Family offices find safety in numbers
The implosion of Bill Hwang’s Archegos Capital Management focused attention on family offices, a fast-growing, lightly regulated and ill-defined investor group. Greater oversight is surely inevitable, as is the evolution of the sector away from small, standalone entities into truly global multi-family wealth managers.
When UK asset manager Schroders bought specialist London-based family office Sandaire in December 2020 it looked like a straightforward case of adding scale.
Strictly by the numbers, it wasn’t a big deal at all: at the time, Sandaire ran £2.2 billion ($3.04 billion) in assets. Schroders’ wealth business was 16 times bigger, managing assets worth £35.6 billion.
But the UK’s largest standalone asset manager knew what it was doing. In Sandaire, it got one of the best boutique advisers to the super-wealthy around – and the deal took place just as the world’s $5.9 trillion family office (FO) industry was entering a cycle of consolidation that looks set to last for years.
Single family offices (SFOs), keen to cut costs and tap into networks – of people, products, deals and ideas – are joining forces to create multi-family offices, which in turn are merging to form super-sized multi-family offices (MFOs), many of which manage tens of billions of dollars in assets.
Family offices are – in the main – well run. Their size, reach and appetite for everything from simple equities to complex structured products makes them hugely attractive clients for commercial and investment banks.