Twenty-three single family offices with a combined net wealth of $20 billion came together for a BConnectClub dinner at L’Oscar on February 6th to listen to three investment presentations; Skyhub Digital a hub for media content on demand from any device, Vachi Diamond, a disruptive multi-channel retailer and Citizen Cosmetics an inclusive vegetarian, cruelty free make up brand for a diverse online audience.
Amongst the investors was my client, Jacob (not his real name).
In 2015, before he sold his digital technology company Jacob read my book ‘When you are Super Rich who can you Trust?’. When he came to sell his business, he knew exactly what he wanted to do and what to expect once he had swapped shares in his company for cash. He had set his goals for his wealth and his family, and was keen to realise his new vision.
His goal was to to invest half his liquid assets into growing tech companies and the remaining half was to be managed by professional investment managers. With regard to his family, he wanted his children and grandchildren to have a decent education, a home and fulfilling career, but he did not want to spoil them financially.
I set up for him a Special Purpose Trustee (SPT), during the latter half of 2018, and embodied his goals and strategy into a binding family constitution with which he was pleased. We also set up for him a family office to administer his investments and to keep his investment managers on their toes. They were expected to prepare investment reports on a six-monthly basis which would be reviewed by the executive board of the SPT.
‘How can I be sure that my family office is not going to pull the wool over our eyes, neither of us on the executive board are investment management specialists?’
I asked Jacob how he had picked his investment managers to date.
‘I tend to pick my investment manager depending on shared interests; tennis, rugby and the opera, in the hope that I would be invited to Wimbledon, Twickenham and Covent Garden, but now that they have all cut down on corporate entertaining, I find it difficult to know which investment manager is better than the others!’
I decided not to comment on his criteria of how he chose his professionals.
‘Why not explore with your executive board at your next meeting whether you want to appoint an independent investment performance analyst to review the performance of each investment manager and on your non-liquid projects – an independent asset audit?’
‘For example; investment manager A may be producing a better return, than investment manager B, but if the dividends are being paid out of long term borrowings, the performance of investment manager B, may be a less risky strategy which you may prefer.’
Jacob remained dubious ‘So we discover that investment manager A takes more risk than B but produces a higher return, how do I know that investment manager C is any better? Furthermore, how does your independent analyst find investment manager C?’
I explained to Jacob that each private client professional has a professional network. The traditional way in which the private client professionals win new business is to build a network of professionals who may have clients who needs his/her services – however, this strategy is a bit ‘hit and miss’. Private client professionals only find out who is a good by making recommendations and seeing what becomes of it. The danger is that if a referral is made which turns out to be poor it could ruin an existing good client relationship.
However, with digital technology, this could now become a lot easier and efficient. BConnectClub is pioneering the lead.
Every adviser which signs up to the Club fills out a questionnaire so that its clients can be matched to the clients of other professionals. Each professional is then ranked according to how many other professionals ‘like’ them.
This process of ranking professional advisers according to likes, in a particular sector, gives a fairly accurate assessment as to how the industry views each professional. From this a short list can easily be identified for any independent investment performance analyst to review which investment manager follows the preferred investment strategy set by the executive board of the SPT.
The BConnectClub digital matching is then made easier through a series of events which focuses specifically on B2B networking at which each attendee which is signed up, will be given a short list of five other professionals that they should meet and do business with.
This strategy is not new. It is set out clearly in my book, ‘Uncovering secrets; How to win business from Private Clients’
If you would like to find out more about GFOS or to buy my books, ‘When you are Super Rich, who can you Trust?’ or ‘Uncovering Secrets; How to win business from Private Clients’ call Caroline on 020 3740 7422 or email firstname.lastname@example.org or you can buy her books on Amazon.
If you would like to be a part of BConnectClub, call Barbara on 07970 000020 or email on Barbara@bconnectclub.com.