A messy divorce, impact investing, and Indonesian rich lists – these were just some of the themes that kept CampdenFB readers hooked during 2014. Below we've listed the most read stories of the year.
Berkshire Hathaway has long been one of the most expensive listed stocks in the US, but it hit a milestone this year when its Class A shares passed the $200,000 apiece mark in August (they are now priced at $226,000) – something chairman Warren Buffett claims attracts long-term investors. Family offices should take note, argued Charlotte Thorne, co-founding partner at private investment advisory Capital Generation Partners. She said Berkshire Hathaway shares could provide them an interesting alternative to private equity or direct deals.
Intergenerational wealth management was the most important objective of family offices, followed by the consolidation of accounting and tax functions according to the inaugural Global Family Office Report 2014. Andrew Porter, director of Campden Wealth Research, described it as: “the largest family office [report] ever conducted, with over 200 principals, beneficiaries and executives participating.” Of its survey respondents, the average family office has total assets of $890 million.
Wealthy individuals and families accounted for 17% of total capital raised by impact fund managers – behind pension funds and insurance companies but ahead of development finance institutions, retail investors and foundations. The Impact Investor Survey, released by JP Morgan and the Global Impact Investing Network (GIIN), reported that 125 of the world's largest impact investors expected to commit 19% more capital this year to the investment style. More than nine out of 10 impact investors said financial returns were above or consistent with their expectations and nearly all reported satisfaction with the social and/or environmental impact of their investments.
Sexagenarian Riley Bechtel stepped down as chief executive and president for Bechtel Corporation due to ill health and was replaced by top candidate Bill Dudley, who had worked at the engineering and construction business since 1981 and had been president and chief operating officer since 2008. Bechtel's son Brendan was appointed president of the oil, gas and chemicals business making it the first time since the 1980s that three generations of the Bechtel family had served in leadership capacities.
Many wealth management firms are masquerading as family offices despite not delivering the same independence and objectivity due to their commercial interests, an article published in The Journal of Wealth Management warned. Unlike these firms, family offices exclusively serve the interests of the family for which they work. It added that families shouldn't assume they will receive true family office experience and services “from a traditional wealth management firm just because it calls itself a family office.”
When the media discover your college roommate did all your homework and you're forced to return your degree, another scandal is never what you want on your hands. Unfortunately the great-niece of Walmart founder Sam Walton, heiress Paige Laurie, reappeared in the spotlight as it was revealed that on divorcing Patrick "Bo" Dubbert she lodged a civil suit on the grounds he siphoned cash from their joint-owned Malibu shopping centre.
Family-owned multi family office Fleming Family & Partners agreed to merge with Stonehage, creating Stonehage Fleming Family and Partners, thereby reducing Fleming Family Trust Company's ownership stake to less than a quarter of the new entity. Family office consultant Kirby Rosplock warned, however, many multi family offices are inefficient and gaining scale may not be the answer to the industry's profitability quandary. The combined business will serve a client base of over 250 wealthy families, and will manage, advise, and/or administer more than €34.6 billion of assets.
Almost two-thirds of people born between 1980 and 2000 own or are interested in socially responsible investments, compared with 40% of the previous generation, due to a forthcoming wealth transfer and shift in mentalities, US Trusts' Insights on Wealth and Worth 2014 found. These “millennials” are more likely to sacrifice financial return for social return. More than eight out ten either own or are interested in owning tangible assets such as land, real estate and timber and are highly interested in using private equity and hedging strategies.
Topping Indonesia's rich list were brothers Michael and Robert Hartono, worth €7.2 billion each thanks to their father's clove cigarette company Djarum. Anthoni Salim, the son of Bank Central Asia's founder, Eka Tjipta Widjaja, who founded family business, Sinar Mas Group (one of the largest conglomerates in Indonesia) and Susilo Wonowidjojo, the son of the Gudang Garam clove cigarette company founder also featured.
The head of strategic planning at technology company Infosys, Ganapathy Subramanian, stepped down to become a vice president at the family office of Infosys' cofounder S D Shibulal. Bangalore-based Innovations Investment Management India has managed the Shibulal family wealth since 2006 alongside a portfolio of hospitality and real estate ventures and is committed to education and healthcare through its two foundations. Infosys reported revenues of Rs 50,000 crore (€6.7 billion) in its 2013-2014 financial year, boosting their year-on-year revenue growth 24%.