For the MFOs

January 24, 2018 | Author: Anonymous | Category: Science, Health Science, Immunology
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Building Bridges Landscape, Comparisons & Implications

Copyright © 2010 Family Wealth Alliance, LLC. All rights reserved.

Three Take-a-Ways for Your Business 

Competitive Landscape: Families & Firms



Fee Charging Alternatives



Outsourcing/Collaboration: Family Office Services

Copyright © 2010 Family Wealth Alliance, LLC. All rights reserved.

Executive Summary: Market Heft, Resilient MFOs, Hesitant SFOs Family Office Market Has Heft in the North American Landscape 

Estimated 140 Multifamily Offices (MFOs) with Aggregate $375 billion AUAs



Approximately 2,500 Single-Family Offices (SFOs) with Aggregate $1.5 trillion AUAs



MFOs Average AUAs at $3.5 billion; SFOs only $450 million



Total Pie of 50k Households > $30 million Estimated at $12 trillion; MFOs & SFOs: 15% Mkt.

MFOs Resilient in Face of Turmoil, Enjoy Scale & Recognition 

AUAs Down Only 9.2% (S&P down 37% in 2008)), Client Relationships Up 8%, with Employee Headcount Up 9%, while Client Attrition Rates are Low at 2.6%



Average Client Relationship is $51.5 Million



Scale Advantage, Deeper Talent Pool, & Gaining Marketplace Recognition

SFOs Hesitant, Not Trusting Alternatives, Have Panache of Being Private 

Cite Challenge of Keeping Next Generation Onboard, Family Governance Issues



Not as Willing to Outsource, Not Trusting Alternatives Available



Panache Still There, Intimacy & Privacy, Multi-Gen. Skills Advantage

Copyright © 2010 Family Wealth Alliance, LLC. All rights reserved.

The Landscape is Changing Client Net Worth

Trust VFO

Ext. CIO

MFO

PTC

Ext. FO

CFO

SFO

JVO

Enh. FP Complexity Enhanced Virtual External MultiChief Financial Family Family Investment Planner Office Office Office

Joint Private External Closed Single Venture Trust Family Family Family Family Company Office Office Office Office

Copyright © 2010 Family Wealth Alliance, LLC. All rights reserved.

4

What the Wealthy Want Is Not Changing  Objective Advice  Stability of Relationship Management  Stability of Ownership  Open Architecture for Implementation  Competency and Consistency of Delivery  Breadth of Service Offerings Copyright © 2010 Family Wealth Alliance, LLC. All rights reserved.

5

Ten Family Office Services Services Most Offered

1. Portfolio Management

2. Record Keeping & Reporting 3. Estate & Wealth Transfer 4. Comprehensive Financial Planning 5. Tax & Compliance Work 6. Risk Management 7. Trust Company Services 8. Life Management

Services Least Offered

9. Family Meetings & Education 10. Strategic Philanthropy & Adm.

Copyright © 2010 Family Wealth Alliance, LLC. All rights reserved.

6

2009 MFO Study at a Glance 

79 Firms Participating » Down from 83 Last Year



Median of 38 Client Relationships » Up 8.6%



$286.3 Billion under Advisement » Down 9.2%



$51.5 Million Mean Relationship Size



Employee Headcount Up 8.6%



Minimum Annual Fee (Mean) » $78,000, Up 11.4%



Attrition Rates » 2.6% Clients » 1.7% Assets

Copyright © 2010 Family Wealth Alliance, LLC. All rights reserved.

7

Highlights of MFO Research 

Storm Damage Appears Relatively Minor



Firms Facing a New Competitive Landscape



Surge in Hiring of Relationship Managers



MFO Executives Remain Highly Optimistic



Evidence of Fee Compression



Margins also Compressed, Perhaps Temporarily



Merger Activity Is Picking Up Again



Building Bridges with Single-Family Offices

Copyright © 2010 Family Wealth Alliance, LLC. All rights reserved.

8

A Shift from Asset-Based Fees to an Annual Retainer Asset Based Fees

Hourly Rate

Percent of Net Worth

Annual Retainer

Copyright © 2010 Family Wealth Alliance, LLC. All rights reserved.

