FT SPECIAL REPORT

Family Office

Playing it safeHow multi-family offices are preserving funds to pass on to the next generation

Thursday November 7 2013 www.ft.com/reports | @ftreports

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Family Office Family Office

Jeremy GrantAsia regional corporatecorrespondent

Ceri JonesFreelance journalist

Elaine MooreDeputy editor, FT Money

Tanya PowleyPersonal finance reporter

Elliot SmitherChief sub-editor, ProfessionalWealth Management

Lucy Warwick-ChingOnline money editor

Leyla Boulton,Hugo GreenhalghCommissioning editorsAndy MearsPicture editorSteven BirdDesignerFrazer HudsonCover and inside illustrations

For advertising, contact:stephanie.collier@ft.com;tel: +44 (0)207 873 4597.

Contributors »

In the discreet world of private moneymanagement, relationships can evolveover generations.

The heartlands of this industry areSwitzerland and London, where provid-

ers act as stewards for the world’s richestfamilies to ensure that the money inheritedby one generation is preserved and passeddown to the next.

As the world’s wealth rebalances fromwest to east, this model is undergoing atransformation.

Although the family offices of globalbanks such as HSBC still dominate the sec-tor by size of assets under management,they are coming under increasing pressurefrom smaller companies that are showingsigns of faster growth.

Multi-family offices such as StanhopeCapital and Matter Family Office say thekey to their success has been their effortsto gain clients in places such as LatinAmerica and Asia.

The number of family offices managinginvestments for wealthy families isexpected to triple in Asia within the nextdecade, according to research by Citigroup.

Catering to this new sector has its ownchallenges. Many wealthy families in thesemarkets are still actively involved in thebusinesses that made them their fortuneand prefer to plough money back into thecompany rather than hand it over to aninvestment adviser.

Bernard Rennell, global head of privatewealth solutions at HSBC Private Banksays many markets have witnessed anunprecedented increase in wealth since thesecond world war, particularly in Asia.

As these entrepreneurs reach retirementage there is an opportunity for advisers tohelp them plan what will happen to theirwealth and their businesses when they areno longer around.

“We reach out to these families and helpthem transition from a traditional modelunder which the patriarch or matriarchoften had complete control of the businessand managed it with long-standing, loyalstaff to a more pluralistic one under thestewardship of the next generation whichoften has a more modern, internationalskill set,” Mr Rennell says.

“There is a real need for this typeof professional planning in new markets,as families become increasingly interna-tional with members living, studying orholding property abroad, family businessesexpand across borders and different legal,tax and regulatory requirements need to bemet.”

In some ways, the global shift in wealthbenefits the family office arms of big pri-vate banks that boast outlets in everymajor city in the world.

However, smaller multi-family offices saythat they can offer a more personal rela-tionship as well as better access to nicheand flexible investment strategies.

Sebastian Dovey, managing partner ofScorpio Partnership, says smaller playerscan provide families with better direct con-tact and the option to control the manage-ment of their assets more closely.

Many multi-family offices pride them-selves on their higher allocation of moneyto alternative investments such as privateequity and hedge funds compared with

banks. In an era of ultra-low interest ratesthese can offer more appealing returns butcaveat emptor: the prices can be high andproviders are often keen to take a generousslice of any profits.

Paul Kearney, head of private investmentoffice at Kleinwort Benson, says familiesshould remember that there are other serv-ices they may need.

“When you deal with very wealthy fami-lies, investment portfolios are only one partof the whole. Wealth is often anchored to abusiness or assets such as properties andother lifestyle assets and there will often becharitable endeavours. These things allhave to be taken into account, which iswhy we are strong on good governanceinfrastructure.”

Underpinning every offer made to fami-lies is the understanding that providers canhelp ensure that disagreements about therole money plays in each member’s life donot fracture the family.

It is especially important to protect theinterests of family members whose voicesmay not otherwise be heard in the middleof the storm, says Andrew Nolan, manag-ing director of Stonehage’s Family OfficeDivision.

