Rise of Global Family Office Power. The 6th Global Family Investment Office Summit, Monaco, Monte Carlo, June 2018.
By Mariett Ramm BSc Hons, CEO, CMO, BBW
The ascent of newly established and hundreds of year old family offices around the world is diversifying the landscape of sophisticated market, with new wealth centres emerging and a changing approach to wealth management and wealth preservation.
According to 2017 “World Ultra Wealth Report, there were 226,450 Ultra-High-Net-Worth (UHNW) individuals in the world, with a total combined net worth of US$27 trillion. Billionaires are a special category of UHNW individuals. According to the Billionaire Census 2014, there were 2,325 billionaires in the world, around 1400 families, with a combined net worth of US$7.3 trillion.
“If you define a family office as $250m upwards, there are as many family offices in Europe as the US,” says Michael Oliver, co-founder of family office services firm Global Partnership Family Offices. “ The Old Wealth that has survived in Europe, coupled with the new wealth is entering particularly from Russia, following the demise of communism.” Family offices are also gaining traction in so-called BRIC countries (Brazil, Russia, India, China), where wealth creators view their own infrastructures as outgrowths of themselves. The Institutionalization of Asian Family Offices reports a surge in China, where those with over $100 million in assets account for one third of the growth in Asia. A Wealth Insight study predicts a 104 percent explosion in India’s UHNW group over the next decade.
As family offices have started to globalize, we are seeing a natural development of family offices. More recently, existing family offices have made changes to the way they operate, adding additional offices around the world and emerging in forms that are different than the traditional structure. Many family offices are also growing their business by merging with other family offices, creating economies of scale, which ultimately benefit the client. “Family offices are becoming more international as families are becoming more complex – the trend toward having multiple jurisdictions will likely continue,” says Mike Reed, managing director, multi-family offices at RBC Wealth Management.
The current market environment has also influenced the way family offices invest. As the search for yield and predictable rates of return intensifies, family offices have begun focusing on non-traditional asset classes, such as private equity, real estate, and blockchain. Objectives of family offices remain inter-generational wealth management, tax and estate planning, family unit preservation and education, philanthropy, and various lifestyle enhancement services.
Family offices are divesting funds from traditional sectors, and investing in food security, agriculture, alternative energy and climate change. E-lending platforms such as Prosper and Kabbage, and new vehicles such as equity crowdfunding, have proved popular draw for venture capital also. Family offices may be pursuing several goals, either separately or in tandem. Some could be looking for diversification, drawing away from the technology sector or specific company they have already launched. Others may be trying to find strategic investments that can generate synergies between existing holdings or lines of business. In general, most families are looking to access businesses they feel would grow exponentially faster than the standard asset base of stocks and fixed income.
I personally attended The 6th Global Family Office Summit in Monaco organised by the 600-year-old history family of Ritossa to learn more about progressive movements of global family offices, mindset, regulations, technology and wealth management trends.
Family office headed by Anthony Ritossa created a leading and authoritative movement in organising these annual events in order to bring A-List group of 300+ Billionaires, Sheikhs, Royal Families and Business Leaders together from around the world, representing more than $2 trillion in investor wealth. “We organise these Global Family Office Summits several times a year in magnificent cities such as Monaco and Dubai in order to provide two days of private peer-to-peer conversation, networking and cross-border thought leadership. Every event is designed to make substantial families think about what to look out for and how they are investing.”- Anthony Ritossa.
This summit, which was held under the High Patronage of His Serene Highness Prince Albert II of Monaco and hosted in the prestigious Meridian Beach Plaza Hotel Monaco over two days at the end of June, was very special.
Giuseppe Ambrosio, President of Monaco Single and Multi-Family Office International Association, Monaco Business Tourism Ambassador, ICAEW MC, collaborated with the Ritossa Family to bring an advanced, fresh, and original perspective to family offices about opportunities in Monaco. Mr Ambrosio helped the summit over the two days with his extensive knowledge on wealth management and passionate commitment towards philanthropy, as well as allowing the summit to build unprecedented local support with all key Monegasque institutions.
Mr Ambrosio opened the summit with keynote session about Monaco’s long-term wealth strategy. He moderated several discussion panels during the two days including private banking with Ian Legder Director of Landmark Management Monaco, and impact and social responsibilities for future investment opportunities with His Excellency Bernard Fautrier, Vice President and CEO of The Prince Albert II of Monaco Foundation. He headed a dynamic round table discussion about living and setting up businesses in Monte Carlo.
