Family Office

EXCLUSIVE: A Walk Around Germany's Single-Family Offices Sector – Part 2

Tom Burroughes Group Editor London 25 October 2023

EXCLUSIVE: A Walk Around Germany's Single-Family Offices Sector – Part 2

In part one of this two-part feature, this publication talked to German banks about their work with the country's single-family offices. Now it is the turn of Swiss banks to discuss how they approach the German sector.

In the first half of this two-part series this publication set out the broad issues for German single-family offices and spoke to three German banks about the work they do with SFOs. In this article, we talk to Swiss banks and one large US bank - Citigroup - about their work in this industry. 

At UBS, the world’s largest international wealth manager, the firm makes a point of its wide coverage of the global sector, often issuing reports drilling into areas such as asset allocation and operational matters. This coverage includes Germany – a natural fit for a Zurich-listed bank.
WealthBriefing spoke to Carl von Wrede, head of global family and institutional wealth, Europe Domestic business. He’s been at UBS for a decade and before that, worked for 14 years at Morgan Stanley in Zurich, New York, London, and Munich holding several different management positions. The bank’s German family offices business has been a dedicated operation since 2013.

“UBS is established as a major player in the family office market in Germany and holds a significant share of the overall market. In the future, we will continue to expand our leading position in the German business and strengthen our growth in the long term. We have laid the foundation for this in recent years,” he said.  

“We have an excellent network in the German-speaking market and are in contact with many family offices in Germany,” von Wrede said. 

“In early 2022, as part of our ambitious growth strategy, UBS brought together its global family office capabilities, unified global markets, global lending unit, prime brokerage, and private markets one bank partnership, under one roof with a fully aligned front-to-back setup to create Global Family and Institutional Wealth (GFIW),” von Wrede continued. The GFIW business is led globally by George Athanasopoulos. “This allows us to further support entrepreneurs, family offices, and other private investors with sophisticated, institutional-like needs by providing more seamless access to the intersection of UBS’s investment banking and wealth management capabilities,” he said.

“We’ve laid strong foundations over the past 18 months and are well-positioned for a multi-year journey to provide an institutional ecosystem that delivers return and impact for clients,” von Wrede said.

Asked about themes, von Wrede said he noticed that while family offices differ, one common point is that they are concentrating again on “active strategies.” He gave the case of the recent UBS Global Family Office report showing that 35 per cent of them prefer the selection of managers and active management as a means of portfolio diversification. 

“The findings from the report underscore that family offices around the world are planning some of the biggest portfolio shifts in years, driven by concerns about geopolitics and inflation,” he said. 

Julius Baer
“We expect a strong growth of family offices in the next five years and assume a double-digit percentage,” the bank told this news service.

Julius Baer entered the German market in the late 1980s, setting up an office in Frankfurt, and since then has opened in Frankfurt, Stuttgart, Duesseldorf, Hamburg, Kiel, Mannheim and Würzburg.

“Since Bank Julius Baer was founded in Germany, we have also been advising family offices, which very often come to us based on recommendations/via word of mouth,” the Zurich-listed private bank said. It also offers networking events during the year for family offices.

The venerable Swiss private bank reckons that because of the heterogeneity of the German family office market, no single firm can claim to have a large share of it. 

“However, we are in contact with many, and they account for a significant part of our business,” Armin Eiche, CEO, Pictet Wealth Management, Germany, told WealthBriefing.

“There are only estimates of the exact number of family offices. There are probably several hundred in Germany,” Eiche said. 

“Pictet was the first bank to introduce a dedicated `family office service’ (and a sophisticated approach) in Europe in 1998. We’re pioneers in this respect,” he continued.

“Over 90 per cent of our clients in Germany have a family business background. Family owned companies are the heart of the German economy – the “Mittelstand” of businesses that have endured and prospered and generated wealth for years,” he said.

“We help them with all sorts of wealth management topics, be it related to family, financial or operational governance.  We do this via our own wealth management resources (for instance we’ve built a leading offering in alternative assets, especially in private equity and PE real estate and on ESG) or by including external specialists,” Eiche said. “We are also helped by the fact that Pictet is independent, with no external stakeholders. We are a family run and management owned company ourself. [This] means we have a similar perspective,” Eiche said.

In Germany we gain insights on clients’ needs via a survey which we carry out among family enterprises on “how they manage their assets” and, last time, more than 260 members of family enterprises participated,” Eiche said, referring to how it works alongside a publication from FAZ-Group and with the Witten Institute for Family Enterprises.

As for the future, Eiche added that he increasingly sees “next gens” more in a supervisory role in their family owned businesses, rather than actually managing them. 

“With increasing M&A activities the `family wealth’ becomes more and more the frame or the identity for multi generation families. Also the aspect `how to invest’ in terms of responsible investing becomes more and more important,” Eiche added.

Citi Private Bank
Christian Pohl, country head for Germany and Austria, Citi Private Bank, spoke to this news service about his firm's offerings into the German SFO space.

"Our German coverage of family office clients is part of a pan-European and global client team. In Continental Europe we have 100 staff dedicated to serving the largest European families. Globally we cover over 1,500 of most prestigious family offices and Germany sits within the top 5 of the world’s biggest wealth markets. We have been servicing some of the largest, most wealthy German and Austrian based families for many years, however this was done out of other locations. In May 2022, we officially launched our business there, serving local clients on the ground as well as family offices based in Austria," Pohl said. 

"We (as an industry) will witness the largest generational transfer of wealth ever over the next few years, particularly in Europe. Given Germany’s backbone is the "Mittelstand" there will be plenty of liquidity events, which will provide opportunity for growth. Germany, with its many global players still owned privately by families, the "Mittelstand", is at the heart of this transition and due to the nature of the German and Austrian economies, with its huge focus on exports, its family offices are very much focussed on international engagements," he continued. "The appetite for direct investment remains strong, albeit with some seeing short-term opportunities and others pausing activity owing to economic uncertainty. Alternative investments are one of our key strengths and we are keen to expand the offering as private equity, and hedge funds can be an unconstrained source of performance while making the portfolios more resilient. Our aspiration is to build one of the top platforms for alternative investments."

"The level of sophistication of family offices has increased over the years. If we look at the next generation, these people more often have an international education, are thinking more globally, and are in pursuit of a more flexible work and life philosophy.  So we see this trend continuing," Pohl said. "Protecting our clients’ assets is so much more than having a huge vault. It’s about diversification beyond asset classes, deep into the fields of strategic and tactical asset allocation, technology as well as international custody."

"The gap between intention and action on sustainable investments remains large, however it is starting to narrow, driven by growing sustainability concerns and a broadening range of themes and instruments for investment. Access to sustainable investment opportunities with competitive financial performance may further narrow this gap," Pohl added.

(We value continued engagement with banks, service providers and others in this space. Also, as a reminder, please take a look at the Highworth Research database for its comprehensive coverage of this market. You can register by going to this link.)

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