US wealth manager Abbot Downing has established a new business strategy to better focus on single family office clients, with its president stating that more investment entities are transitioning into family offices in the face of increasing regulation.
The group announced last month that it would be appointing Joe Freeman its new head of family office services. The platform would facilitate access to products and services provided by Abbot Downing’s parent company Wells Fargo.
Jim Steiner, president of Abbot Downing, said these services might include treasury management, private banking or insurance solutions, as well as pre-IPO investing and international services.
The wealth manager traditionally deals with families that have $50 million or more of investible assets, multigenerational families, and charities and endowments. It was ranked as the 11th largest multi family office worldwide in Bloomberg’s annual survey of the industry.
“We do have a number of family offices we serve, we just serve them in a different way to our core clients,” Steiner said. “What we really did was step back a year ago and think how might we serve this niche a lot better.”
Steiner said that he believes there is an increase in the number of single family offices being formed.
“A lot of people that may have been RIAs or running alternative asset management businesses, often times they may just give the external money back and turn into a family office, as opposed to putting themselves under greater regulatory scrutiny,” he said, adding this trend is strongest in big cities like New York, Chicago, Los Angeles, and San Francisco.
In the US a number of hedge funds have returned investor money and transitioned into single family offices since the Dodd Frank Act stepped up scrutiny in the financial services sector following the 2008 global financial crisis.
Former hedge funder Melissa Ko, who founded Covepoint Capital, is an example of a fund that converted into a family office, alongside legendary investor George Soros, and more recently Douglas Hirsch, who closed his fund, Seneca Capital, to outsider money just before Christmas.
Steiner said some of the differences in dealing with family offices compared to core clients was that they often interacted with office staff rather than the individual family.
He added that family offices typically required more banking services, like custody solutions, but that the investment expertise embedded in-house varied from one family office to the next.
Freeman has worked in the wealth management industry for 25 years, and has led the Mid-Atlantic Abbot Downing practice for the last five years.