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.
Amongst the investors was my client, Jacob (not his real name).
Jacob sold his company in 2015, and the first thing he did, as I say in my book ‘When you are Super Rich who can you Trust?’ was to set out for himself goals for what he wanted to do with his new found wealth.
He wanted to invest half his liquid wealth in growing tech companies and the remaining half he wanted managed by professional investment managers. With regard to his family, he wanted his children and grandchildren to have a decent education, a home and a fulfilling career, but he did not want to spoil them financially - and he wanted a boat.
In 2018 I set up for him a Special Purpose Trustee (SPT) and embodied his goals and strategy into a binding family constitution. We also set up for him a family office to administer his tech 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 his SPT.
‘I am not sure the board of my SPT are being critical of my single family office executives or the investment managers. None of us are investment specialists. They all seem too cosy; they get paid a lot for pitiful returns. Is this the best they can do, or should I expect more?’
I asked Jacob how he had picked his tech investments, single family office executives and the investment managers and why had he kept them.
‘I suppose I hand picked my single family executives on shared interests; tennis, rugby and the opera, and a good cv, and they picked the investment managers. I know what to look for in tech companies so I tend to pick which projects to invest in. I like to keep an eye on the tech projects, but I am not sure that my single family office executives or investment managers are any good, and I don’t understand their reports’
‘Why not explore with the executive board of your SPT at your next meeting appointing an independent investment performance analyst to review the performance of your single family office, each investment manager and your non-liquid projects – an independent asset audit?’
‘For example; investment manager A may be producing a better return than investment manager B, but he may be taking a higher risk or paying dividends out of long term borrowings. The performance of investment manager B, may be taking less risk, but is invested in sustainable companies.’
Jacob looked puzzled ‘So we appoint an investment performance analyst to teach us what to look for in our single family office executives and investment managers?’
I agreed. By carrying out an independent investment performance review, he and the board would learn more about the ‘art’ of investment management and what to look for. The board would then be much better informed as to what it wanted and could then analyse the reports prepared for it more critically.
With regard to finding a new investment manager or single family office executive, I told Jacob they could find private client professionals through the BConnectClub.
Each private client professional has a network of professionals who have clients to whom they refer business – however, referring a client to someone in your network can be a bit ‘hit and miss’ and a reliable network takes years to develop.
With digital technology pioneered by BConnectClub, this process can be sped up and made much easier and more efficient.
Every adviser wanting to win new business, whether from Club members or through its network, is asked to fill out a questionnaire; what services do you provide, what type of clients do you have and what are your interests. These answers are then matched to the questionnaires of other professionals. Each professional is then ranked by his or her peers according to ‘likes’.
This process of ranking professional advisers, in a particular sector, gives a fairly accurate assessment of how the industry views each professional. From this a short list can be identified and the executive board of the SPT can interview each of them against an objective investment strategy.
To further speed up the process BConnectClub not only provides deal dinners for Club members like Jacob, but it also hosts B2B networking events for private client professionals. At each event they learn what others do for their clients in a series of case studies, and are given a short list of five other professionals who are at the event and with whom they may like to refer business.
This strategy is not new, it is set out 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 email@example.com 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 her on firstname.lastname@example.org.