One of the most enduring family office myths is that no one office is alike. The industry's most common phrase, 'once you've seen one family office, you've seen one family office', speaks to their distinct nature. Yet the UBS and Campden Wealth Global Family Office Report 2014 cast doubt on this conventionally held wisdom, finding that family offices have more in common than originally thought.
“Before the study I had the perception that family offices were relatively similar, but I've been absolutely amazed at how similar they are by geography,” says Philip Higson, vice chairman at UBS's global family office group. “The range of variants is really quite small, whether you take the cost-line item or asset allocation strategy,” he says.
Higson says the most surprising revelation was that large family offices were not able to demonstrate economies of scale whatsoever, which he speculates is because they are forced to spend on additional services. He said the negative effect of close owner involvement on performance was also surprising.
Higson says that there are three things that family office executives should take away from the report if they hope to better serve their employers.
“Firstly, there needs to be an improvement in communication. The report shows that there is a divergence between how much services cost and how much family members value the service. This means that family office executives have failed to communicate the cost benefit of the said line item,” he says.
“Secondly, what is it that the family thinks costs a lot or values highly? These are family professional services. They actually cost less to implement but are highly valued by the family. Things like managing cars or boats, or bill paying services.
“The last key finding is how poorly family reputation management is handled. Direct reputation management is not particularly high on the radar screen of the services provided, but it is very high on the radar screen of what families want. The repercussions of a drunken night in a bar can last the next 50 years.”
Based on the surveys of 205 principals, beneficiaries and executives, the Global Family Office Report 2014 is the largest family office study ever committed to paper. The sample size ranges across 40 different countries and included offices that manage more than $180 billion (€144 billion) in global assets in total.
If you are part of a family office and would like to be involved in the 2015 Global Family Office Report, please feel free to complete our online survey. Alternatively, the research team can be contacted at firstname.lastname@example.org or on +44 (0)20 3763 2800.