Mr Ambrosio chaired the highlight philanthropy award ceremony which saw Sir Stelios Haji-Ioannou, the founder of easyJet and member of The Giving Pledge Foundation, receiving ultimate recognition for his philanthropic contribution, The Family Office Lifetime Achievement in Strategic Philanthropy Award, including a keynote presentation by Sofia Michelakis from the Bill and Melinda Gates Foundation.
“At that time, I wanted to create a bit of an institution, a bit of a legacy if you like. So, we sat down with the people from Leonard Chesire and created an annual award that goes to a disabled person who has started a business.”- Sir Stelios.
Six additional awards presented by the Monaco Single & Multi Family Association in recognition of business success included:
Best Family Office Asset Manager Award for 2018 – MEDIATRIX CAPITAL collected by CEO MICHAEL S. YOUNG
Best Family Office Innovation in Private Equity with Impact Award for 2018 – COLLER CAPITAL collected by HEAD OF FAMILY OFFICE STEPHEN ZIFF
Best Family Office Private Banker Award for 2018 – CMB collected by CEO WERNER PEYER
Best Family Office Shipping & Yachting International Legal Counsel Award for 2018 – MBLAW OFFICE collected by IRENE BALLINI
Best Family Office Fund Manager Award for 2018 – GFG collected by CEO STEFANO ZAVAGLIA
Best Family Office Social Responsibility Report Award for 2018 – FERRERO – collected by GUIDO GIANNOTTA
“It is a real honour for Monaco to be selected as the location for the influential Ritossa Family Office Summit and our sovereign city-state did a stellar job of rolling out the red carpet for this esteemed group of global family offices,” said Master of Ceremonies, Eric Brundage, Owner of Monaco Life, who opened the prestigious event.
H.R.H. Prince Michel de Yougoslavi, Grandson of King Umberto of Italy and Prince Paul of Yugoslavia, also attended the event.” My experience was very pleasant. It was a very open-minded summit, and the participants were very aligned. It was obvious that everyone was very respectful of the space of other participants and at the same time engaging and willing to express their views and open to discussions and exchanges. I learned a lot about the investment objectives of the various families as well as different themes. Heard about technologies, artificial intelligence, Silicon Valley, real estate, small caps, data processing centres etc. The rhythm was also very good, the panels were very much on time and on target. I enjoyed participating to one, and there was a good exchange with the participants. Overall, I wish to thank the participants and the organizers. It was a great way to make new contacts and to deepen existing relationships.”- revealed His Royal Highness to me in a one to one conversation.
The first day keynote panel session spotlighting The Middle East saw an intense interest from participants. Speakers included His Excellency Zulfiquar Ghadayali CEO of Private Office of H.H. Tahnoon Bin Saeed Thnoon Al Nahyan; Habib Al-Assaad, Co-Executive Director of AFAQ Group / Office of Sheikha Latifa Mohammed Bin Mejirin Al Murar Espoused to His Highness Sheikh Hasher Bin Ahmed Bin Juma Al Maktoum, UAE ; Faris Al Tahtamooni, Manager – International Ventures, The Private Office of Sheikh Saeed Al Maktoum, UAE; and Adam Ladjadj, Managing Director of FDI, Private Office of Sheikh Hamdan bin Mohammed Al Nehayan, UAE.
I sat down with panel moderator of this session, Nabil Nazer, CIO, Al Sulaiman Group, Kingdom of Saudi Arabia, to find out about investment approach and moderating the panel. Mr Nazer, who started his career in Beirut, has been with the AL Sulaiman Group for five years now prior to being a CFO for Holding Company in Jordan. He was also in investment banking, private placement and IPO restructuring, and acted in advisory capacity on various businesses including taking operations public on the stock exchange.
“As a moderator, it is important to listen directly and extract the insights from the panellists who are talking to you. I really wanted to get across something different. I didn’t want people to leave the session thinking “we have heard the same content before”. I wanted to leave the audience with the revelation that they did not know that this sector was so compelling and thought-provoking. We covered a lot of non-conventional sectors also. I really liked surprising the panellists with surprise questions; spontaneously getting generous answers which really reflect some direct approach is the main jewel of a multiplex conversation.”
“My initial observation was that investors are looking for non-conventional investments; blockchain AI and fintech. These compliment a more traditional portfolio, also these sectors are generating 100 to 200% return to the conventional 8%, which is very interesting. The second thing I observed that a lot of family offices are focusing on the start-up entrepreneurial ecosystem, and they are getting involved at a very early stage with start-up companies, especially those who are coming into the region.”
Tips from Mr Nazer
- It is vital to know how much to allocate to “exotic” types of investments. If the selection is done right, it reflects positively on the portfolio. There is also an oversupply of blockchain and fintech opportunities so finding the right opportunity is also a challenge. Finding the right opportunity especially in an industry where you don’t have established players, is vey challenging. It is like finding which horse to bet on.
