A multi-family office founded a couple of years ago, and already making a name for itself, talks to WealthBriefing about the "fear of missing out," proving genuine value, saying "no" to clients, and guiding them through volatile markets.

In the investing world there are thousands of products, ideas which outnumber these products, and too much market noise. To top it all off, there are numerous advisors who want to peddle a product or idea, not because they are the best options, but because they yield the highest commissions.

This is the trenchant opinion of Manish Tibrewal, the co-founder of Singapore-based Farro Capital, the multi-family office and example of the kind of independent outfit competing against banks and other business models in Asia and elsewhere. (In December 2023, Farro Capital opened in Dubai.)

Tibrewal says one big problem in the wealth – and wider financial sector – today is “FOMO” – fear of missing out. With stocks such as chipmaker Nvidia in the stratosphere and the air abuzz over AI and other developments, this giddy atmosphere requires composure.

“If we consider history a good teacher, the biggest lesson learned would be that not most, but all the fads have eventually faded. There is a big distinction between a generational trend and a fad,” he said. 

“Fads could last for the short term, but the markets always revert to the fundamental reality in the long term. It is always a twenty-twenty hindsight when we retrospect, but it is a tough call to separate a fad from a long-term trend on some occasions. For example, the internet bubble was a fad at the time, but it became a generational trend in the long term.”

“The investors who could hold their nerves and invested in the winners reaped rich dividends. Compare that with the recent zero rate environment where companies without any path to profitability were trading at berserk valuations. The moment the interest rate environment changed; all these companies became close to worthless,” Tibrewal continued. 

Tibrewal said another point that the industry can too easily forget is one of the oldest insights of all: compounding.

“Every dollar saved is a dollar earned, says the adage. Similarly, in the investing world, every dollar that is not lost to avoidable risks is equivalent to a dollar return enhanced on investment. Picture this: if you lose 50 per cent of the value of your investment, you need to make a 100 per cent gain just to come back to your original amount. Hence, if one must compound for the long term, they cannot afford to have big dips in their portfolio value as that erodes the gains made over the years significantly,” he said.  

Explaining some of these points to wealthy clients whose heads might be turned by the kind of fads, or even more credible ideas, that Tibrewal talks about, is not always easy, particularly when HNW and ultra-HNW clients have built fortunes through taking great risk. 

“We have the courage to have deep conversations with the families including some uncomfortable issues around their family dynamics, family net worth vs liquid net worth, gaps in their investment philosophy and the profound realisation that it is not necessary [the case] that every successful entrepreneur will be a successful investor,” he said. “On the contrary, many entrepreneurs get blindsided when it comes to investing because they are naturally configured to take risk. Hence, they will usually perform well in bull markets but get burnt badly at times of volatility,” he said. 

This news service has got to know Tibrewal and colleagues over recent years. Farro, which was established in 2022, is licensed by the Monetary Authority of Singapore. Farro took its name from an ancient grain that dates back many millennia and still thrives today. Tibrewal was previously CEO at Maitri, the fund manager and multi-family office in Singapore. He has more than 19 years of experience working in various leadership roles across India, Africa, and Singapore at the multi-billion-dollar Tolaram group.

Value proposition
WBA asked why wealth managers might struggle to explain their value proposition.

“The landscape has changed drastically in the past 20 years. Owning a bearer share company or a numbered account without any KYC has become a thing of the past. The margins in the business used to be high as the brokerage was not transparent and there were no cheap technology-led competitors in the market,” he said. “Many of these banks and wealth management firms are still stuck in the past thinking that the old model is what the clients want and continue to make cosmetic changes to their offering, without addressing the fundamental issue.” 

Tibrewal argued that many firms continue to have inherent conflicts of interest by charging commissions, encouraging them to churn portfolios. 

“They [firms] are also constrained by the internal platform capabilities. There would be many products and investment theses that may be superior to their own offering, but they are unable to offer a best-in-class solution to the client,” he said. 

Farro brings “best-in-class” solutions to clients because it is agnostic about products and platforms, Tibrewal continued. 

An issue is that most wealth managers and banks often focus only on the liquid financial net worth of a client’s wealth, he continued.  

“Though they are aware that a family is in the `billionaire’ league, they use it for marketing laurels, and don’t pay enough attention to the ways to add value to their businesses,” he responded.

Tibrewal gave a concrete case of how Farro works. 

“While we were reviewing the portfolio of a newly-onboarded client, we saw that he had a disproportionately large exposure to a particular stock. When we enquired about it, he said that he was surprised to hear that. The reason was that he owned direct equity with one custodian, a long derivative with another custodian, another long derivative on the same stock with a third custodian, and a fund where the top holding was the same stock,” Tibrewal said. “The total exposure to the stock was five times the exposure that the client thought was in the portfolio. The reason was simple – all the custodians just knew the level of exposure with them, and the client had never consolidated his portfolio to see the performance and exposure in totality,” he said. 

Farro uses technologies to get a whole view of a portfolio and provide a client with a whole view of their holdings, including business assets, real estate, wine, art, or any other alternative assets.

WBA asked Tibrewal about what happens when some clients sack advisors and hire new ones. 

“The biggest issue in our industry is that of `overpromise and underdeliver’, and mis-selling due to conflicts and vested interests. Clients may feel dissatisfied when their advisor's recommendations seem to prioritise the firm’s benefits over their own financial goals, such as pushing proprietary products with higher commissions, and such products are pushed as 'high conviction' ideas,” he said. 

“This erodes trust and prompts clients to seek advisors who genuinely prioritise their best interests. Inadequate customisation is another major concern. Clients with unique financial needs and goals may feel underserved when advisors provide generic solutions rather than tailored advice.

“For example, a family with complex estate planning needs might switch to a firm that offers specialised expertise and personalised strategies. Additionally, lack of communication is a significant issue; clients expect regular updates and proactive communication from their advisors. When advisors are unresponsive or fail to keep clients informed about their portfolio's performance and market conditions, it creates frustration and a sense of neglect,” he said.

Finally, WBA asked Tibrewal about the need for advisors to sometimes say “no” to a client and frame their expectations realistically. 

“Since we consider ourselves an extension of our clients, we don’t hesitate to speak our minds. Our clients engage and trust us because we always keep their best interests at heart. It is our primary responsibility to ensure that if we believe a certain decision or strategy is not suited to the client’s needs and could have an adverse impact, we engage in a mature conversation to explain our concerns,” he replied. “Fortunately, we have built a high level of trust with our clients, and they take our counsel very seriously. Often, these discussions revolve around asset allocation.”

Avoiding mistakes
“For example, one of our clients recently exited his technology business, which he had built from the ground up. Having no interest in traditional assets, he wanted to deploy all his cash into high-growth ventures. Coming from a humble background and being a technology savant, he had very little interest in conventional financial investments,” Tibrewal said. “During our multiple conversations, he mentioned that other advisors were eager to allocate his entire capital into high-growth ventures as per his preference. He questioned why we insisted on creating a nest egg, especially since he is young and has plenty of time to recover any potential losses from high-growth investments,” he continued. 

“We had a profound discussion where we pointed out that his plan didn’t account for the possibility of him not being around in the future. In that unfortunate scenario, would his family be able to maintain the same lifestyle if all assets were tied up in illiquid high-growth ventures? This perspective changed the entire conversation. He is now content, knowing that he has provided an insurance for his family by allocating a portion of his wealth into safe and less volatile assets,” Tibrewal added.