Clearly markets are global: a small increase in the bank reserve requirement in China creates doubts in all stock markets and makes them fall; the discovery of doubtful practices in the accounting of the public deficit in Greece creates tension in fixed income spreads all over the world; and a speech by Barak Obama tumbles the financial shares in many countries.
Wealthy families are also global. I can barely think of any well established family that does not send their kids away for education some time in their lives, most of them in the university years. And more and more end up marrying someone from a different nationality. Family businesses are also global with the majority of family owned companies in Europe operating cross border.
Yet family offices and private investment offices are not global. Family offices and private investment offices are the preferred solution wealthy families use for the professional management of their wealth in either one of their different formats: single family offices, multi family offices or the fashionable formula of single supported family office – which is the combination of the other two to serve a particular family. But all of them are local.
There is a clear reason for this phenomenon: investment advice is very much dependent on the local taxes, customs and regulation. A local touch and deep knowledge of the local reality is a must. But globalisation of markets and institutionalisation of the family office concept are processes that are gaining more and more momentum of late. My conviction is the next step in this process is going to be the international dimension of family offices and private investment offices.
When we started our business more than a year ago, we spent a lot of time thinking about this issue of international dimension. We exchanged ideas about the concept with other well established firms in other countries. Some of them embraced the idea and we were fortunate enough to find a strong meeting of minds with Lord North Street, with whom we have created a strategic partnership. The experience has been extremely successful. As investment advisers to our clients, we have now ears and eyes in two different locations linked to two different world regions. With MdFAchievers focused on Iberia and Latin America, Lord North Street gives us their expertise in UK, Europe as well as Middle East.
As advisers, families know we deeply understand the reality of two different parts of the world. As investors we have more critical mass and more resources to dedicate to finding better talent and more advantageous economic conditions for our clients. We have added talent, which is the most critical asset in this activity. And we have achieved all that without losing a gram of our local touch and expertise, maintaining the customised and tailor made service we want to deliver our clients while having a complementary entity with whom we share 100% of our principles and values - in particular the radical independence of our advice.
Our formula may not be right for everyone but the really important fact is that the wealthy families will require a more and more global dimension in the management of the wealth. Hence, those that advise those families will have to find ways of delivering that international dimension and doing it following the same principles by which they provide their advice. We have found one, others will find different ones.
As we see the family office, or private investment office, concept consolidate more and more, I am convinced we will hear more about their international dimension.