He recommends that families employ acodified set of rules to make the process ofinheritance easier to navigate.

Written constitutions are designed toensure that the passage of wealth from onegeneration to another is a smooth one. Ifthe contracts minimise the potential fortrouble in the future, they could becomeone of the most important services thatfamily offices have to offer.

Smaller-scaleadvisers seekedge by offeringbespoke strategy

WorldwideCompetition is fierce tomanage theglobal affairs of the newly aff luent from emergingmarket countries, writesElaineMoore

Safe as houses: family officesaim to preserve and grow capital,even in turbulent markets Alamy

Go the family way

A new wave of single-family offices isentering the market as hedge funds adoptthe structure to avoid regulations, writesTanya Powley.Growing compliance costs and regulatory

scrutiny have led more hedge funds tomove to a single-family office model inrecent years. George Soros, the billionairehedge fund manager decided, in 2011, toreturn money to investors in his Quantumhedge fund and convert the business into afamily office. New York-based hedge fundsCovepoint Capital and Brencourt Advisorshave gone the same way.New SEC regulations require hedge funds

that have more than $150m in assets undermanagement and manage the money ofoutside investors to register with the SEC.Family offices remain exempt if they adviseonly family clients.In Europe, single-family offices are

exempt from the Alternative InvestmentFund Managers Directive, which aims toimprove investor protection.

Barely a week goes by with-out a new study showingthe growth of wealth inAsia, and how the region iscreating it faster than anyother in the world.

One of the latest, by con-sultancy Capgemini andRBC Wealth Management,the Canadian bank, saysthat since 2007 the popula-tion with $1m in easilyinvestable assets in Asiahas grown by 31 per cent,with their combined wealthexpanding by 27 per cent.That is well in excess ofincreases of 14 per cent and9 per cent respectively forthe rest of the world.

Although so much invest-able wealth exists in theregion, the family officeremains in its infancy.Campden Wealth, aresearch company, esti-mates that between 100 and120 single family officesoperate in Asia, with 75 percent of them in Hong Kongand Singapore. That com-pares with an estimated2,000 such companies inEurope and North America.

Many entrepreneurs stillprefer to plough wealthback into their business,where they can get double-digit returns, rather thanturn to a family office thatmight only generate single-digit growth.

“Wealth creation in theregion is still very muchtied up with the familybusiness and family officeshave yet to capture theimagination of the region’swealthiest families as theyhave done in Europe andNorth America,” a reportfrom Campden Wealth andUBS noted.

Anuj Kagalwala, familyoffice leader at PwC in

Singapore says it can costbetween $500,000 and $1m ayear to run a family officewith two to four staff.

“The people we meet saythey have never had a fam-ily office and have growntheir wealth from almostnothing to $1bn and, if theyhave done so well without afamily office, it’s not aneasy thing to convince themof it,” he says.

Evidence suggests thepace of adoption is pickingup in Singapore, a statewith one of the highest con-centrations of wealthy peo-ple in the world. It is a hubfor wealth management insoutheast Asia, with Indo-nesians and Malaysiansattracted by its political sta-bility, sound common lawlegal system and strongfinancial regulation.

Anuj Khanna, chief exec-utive for south Asia wealthmanagement at Pictet, theSwiss private bank, saysvery large clients “noticedthe weaknesses of the tradi-tional private bankingset-up in servicing theirneeds, including conflicts ofinterest for bankers drivenby weekly revenue targetsand investment bankingproducts where the bankmay have its own inter-ests”.

Singapore has done muchto attract family offices,offering tax and otherincentives. “We are lookingto Singapore as one of thetop emerging hotbeds forfamily office activity,” saysRichard Wilson, chief exec-utive of Family OfficesGroup, a networking associ-ation based in Oregon.