9

Operating Ratios for MFOs

Revenue per $ Assets (bps)

2008 60

%∆ -3.2

2007 62

Expense per $ Assets (bps)

57

35.7

42

13.1%

-42.3

22.7%

Profit Margin (%)

Copyright © 2010 Family Wealth Alliance, LLC. All rights reserved.

10

New Competitive Landscape Your Top 3 Competitors, Today and 3 Years Ago Rank Today

Rank 3 Years Ago

Goldman Sachs

1

1

Bessemer Trust

2

4

GenSpring

2

8

Northern Trust

4

3

J.P. Morgan

5

6

U.S. Trust

15

2

Merrill Lynch

27

5

Morgan Stanley

29

9

Copyright © 2010 Family Wealth Alliance, LLC. All rights reserved.

11

2009 SFO Study Interim Report 

30 Single-Family Offices Participating to Date



Range of Assets Supervised = $450,000 to $2B



Chief Executive Is a Family Member at 44.8%



Average of 2.5 Generations, 14 Households Served



Family Households Not Served = 6.1%



Median Age of Family Office = 12 Years



Youngest = 1 Year, Oldest =100 Years



One in Six (16.7%) Part of an Operating Business

Copyright © 2010 Family Wealth Alliance, LLC. All rights reserved.

12

The View from 10,000 Feet 

An Overlay of Stress from Plunging Markets



Strong Underlying Concern about Sustainability



Single-Family Offices Inherently Unstable



Fighting the Reality of ‘Generational Decay’



You Are in a Scale Business, Like It or Not



Not Immune from Advisory Firm Economics



Recognition of Challenges They Face



Openness to Partnering & New Solutions

Copyright © 2010 Family Wealth Alliance, LLC. All rights reserved.

13

Top Challenges: SFOs & MFOs For the SFOs:

For the MFOs:

1. Gen./Family Relationships

Human Capital

2. Investments

Business Development

3. Human Capital

Managing Growth

4. Justifying Expenses/Budget

Technology, Client Reporting

5. Sustainability & Strategy

Marketplace Awareness

6. Financial/Generational Plan.

Profitability

7. Consolid. Reporting/Tech.

Managing Client Expectations

8. Liquidity & Cash Management

Economic Turmoil

9. Compliance, Tax and Legal

Invest. Client Portfolios

10. Managing Growth

Operational Efficiencies

Copyright © 2010 Family Wealth Alliance, LLC. All rights reserved.

14

Rising Expectations: What Clients are Asking For Now Of the MFOs:

Of the SFOs:

Advice on Private Equity

Aircraft Management

Trustee Services

Managing Newly Acquired Business

Advice on Job Search

Family Investment Partnership

Property-Casualty Risk Review

More Family Communication

Gold Investments

Estate Planning

Partnership Accounting

Foundation Management

Enhanced Tax Reporting

Family Education

Foundation Consulting Family Education Copyright © 2010 Family Wealth Alliance, LLC. All rights reserved.

15

Complementary Skills

Overall Strengths (S) & Achilles Heels (A) MFOs

1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

SFOs

Client Trust/Office Integrity

S

S

Financial Planning

S

A

Scale

S

A

Investment Management

S

A

Fiduciary Management

A

S

Family Ed. & Communication

A

S

Client & Office Intimacy

A

S

Inter/Intra-Family Interaction

A

S

Consolidated Reporting.

A

A

Security

A

A

Copyright © 2010 Family Wealth Alliance, LLC. All rights reserved.

16

Comparison of Scalability: I

Mean Size of Participating MFOs @ $3.8 Billion AUAs

Copyright © 2010 Family Wealth Alliance, LLC. All rights reserved .

Mean Size of Participating SFOs @ $450 Million AUAs

17

Comparisons of Scalability: II … but Research Is Inconclusive that Scale Translates into Efficiencies Tier

Assets

MFO AUAs* Per Employee

SFO AUAs* Per Employee

I

>$5B

$182.6M

$100.2M+

II

$1B->$5B

94.1

83.4 - 100.2

III

$0.5B-
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