- It is very important to willing to invest in the relationship. If you are meeting with an investor and expect him to write you a check that is pushing the boundaries of disappointment. It’s not going to reflect well. A company must show improvements from one year to the next and prove that they generated the expected results. That way the investor can have faith and confidence. Invest in educating your investors.
- People move around today. “I might be representing a family who is currently not interested in blockchain. But maybe in a year’s time I am with another family that explicitly looking for blockchain related opportunities. If I remained with the same family who within a year decides to change the investment appetite, if people don’t invest in the relationship with me, spend time in the old-fashioned way to nurture our relationship, success will be very difficult. Only a handful of start-ups succeed. So, they must respect these parameters.
- The cost of failure is much higher than the price of discipline. If you have a structured disciplined investment strategy and because of that you may miss out on amazing opportunities. Not enough time to make the right due diligence; they do not meet certain criteria; because you don’t make the decision fast enough. You should not be disappointed. Being rushed and in a hurry increase the risk for making mistakes. These mistakes could wipe out entire gains that you made from something else. So actually, a structured and disciplined approach on the more stable, analytical, and solid foundations will generate returns on the long run.
I also caught Joze Oberstar for an afternoon coffee on the second day of the event, who has been working with the Ritossa Family for three years now as legal representative. “We are helping to organise the validity and the media for the conference. I believe that the conference is growing, and the community is getting stronger and more connected since the first summit that took place 3 years ago in Dubai. Topics are very present, contemporary and up-to-date with investors’ current interests. The best thing of this conference is the very extensive networking. People who come here are very prepared, they are decision makers and they want to discuss business. I personally have noticed that blockchain is of a great interest. Projects are getting more realistic to investors, and people are more optimistic about blockchain than they were a couple of years ago.”- said Mr Oberstar, Attorney at Law previously European and international Affairs Officer at Cabinet of Ministry for Interior Affairs of Slovenia.
And speaking of blockchain, Chainstarter, a UK based company lead by Nick Ayton Founder and CEO, was the main sponsor of the summit representing several high profile global blockchain companies. Chainstarter is second generation Token Launch Platform that delivers full Security, US Accreditation and digital KYC/AML. It is fully functional Crypto Exchange that creates a market for Tokens that are Securities. New Token Listings, Market Making and OTC. It is also the development of Blockchains, Blockchain agnostic including Bitcoin, Ethereum, NXT, Stellar and other DLTs.
Mr Ayton delivered a fascinating one-hour keynote presentation on the first day of the event, What’s to come in 2018? “The value of the dollar is going to zero because the Central Banks have printed too much money on a mistake in concept called Keynesian economics. This concept devalues everything. The value of your assets the value of your house, the value of your currency, your ability to feed yourself, send your children to school. All currencies will go to zero unless we change something. Pension funds, mortgages, and insurance are also failed products of the past. We need to reinvent the capital market, and design products using the new technology that delivers value to the people that matter most. Ordinary hard-working people who do all the work.”- said Mr Ayton.
There were plenty of networking in between breaks, as well as before and after the hectic day program schedule. The amazing buffers, selection of day-time amuse-gueule refreshments, and lunches provided for participants left everyone incredibly contented. On the second day late afternoon, I sat down with a group of participants to ask about their experience. My focus was to find out what initiated the attendance for this prestigious event, and the value they received from participating.
The small networking group I talked to had members from New York, San Francisco, Zurich, and Milan. One gentleman, a professional photographer in the process of digitalising his business who participated in the event via recommendation of a trusted advisor, said he was very pleasantly surprised how open and transparent the event was with a very positive feel to it. A Zurich family office representative was looking for projects, and really overwhelmed by the quality and high standard of proposals. She also agreed overall participants were very open to talk and exchange ideas. The couple from New York said is has been the best organised event they have ever been to. The level of engagement, high level of trust in an intimate environment, competency. “There are so many things that we will take back with us. We met some remarkable people, family offices approached our business, we made some incredible friends. “I personally have been in business for 25 years, and one has to take opportunities like these to grow. We have to work in unity. We have to share in order to grow. The community here is vital.”- said the businesswoman from New York.
For details on the upcoming invitation-only 7th Global Family Office Investment Summit to be held in Dubai on November 11-13, please email – info@RitossaSummits.com
For further details about the Monaco Single & Multi Family Office International Association and accreditation for local Monegasque family offices please email Giuseppe Ambrosio at email@example.com
Mariett Ramm CEO of Billionaire Chronicle