The number of hedgefunds setting up shop toservice family offices hasincreased. Mr Wilson cau-tions, however, that fewhedge funds “have a clearstrategy for targeting fam-ily offices and even fewerhave a specific plan for rais-ing capital from Singaporeinvestors”.

One recent initiative may

help. A year ago, SingaporeManagement Universitylaunched the Business Fam-ilies Institute (BFI) to edu-cate family-owned busi-nesses in governance andmanagement.

“Some of the bankershave asked us specificallyhow they can learn moreabout family offices andthat’s something we have in

mind to do,” says Clare Lee,BFI business developmentmanager.

Still, the UBS/Campdenreport finds that hedge fundinvesting by Asia’s wealthi-est families fell by nearlyhalf in the last year.

Wealthy investors havebeen shifting money outof capital markets andhedge funds and into direct

investments such as prop-erty, which accounted for 16per cent of allocations thisyear, compared with justunder 9 per cent in 2012.

Kathryn Shih, chief exec-utive of UBS wealth man-agement in Asia-Pacificsays it may take a genera-tional shift for the familyoffice to take off as it has inEurope and North America.

East plays catch-up in planning for the futureAsia

Generational shiftmay bring change,writes Jeremy Grant

“As the second and thirdgeneration assume roles ofleadership within the fam-ily businesses, we are goingto see the concept of familyoffices changing to focusmore on planning for thefuture and putting strate-gies in place to ensure thecontinued success of long-lasting family legacies,” shesays.

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Family Office

The family office world has longbeen cloaked in a shroud ofsecrecy as rich families havesought to keep their personal for-tunes private. But the explosion of

wealth in the past few decades and dissatis-faction with the poor performance of port-folios handled by global private banks haspushed the sector to greater prominence.

While many single family offices still pre-fer their anonymity, so-called multi-familyoffices (MFOs) – private companies thatmanage the investments and financialaffairs of more than one family – are keento raise their profiles as they look todevelop their businesses.

The family office arms of the big privatebanks tend to be the biggest players in themarket. In a list of the top 50 richest MFOspublished by Bloomberg Markets inAugust, Hong Kong-based HSBC PrivateWealth Solutions was ranked as the big-gest, with assets under advisement of$137.3bn. BNY Mellon Wealth Management,Pictet and UBS Global Family Office fea-ture in the top 10.

Many of the oldest and most famous fam-ily offices continue to do well.

Bessemer Trust, founded in 1907 byHenry Phipps, the right-hand man of steelmagnate Andrew Carnegie, ranks third,with $77.9bn assets under advisement.Rockefeller & Co, which started out life in1882 as a single family office before openingits doors in 1980, came 11th with $23.1bn.

Some of the more interesting familyoffice players are those that are rapidlyincreasing their assets under advisement.Miami-based CV Advisors (see page eight)made it into the top 50 after becoming thefastest-growing MFO, with assets under

advisement up 100 per cent to $2.5bn in2012. The office has targeted its growththrough Latin American families. US-basedAscent Private Capital Management, Tolle-son Wealth Management and Bedrock havealso grown considerably over the past year.

According to Maurice Ephrati, managingpartner and co-founder of Bedrock – whichsprouted out of the Republic National Bankof New York, owned by the high-profileSafra family – says its growth has been acombination of taking on new families inits core markets of Europe, the MiddleEast, Russia and Brazil, and internal

Shroud of secrecy starts to slip awayInternationalVerywealthy families are becomingmore andmore globalised, reportsTanya Powley

Reach for the skies: Bessemer Trust, one of the US’s oldest family offices was founded in 1907 by Henry Phipps. Its headquarters are in New York’s famous Rockefeller Center Dreamstime

MFOs Acknowledging the virtue of collective effort

Multi-family offices take varying approachesto gaining a global presence. In 2011,London-based SandAire joined with five otherheavyweight MFOs from around the world toform the Wigmore Association and shareinvestment research.The founding members include Australian-

based Myer Family Company, HQ Trust fromGermany, Northwood Family Office fromCanada and US-based Pitcairn and Progeny3. Last year, it added Turim, one of thelargest MFOs in Brazil. It may look to addone or two more members from Asia or theMiddle East.Karen Clark, a director at SandAire, says

of the alliance between the MFOs: “What weare doing is sharing information to help usdo a better job for our clients.”

