-tion under the group’s heading. In practice however, many such groups are dominated by professionals seeking to sell and they suffer from a lack of group management, meaning the discussions are little more than promotional adverts for this or that firm.
Nevertheless there is massive potential in such services, if prop-erly moderated, as they attract advisers and families from around the globe. Socially-aware advisers are keen to demonstrate their knowledge by giving value-added answers to the queries raised, giving rise to the idea that such LinkedIn groups may develop into virtual family office advisory hubs, where families can raise professional issues, find co-investors and invest-ment opportunities.
For example there are genuine debates on family office groups on the merits of private equity co-investment and as to whether a SFO or a MFO is the best model. Often these debates are ‘intermediated’ and normally it is not family offices asking the questions directly, but they may have asked someone to do it on their behalf, presumably to avoid a slew of sales messages.
As for making connections on LinkedIn, some sceptics fear these can be plundered by rivals, but a few minutes on the privacy settings will ensure that only you can view your contacts. What’s certainly true is that many firms, be they family offices or private wealth profes-sionals have not yet tapped into the potential value of their staff ’s LinkedIn contacts.
This can be done by encour-aging staff to share their busi-ness related contacts in a safe and secure way. Some firms will want to lay claim to the LinkedIn contacts made during business hours and others will want to strike a balance that encourages employees to keep on making contacts, even in their spare time.
It will be interesting to review the development of MFOs on Twitter and perhaps by the time you read this you will find the accounts men-tioned above have gone live. As for SFOs it’s easier to imagine those who take an interest will retain a presence by listening and by virtue of the fact some staff members are active, but with a low profile.
On LinkedIn, SFOs in particular may benefit from properly managed groups where genuine discussions take place, information is shared and discussions are intermediated. These are possibilities but one thing is for sure, social media does not stand still.
