Editor's note
Welcome to issue 7. When we launched the first Campden FO magazine in autumn 2008 there was much talk of the rise of the multifamily office. The credit crunch was in full swing and Lehman Brothers was filing for Chapter 11 bankruptcy protection, starting in train the global financial crisis.
With trust in financial services institutions falling faster than the average stock, the apparent sanctity of an MFO was particularly appealing. A grouping of like-minded investors, free from the inherent conflicts of interests at major banks made a compelling case for a new form of wealth management.
Two years on, while the economic recovery is underway the rise of the MFO has yet to come to fruition. It still might of course, but it is fair to say there is a certain amount of soul searching going on within the MFO community as consolidation and closures take the shine off this little understood sector of the wealth management industry.
In our cover feature this issue, we take an indepth look at the MFO marketplace and assess where it stands today and where it might go in the near future. David Bain analyses some fundamental issues, such as whether MFOs will ever be able to provide the same level of services that a big wealth manager connected to a universal bank can.
Then there are issues over the ability of cross-border deals, an increasingly important strategy in today's global economy, and whether an MFO can truly service a large family without compromising profitability.
The MFO is not dead, nor is it dying. Instead, what we are seeing is something more akin to teething problems or perhaps a troubled adolescence. The fundamental business case behind the MFO remains strong and as relevant as ever.
More than anything, MFOs need to define exactly what they are. Many service providers have jumped on the bandwagon, purporting to be family offices when they are nothing short of asset gatherers.
Such outfits will not succeed, but nor will a loose gathering of speculative families who like the idea of having a family office but have neither the required talent nor the necessary assets to make it work.
Elsewhere this issue, we tackle how senior family office staff should be paid. In particular we look at long-term compensation and how it differs between single and multi-family offices.
There is an exclusive interview with John Phelan, the man who runs the single family office of IT impresario Michael Dell. I am grateful to John for sharing his insights into investment management and how he runs one of the most successful family offices in America.
In light of the BP debacle, we investigate whether investing directly into socially responsible companies and funds is more beneficial than pursuing change through philanthropy.
There is an exclusive roundtable from Campden's Family Investment Workshop in Zurich where families, family offices and independent experts discussed their views on the current economic climate.
Real estate, hedge funds and venture capital investing form the basis of our Class section this issue. David Bain analyses the latest property trends, while Michael Fischer looks how relevant and integral hedge funds are to the portfolios of family offices around the world.
We also look at the merits of investing in young, growth companies, which given the increasing importance of the private sector in helping western economies rebalance their economies, is a strategy worth pursuing.
Finally, we provide you with 10 tips to help you with your philanthropy.
Enjoy the issue.