The chief investment officers of each MFOmeet twice a year to share insights onstrategies and meet local managers.The Wigmore Association last met in

September in Rio de Janeiro. They discussedthe economic outlook, with a specific focuson Brazil and the South American region.Investment management companies from theregion presented their ideas alongside thecurrent and former deputy governors of theCentral Bank of Brazil.Ms Clark says the benefit of an alliance

with other families becomes clear as theinvestment world becomes more global.“There’s a need to condense and analyseinformation beyond the scope that a familyoffice on its own would have,” she says.

TP

growth and expansion from its existingfamilies.

Sebastian Dovey, managing partner atthe wealth management consultancy Scor-pio Partnership, says many family officesmiss a trick by not adapting their model tocover multiple jurisdictions and are likelyto see their growth suffer. “This is a part ofthe industry that’s not fully matured yet.It’s been a business model struggle formany offices over the past five or so years.”

Stephen Skelly, head of private wealthsolutions at HSBC Private Bank, says itsglobal platform has helped give it anadvantage.

“Very wealthy families are becomingmore and more globalised. It’s not just thefact that they are acquiring assets – likereal estate – in several jurisdictions, butfamily members are scattered around theglobe and need to be able to transact inthose countries,” Mr Skelly says.

Other smaller family offices have taken asimilar view. Stanhope Capital, a fast-grow-ing London-based private investment office,founded 10 years ago, opened an office inGeneva in 2008 to service the needs of fami-lies from Switzerland, Latin America andthe Middle East who have traditionallybanked there.

Daniel Pinto, Stanhope’s co-founder andchief executive, says its choice has been tohave its international capability housed outof two offices.

Mr Ephrati of Bedrock admits it is not aneasy task to manage the changing regula-tions of each jurisdiction.

“Having said this, our clients see thevalue of our multi-jurisdictional set-up andof our local knowledge in different jurisdic-tions,” he says.

Subsidiaries of the big privatebanks tend to be the biggestplayers in the market

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Family Office Family Office

Disagreements over theasset allocation and direc-tion of family businesseshave driven some of theworld’s richest individualsto turn to written agree-ments to facilitate riskmanagement strategies overthe past few years of thefinancial crisis.

As wealthy families haveseen cash flows decimated,it has become harder toagree long-term strategiesfor wealth and disputeshave arisen over how capi-tal should be allocated tosupport family businesses.

Family offices havereported a rise in thenumber of formal agree-ments, known in the indus-try as written constitu-tions,. These outline howwealth should be managedby future generations.

“There is no magic for-mula for ensuring long-termcast iron asset protection interms of the family busi-ness or privately held assetsor avoiding disputes withinfamilies”, says Anna Stew-ard, senior counsel at law-yers Charles Russell.

“However, using a consti-tution to set out strategiesfor communication anddecision-making proceduresbetween family memberswhich strive to achieve fair-ness, a family is more likelyto work together to protectand preserve the familybusiness and accumulatedfamily wealth.”

Family constitutions havebeen around for generationsin the form of trust deeds,partnerships, shareholderagreements or other docu-ments, say experts.

“Equally,” says Alexan-der Dickinson, partner atlawyer Bond Dickinson, “a

family’s wish to allocatecapital between differentfamily members, some ofwhom may be involved inthe principal business andothers who may not, isnothing new.

“Many families own sev-eral very different busi-nesses requiring differinglevels of capital and differ-ent management skills.”

Such agreements tend tocombine a number of sepa-rate documents that set outthe framework for the fam-ily’s self-governance. Thiscan include a shareholders’agreement for the business,the constitution of a familycouncil with agreed disputeresolution procedures andan investment advisorycommittee that can includenon-family members.

