Family wealth managers are more and more challenged by demands placed on them by digitalisation, increasingly stringent regulations and complex cross-border taxation requirements. It’s an environment that encourages some wealthy families to join forces with others and enter their investments into a Multi-Family Office business, moving away from the traditional single-family office. “It’s the correct answer to the market.”
Luxembourg in 2012 became the first EU member state to create a dedicated legal regime for family offices and now is seen as a base to family wealth managers. Most notably in the legal framework is that it provided family offices, like institutional investors and pension funds, with an official status that sets they apart from individual retail investors. It also made Luxembourg more competitive compared to Switzerland, the traditional home for family wealth.
Recently, a major European single-family office has chosen to transform itself into a multi-family office. For Amsterdam-based Anthos Asset Management, the family office established by the Dutch Brenninkmeijer family, known for its C&A fashion retail chain and based in Switzerland, Luxembourg plays a central role in its transformation, as reported earlier by Investment Officer.
Speakers at an 13 June event organised by the Luxembourg Association for Family Offices, known as Lafo, and the Luxembourg Private Equity Association, LPEA, discussed the market for family wealth. Asked if they noted a trend towards multi-family offices, they said they recognised the rationale behind a single-office family that transforms into a multi-family business.
‘Too much for a single family office to handle’
Increasing demands placed on investment managers by digitalisation of financial services - tokenisation - and more stringent requirements in terms of regulation and supervision as well as reporting provide a context in which it makes sense to join forces with other families. The challenging macroeconomic context further complicates managing family wealth.
“I think they really need this multi-family office,” said Anne Canel, who advises family offices as an independent director, and as CEO of consultancy firm Sherpas. “It is too much for a single family office to handle. So for me, it’s the correct answer to the market but it’s a risky business. At the end of the day it is a difficult and complicated job.”
‹Mutualising fixed costs’
Claude des Raismes, CEO at French family firm Wendel SE, which has been investing for some 270 years and now is serving its 10th to 13th generations, said he multi-family offices can save costs, in particular for meeting compliance and regulation requirements. Wendel has about 9 billion euro under management.
“I believe it’s a question of size. There is a kind of inflation in terms of fixed costs. With that I mean those for compliance issues, which require a lot of time, energy and euros at the end of the day. And it’s so mutualising fixed costs, also important I believe.”