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Wealth Manager: Clarmond House's MD explains why multi-family offices don't work

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by James Phillipps on Nov 29, 2012 at 00:01

Like many in the industry, Clarmond House chief executive Chris Andrew learned as much about what does not work as about what does in his formative years in the private client world.

Fast-tracked to become an investment manager at family office Consulta, he was thrown in at the deep end early on.

‘I went straight from university to a family office based in London at the age of 21 and I didn’t realise at the time that this was unusual,’ he says. ‘It was a single family office, a Latin American family with around $2 billion in assets with beneficiaries all over the world.

‘A family office is a totally different upbringing than in a private bank. I was given a lot more responsibility early on and it is not just what you do but how you behave. You never knew when people were coming in and whether they were worth millions or not.’

He looks back fondly on his time at the firm. As an early adopter and large holder of hedge funds, Andrew was able to meet the great and the good of the hedged world at a young age and developed a passion for asset allocation.

When the firm changed direction to become a multi-family office he was spending a lot of time with third party clients, which enabled him to build up an enviable contacts book in the family office world and an insight into different approaches to running wealth. But against the backdrop of the financial crisis, his exposure to both led Andrew to believe the multi-family office structure was flawed and hedge fund pricing was unsustainable.

‘Jon Hunt, the former owner of Foxtons, was on the advisory board. I took him round different family offices but you have to ask what different families have in common – they have different values, needs and goals. What do the Flemings, Alex Scott or the Hambros really have in common apart from the fact that they are families?’ he asks.

‘A single family office is undoubtedly the most attractive way to have your money run if you have enough to justify it, but that number is going up and up.’

He accepts that many families are not interested in setting up their own family offices and the businesses do have their own problems. Besides the normal hassles of hiring people and finding premises and so forth, there is the in-built difficulty of incentivising people, particularly when many senior people will want equity in the business.

 

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