It should set out the fam-ily’s goals, overriding prin-ciples and access to infor-mation for family members,who may not have an activerole in the management oroversight of business andother assets. It can coverrequirements for familymembers to enter into pre-nuptial agreements andshould account for circum-stances under which thebusiness may be sold.

One of the key features,says Ms Steward, is itshould be capable of beingamended – within limits.

For example, if the busi-ness is sold, the distributionand investment strategiesare likely to change infocus. “Whilst a constitu-tion will not in itself be alegally binding document, ifmembers of current andsuccessive generations areencouraged to sign up,there is increased likelihoodthat they will be willing toadhere to the principleswithin the constitution,”she says.

They can have the addedbenefit of helping individu-als to work out exactlywhat they want in terms ofsuccession planning. “Aswell as having practicaladvantages, the process ofdrawing up a family consti-tution can be extremelyuseful in itself as it requiresfamily members to standback and consider the big-ger picture, which isalways time well spent,”says David Baker, chiefinvestment officer atMazars Financial Plan-ning.

It is important foryounger family mem-

bers to becomeinvolved and manyfamilies are usingmodern technologyto engage them.

“We are nowusing innovativec o m m u n i c a t i o n

platforms to capture the‘soft information’, eitherfamily network platforms,which are like private Face-book sites, or secure cloud-based depositories, whichallow communications andupdates to be passedbetween members,” saysMike Batchelor, head of pri-vate office at BroadstonePensions & Investments. He

says this can help familymembers to make betterdecisions following a gener-ational change in the keyfamily decision makers.

Others say the process ofwriting a constitution cansometimes be more impor-tant than the documentitself – allowing families toiron out problems.

Grégoire Imfeld, head of

family governance at PictetFamily Office Services,says: “The real challenge ishow those families keep italive,” he adds. “What hap-pens once it is written? Itoften ends in a drawer andis forgotten.”

One problem is thatagreements can attempt tobe too exhaustive. Expertsrecommend keeping them

lean and relevant. Theysuggest leaving space forthe next generation toexpress itself will help keepsuch agreements alive.

“Whatever the reason andscope of a constitution, it isworth taking time for sucha process,” argues MrImfeld. “As the Chinese say:The palest ink is betterthan the best memory.”

Whatever you want, get it down in black and whiteWritten constitutions

Formal accords areon the rise, says LucyWarwick-Ching

Anna Steward,senior counsel atCharles Russell

The very wealthy clients served byfamily offices tend to be astutefinancially, often running theirown businesses. They bring withthem a unique set of requirements

for the capital they are looking to invest.Many express a desire to preserve thatwealth for future generations.

“Most of the families that come to us arequite often putting aside wealth,” saysJohn Veale, chief investment officer atStonehage Investment Partners, part of theStonehage multi-family office (MFO). “Theystill have operating businesses that aregenerating revenue and they want a safepot.”

With an MFO typically looking after arelatively small number of clients – Stone-hage offers a full advisory service toaround 40 families each investing upwardsof $10m – forming extremely close relation-ships is essential. Much of the discussionrevolves around the levels of risk the inves-tors are willing to take on and over whatperiod of time. An MFO will have its houseview on how best to build a portfolio,which it will look to match with the client’sown ideas and expectations. For the sake ofdiversification, those with a large exposureto property in their other investments orbusinesses might instruct their familyoffice to avoid that particular asset class.

Family offices tend to specialise inbalanced portfolios that will preserve aclient’s wealth while making moderategains, although they will tailor investmentsto take on more or less risk depending onindividual needs.

To do this they often utilise external fundmanagers, although they may provide somein-house expertise in specific areas such aslarge-cap equities. They will have anapproved list of fund providers covering arange of asset classes, allocating on behalfof clients when and where they see oppor-tunities.

