New research: Risk hits a critical level for family offices


Monday 21 November 2011

Media Press Release

Risk hits a critical level for family offices, according to a survey on European family offices, undertaken by Campden Research and UBS.

According to the 4th Annual European Family Office Survey, published by Campden Research and UBS on 10 November 2011, risk and how to manage it are preoccupying family offices more than ever, as unprecedented levels of uncertainty in global financial markets are making it more difficult to evaluate performance of assets. But, it isn’t just investment risk that offices are concerned about. Family offices are also monitoring banking, confidentiality and personal security risk more than ever.

Typically, family offices are hiring staff as well as outsourcing risk functions in order to deal with their heightened concerns about risk, but this is placing more pressure on their due diligence processes.

That said, many family offices are not allowing a preoccupation of risk to stop them from adopting a more growth-orientated investment strategy. This year’s survey found that family offices are increasing their exposure to riskier assets like equities and hedge funds, albeit with a shorter investment horizon than last year.

These were among the findings of a major research study on European family offices undertaken by Campden Research, supported by UBS.  The study, entitled: Beyond uncertainty: Family offices adapt to unpredictability, surveyed the attitudes of a big cross section of Single Family Offices and Multi Family Offices throughout Europe.

“Unsurprisingly, risk management has come to the fore at family offices across Europe. But this doesn’t mean family offices aren’t looking for investment opportunities; indeed many of them are adapting a more aggressive investment stance than they were this time last year,” says David Bain, Head of Research and Editorial Director at CampdenWealth.

Philip Higson, Head of Europe and Switzerland Global Family Office Group (GFO), UBS, commented: “UBS is delighted to support independent research to understand better the issues facing European family offices. Many of the research findings echo the concerns and requests that we hear from our clients, especially the topic of risk management. It starts with governance issues, includes questions on jurisdictional regulation and top down portfolio risk monitoring, and in particular counterparty risk and liquidity. In this stressed macro and market environment every decision requires more due diligence and clear controls.

The report highlighted the wide range of services that family offices require in order to fulfil their 'mandate', and UBS is actively engaged with this client group. We are very pleased with the progress of our new established business unit called GFO (Global Family Office), which is a joint venture between UBS Investment Bank and Wealth Management. Clients of GFO typically have assets in excess of 500million Swiss francs and require institutional type coverage."

Among the other key findings in the report were:


• Single family offices achieved an annual average investment return of 8.3% in the 12 months  to June  2011, compared with 9.1% in the pervious year. Multi family offices achieved a return of 8.4%, compared with 11.7% the year before

• Equity and hedge fund investment might have gained in popularity, but so to has direct investing in “real” assets like gold, other precious metals and farmland

• As fewer family members are working in family offices, staff recruitment is one of the key challenges family offices say they will face in the next year

• Family offices are taking more control of service provision; even where they outsource services, they are spending more time and money on due diligence and monitoring suppliers

• The cost of operating a family office averages just 63 basis points of assets under management, much lower than for most asset managers

• Legal advisers and tax specialists are the most valued non-financial service providers; asset managers are the most valued financial service providers

Campden Wealth canvassed the opinions of more than 50 family offices (single and multi family offices) across Europe in the summer and autumn of 2011. Over 80% of family offices in this survey have investable assets of more than €100 million. The survey is now in its fourth year and represents the most comprehensive analysis available on family offices and their attitudes in Europe.

Editors Note

Contacts for Media

Dominic Samuelson
Managing Director
Campden Wealth
+44 (0)20 7214 0576
+44 (0)7880 601 136 (Blackberry)
dominicsamuelson@campden.com

David Bain
Editorial Director / Head of Research
Campden Wealth
+44 (0)20 7214 0585
davidbain@campden.com

Sarah-Jayne Gardner
Research Manager
Campden Wealth
+44 (0)20 7214 0509
sarah-jaynegardner@campden.com

Oliver Gadney
Media Relations
UBS
+44 20 7568 9982
oliver.gadney@ubs.com

About the report

The purpose of the survey was to identify the key issues facing single family offices and multi family offices, and provide comparative data against which individual offices could
evaluate their activities and strategies. More than 50 family offices from across Europe participated by means of either an extensive questionnaire or an interview. Participants varied from long-established operations serving six generations of the same family across multiple jurisdictions – and with an extensive range of investment, advisory and personal services – to newer establishments, currently developing their services to second-generation family members, or non-related families. The level of wealth managed by participating offices also varied enormously, from under €100 million to well over €1.5 billion.

About UBS

UBS draws on its 150-year heritage to serve private, institutional and corporate clients worldwide, as well as retail clients in Switzerland. We combine our wealth management, investment banking and asset management businesses with our Swiss operations to deliver superior financial solutions. Headquartered in Zurich and Basel, Switzerland, UBS has offices in more than 50 countries, including all major financial centers, and employs approximately 66,000 people. UBS AG is the parent company of the UBS Group (Group). The operational structure of the Group comprises the Corporate Center and four business divisions: Wealth Management & Swiss Bank, Wealth Management Americas, Global Asset Management and the Investment Bank.

Wealth Management & Swiss Bank: Wealth Management & Swiss Bank focuses on delivering comprehensive financial services to high net worth and ultra-high net worth individuals around the world – except to those served by Wealth Management Americas – as well as private and corporate clients in Switzerland. Our Wealth Management business unit provides clients in over 40 countries, including Switzerland, with financial advice, products and tools to fit their individual needs.

Global Family Office Group: A joint venture between UBS’s Investment Bank and Wealth Management divisions, the Global Family Office Group’s approach to client service offers holistic advisory services, full access to UBS cross-divisional expertise, operational excellence and full accountability with dedicated teams in London, Zurich, Geneva, Hong Kong and Singapore.

About Campden Media

Since 1997 Campden has provided unrivalled knowledge and intelligence to a community of the world’s wealthiest families, their family offices and ultra-high net worth private investors. Families connect directly with each other in a private peer-to-peer environment providing them with unique access to innovative educational and networking resources worldwide.

Its research division provides proprietary data and analysis on a range of topics of strategic significance including trends and developments in European, American and Asian family offices; advanced planning practises for business-owning families; the challenges of succession and wealth management in Russia; attitudes towards global family philanthropy; implementing responsible investment in Asia and how affluent women are taking control of their future.

Campden has produced more than 158 private forums for families and family offices globally throughout Europe, the US, Asia and the Middle East over the past 14 years.

Campden also publishes the leading international business titles CampdenFB, which probes the spectrum of issues facing ultra-high net worth, multi-generational family businesses, and CampdenFO – the only global magazine dedicated to covering the growing market of private single and multi family offices. It also delivers real-time news and features via campdenfb.com.

Campden further enhanced its international reach and community within the global private wealth arena with the acquisition in 2011 of the Institute for Private Investors (IPI), the leading membership network of private investors in the US, which was founded in 1991.