If you don't know where you are going , any road will take you there. Is a family office a vehicle for more efficient and/or broader passive investment? Will it be entrepreneurial? Is it based around a central business to which a majority of the family is committed or is it an investment channel for a group of linked by familial bonds and/or shared values ? Is it big enough and does it have a diversified client base and professional management that it ultimately transcends its founding family?
This isn't just an investment issue . It is a question of the continuing appropriateness of a consolidated vehicle.
I’d be interested to hear about how Frederick learned to write so well, what’s the inspiration for style of prose, does it differ to how you would write in German?
Enjoyed this so much. Reminded me of The Battle for WSJ and how the Bancroft family couldn’t unite on any front and give away the media empire to Murdoch.
I have seen single FOs first hand and am currently working in a MFO. Most people tend to think that families with big portfolios (>$150mln) tend to be more rational, more sophisticated and better investors but I assure you that is a far-cry from where things stand. Also keep in mind that many families set-up single FO without really investing in the structure and that turns out to be a worse choice than working directly with one or two private banks. Finally I would suggest that, unless you are speaking of a very large single FO (above $1bn), it is very very hard to attract talent as these structures are simply not competitive in terms of compensation.
I agree that it's easy to set up a family office but hard to set up one that works well - or better than the alternatives. And yes, larger does not mean more rational. That's true for institutional investors, too. Agree on the talent issue (with the exception of PM/CIO function if there is carry/performance bonus).
Great article Frederick. Working for a family business business is like trying to carry a cat by the tail.... it is a unique experience. 😑
Indeed, you never know what's going to happen next :)
If you don't know where you are going , any road will take you there. Is a family office a vehicle for more efficient and/or broader passive investment? Will it be entrepreneurial? Is it based around a central business to which a majority of the family is committed or is it an investment channel for a group of linked by familial bonds and/or shared values ? Is it big enough and does it have a diversified client base and professional management that it ultimately transcends its founding family?
This isn't just an investment issue . It is a question of the continuing appropriateness of a consolidated vehicle.
Agree, it's a foundational question for a family. I've seen the answer change in real time which was quite disruptive.
Great article
Thank you, Reynaldo!
Excellent article. You are a very good writer. And English is your second language!
Thank you, Bert!
I’d be interested to hear about how Frederick learned to write so well, what’s the inspiration for style of prose, does it differ to how you would write in German?
Enjoyed this so much. Reminded me of The Battle for WSJ and how the Bancroft family couldn’t unite on any front and give away the media empire to Murdoch.
Thank you. I should read up on that story.🤔
I have seen single FOs first hand and am currently working in a MFO. Most people tend to think that families with big portfolios (>$150mln) tend to be more rational, more sophisticated and better investors but I assure you that is a far-cry from where things stand. Also keep in mind that many families set-up single FO without really investing in the structure and that turns out to be a worse choice than working directly with one or two private banks. Finally I would suggest that, unless you are speaking of a very large single FO (above $1bn), it is very very hard to attract talent as these structures are simply not competitive in terms of compensation.
I agree that it's easy to set up a family office but hard to set up one that works well - or better than the alternatives. And yes, larger does not mean more rational. That's true for institutional investors, too. Agree on the talent issue (with the exception of PM/CIO function if there is carry/performance bonus).