The CEO of multi-family office Pitcairn has said family offices and advisors for ultra high net worth families need to pay closer attention to risk control.
Investors are less interested in chasing returns and more interested in long-term stability. Dirk Jungé, chairman and chief executive of Pitcairn, said: "Investors are taking a much more sober attitude towards risk, realising additional risks may now exist where not previously anticipated."
The economic crisis has significantly impacted wealthy families and caused unprecedented problems for those attempting to advise them, according to Jungé. He said: "Skilfully and discretely managing the many options in today's unpredictable investment environment, as well as the unique relationship between affluent families and great wealth, remain the central challenges to sustaining that wealth over the long-term horizon."
A lack of trust, caused by failed banks and high profile scandals like the Madoff case, has lead to a lack of confidence from families in traditional institutions and their advisors. Jungé understands there is no short-term answer to regaining trust. "Because of the substantial assets involved, the need for long experience in many market environments, coupled with objectivity and transparency in every aspect of a family's wealth structure, cannot be over-emphasised. It is incumbent on the MFO industry today to provide a bridge of trust to meet the very specific requirements of its client families," he said.
Pitcairn is a US multi-family office that was originally set up as the single-family office for the Pitcairn family. It branched out to advise more families in 1987.