“I would say what really differentiates usfrom a bank is that we can be more niche,”says Ariel Arazi, managing partner and co-founder of Bedrock, which offers familyoffice services to more than 60 clients.

“We believe a lot in asset allocation[which] is where 90 per cent of your returnscome from. Because we are smaller wehave a lot more flexibility in what to investin, what kind of managers and themes, andwhen we identify an idea then we canreally analyse it, study it, and then find thebest way to implement it for our clients.”

This flexibility can lead family offices toinvest in a much more diversified mannerthan institutional investors or privatebanks, which often lean towards largeallocations in equities and bonds. Whilethese still play an important role in manyMFO client portfolios, they frequently dis-play a greater willingness to consider alter-natives such as hedge funds, private equityor distressed real estate, an approach thathas found favour with investors in thewake of the 2008 crash and the volatility ofmainstream assets since then.

While high-quality bonds might tradition-ally have been used to preserve capital,many MFOs are scaling this back andallocating to lower-grade fixed income

or hedge funds to play a similar role.“We currently hold very few government

securities and the implied view is that thisis not a good way of preserving capital,”says Arthur Grigoryants, head ofinvestments at Fleming Family & PartnersAsset Management. “Given our concernsabout a possible correction in the othermain asset class – which is equities – thereis very little we can do to remain in themainstream.”

The relatively long investment horizonsof many ultra-wealthy families, as well astheir ability to stomach a certain lack ofliquidity, have made private equity increas-ingly attractive to some. While many fam-ily offices recommend a fund-based

approach, others have championed the useof club deals, where two or more familiesare brought together to invest in a venture.

Family offices very often show a propen-sity to be ahead of the curve, says StuartMacDonald, managing director at AquilaCapital, an independent specialist in alter-native investments that has long had deal-ing with family offices.

“That is what justifies the positions ofthe chief investment officers. Some of thevery first investors in hedge funds werefamily offices and they tend to be quietlysophisticated when it comes to this sort ofthing. There are family offices where themajority of their allocated capital is tied upin alternatives,” says Mr MacDonald.

Clients look to maintain a ‘safe pot’Strategies

The discussion revolves aroundthe levels of risk investors arewilling to take on and overwhat period of time, writesElliot Smither

Relatively long investmenthorizons have made privateequity increasingly attractive

Illustration:FrazerHudson

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Family Office

B Capital wasestablished in theautumn of 2008by Lorne Baring,an old Etonian andformer Life Guard,who set up officesin London andGeneva after astint at Barclays’Swiss office. Thebusiness has 20clients, with $500min classic assetallocation strategies(such as bonds and equities) and roughlythe same in private equity investments.Mr Baring has been able to take

advantage of high growth rates in emergingeconomies – particularly Russia – where hehas family connections, and is well known inthe energy and banking sectors. His brotherEdward is a partner in finance at lawyersHerbert Smith Freehills in Moscow.“Amongst very wealthy Russian families

there is an overlap between the politicsof the country and generic risk, and thesefamilies naturally want to diversify outof Russia due to proper risk mitigation,”Lorne Baring says. “It is prudent to have alink outside, and the obvious places areSwitzerland and the UK.“If an oligarch arrives in London with

$100m, he is likely to deploy it quickly, andthat is good business,” he adds. “There areservices such as property lending, currencytrading, precious metal storage and trading,and trust advice.”Mr Baring talks to half his clients every

48 hours, and each of them weekly, andsays he really enjoys the client relationshipside of his work. “I’m dealing with themost demanding and exciting entrepreneursin the world,” he says.

CJ

Lorne BaringB Capital

Fast-growing emerging economiesoffer great business potential formulti-family offices, particularlyfor those prepared to go the extramile for clients with recently

acquired wealth. Many of these will havemade their fortunes in the 1990s and areconsidering diversification and successionplanning for the first time.

“China now has the second highest con-centration of billionaires in theworld,” says Rolf Roetheli, a wealth and taxplanning expert at Julius Baer, the Swissprivate bank. “However, family officesin the region, which number just over 100,do not reflect the boom in regional wealth.The growth of HNWIs [high net worthindividuals] and ultra-HNWIs in Asia hasoutpaced the availability of experiencedwealth managers and relationship manag-ers.

“There is a huge opportunity for provid-ing services around structuring their

families’ wealth for the future such asintergenerational wealth transfer, philan-thropy and estate planning.”

In many cases, first-generation entrepre-neurs will require several structures andservices to be put in place from scratch, butthey can be distrustful and more demand-ing than subsequent generations, who aretypically educated in the west, and moreresponsive to professional advice.

“Russian, Arab, African and Chinesebanks are opening branches to capture thisbusiness,” says Mark Idriss, head of globalemerging markets at UBS. “Several smallArab private banks have opened in Londonand Switzerland. Arab families can be com-plicated, as often more than one brother isinvolved at high level, and there are multi-ple families.”

The Russian market is characterised by ahigh proportion of pioneers who havecashed out of a new idea or business oppor-tunity and have become very wealthy veryquickly, rather than entrepreneurs who arecommercial in a traditional sense. Theymay not have solid, sustainable businessesto run, and are typically keen to diversifyout of Russia to avoid political risk. Severalmulti-family offices have set up an interna-tional office outside Russia. London is afavoured destination, as it is a hub forinternational business and is seen as anattractive place to live.

Succession planning in emerging markets

is a hard sell compared with the west, as itcannot be easily measured in terms of

mitigating inheritance tax (IHT).“Asian environments, don’t have

that inheritance tax driver so thevalue of a trust is in the conven-ience of the succession planning andthe consolidation of the assets, andusing the succession structure as a

means to protect long-term wealth,”says Mark Smallwood, head of fran-

chise development and strategicinitiatives, Asia Pacific, at Deut-sche Bank.

“IHT is already in forcein certain provinces and citiesin China, and big law firms inIndia are beefing up theirteams in the expectation thatit won’t be long arriving.”

International families alsohave a need for cross-borderplanning, and this hasbecome more challenging as

countries become increas-ingly sophisticated inenforcing taxes.

Many argue that the solu-tion would be to establisha large network with

country-specific competence,which is an area in whichfew family offices can hope tocompete.

Call goes out for specialist adviceEmerging markets

The well-heeled fromfast-growing economiesincreasingly look to successionplanning, writes Ceri Jones

Mark Idriss, head of globalemerging markets, UBS

CV Advisors is the fastest-growing multi-family office in the world, according torecent rankings in Bloomberg Markets. TheMiami-based company’s assets underadvisement grew 100 per cent to $2.5bn in2012, with the growth coming from just sixfamilies.CV’s total assets stand at $2.9bn,

representing the wealth of 42 families basedin Latin America and the US.Elliot Dornbusch, chief executive and

founding partner, started investing hisown wealth in 2003, after selling hisVenezuelan construction company andmoving to the US.He was joined by his fellow founding

partner and childhood friend Alex Mannin 2006, when other families started toask Mr Dornbusch if he could managetheir money, too.By 2008, CV had approximately 10

clients and was joined by its third foundingpartner, Matthew Storm.According to Mr Dornbusch, an

economist by training, CV helped itsclients preserve their wealth duringthe financial crisis through a “conservative”strategy of controlling volatility, rather thanby targeting returns.They invest mainly in corporate bonds

with an average duration of six years toprotect against rate rises, and aim todouble their capital every 10 years.CV’s clients are single-family offices,and their work is almost solely non-discretionary investment, rather thanadditional services such as advising onschools, Mr Dornbusch says.“Nobody in our firm goes out looking

for clients,” he says, attributing itsgrowth to word of mouth.“We take an extremely long time,” he

adds, “to make sure that a family who joinsus adds value.”

Rachel Savage

Elliot DornbuschCV Advisors