This publication recently interviewed the Wigmore Association, a club of heavyweight family offices around the world that recently formed to get greater clout in manager selection and investment.

When
six heavyweight family offices teamed up in 2011 to form the Wigmore
Association they achieved greater clout on the investment research and
manager selection side, in a difficult investment environment. But the
association also opened up possibilities about the way family offices
from different countries could work together.

The founding members straddle North America, Europe and Australia,
and are SandAire (UK), Pitcairn (US), HQ Trust (Germany), The Myer
Family Company (Australia), Northwood Family Office (Canada) and Progeny
3 (US).

Members attended a three-day summit in Melbourne in April to discuss the shift of economic power from West to East, and will meet
in Toronto, Canada in September. When the chief investment officers meet
they swap ideas and discuss trends, but they also take the opportunity
to meet local managers. The beauty of this is that the local family
office can advise on the best investment managers to meet, thus time is
spent more efficiently.

Membership to the exclusive organization is based on a “willingness
to share information,” explains Karen Clark, director, client team at SandAire. And this willingness comes from “the belief that by doing so we will do a better job for our clients and we all benefit.”

On the group’s expansion plans, Clark says it’s not a “bigger is
better” mentality. She says the dynamics work well at the moment and
there is no need to expand. However, the members constantly review how
the Association can achieve more.

“We all recognised that the future is not having a manager in
Edinburgh investing in Japan - it’s having people on the ground,
expanding your network beyond your community,” says Clark.

Competition versus cooperation

Collaboration between firms offering similar services raises the
question of competition, as there has to be an environment of trust to
share information.

“We don’t view each other as competition,” says Clark. This is partly
a product of geography, as the offices are spread out globally, which
also gives the maximum benefit in terms of research coverage. But “it’s
also that the chemistry is crucial” between clients and family offices,
she says, and this is “different in each office.”

Clients tend to be a tight fit, and working with one multi-family
office doesn’t necessarily mean a client would be the right fit with
another. Each firm has a particular skill set, specific strengths and
focus, which are usually a product of its history.

A stronger industry

“When each of us does well it reflects well on multi-family offices
and single family offices as solutions for families of wealth,” says
Clark.

“It’s going to be as difficult as it is right now to invest in the
public equity markets for the near future,” she believes, and so
leveraging experience and time spent researching is a clear bonus. It’s
about “sharing of the best ideas, best practices, taking advantage of
the opportunities for families of this level of wealth.”

Of course this idea can be translated to other functions, not just
investment. There’s evidence the MFO industry is strengthening, forming
more alliances, working together to create a stronger industry brand and
distinguish itself vis-à-vis other areas of finance.

One area the Wigmore Association is looking at working
collaboratively on is next-generation programmes. Instead of running
one-off day events, it would introduce specific mentors that are
well-suited to individual younger-gen clients. This would allow young
people to talk with a mentor without the family office or other family
members present, so removing any pressure or sales atmosphere. The
family office would be “coming up with the framework,” explains Clark.

Another idea is to create an exchange programme, allowing clients’
children to gain work experience at partner family offices, as well as
the businesses associated with those offices – so offering a
multicultural learning experience.

The economics

While being in the partnership gives each firm access to greater
investment knowledge, Clark says “the economics weren’t really a driver”
for setting it up. In fact, it is viewed as an investment, not a
cost-saving programme. The benefits are “non-quantifiable” but she is
confident the family offices involved will “reap dividends.”

“We know from the dialogues we’ve already had that it’s a worthwhile exercise.”

She is candid about the challenges family offices can face: “We’re 26
people sitting in London that [a prospective client] needs to believe
can manage their affairs better than the largest financial institutions
in the world. [The Wigmore Association] creates a network with reach.”
And, she continues, this reach goes deeper than can be achieved by day
trips around the world to meet investment managers: “It becomes a
conversation as opposed to a one-off meeting.”

She also says that, like with a family office, defining the association in precise terms can be difficult.

“What is unique about the Wigmore Association is what is unique about
family offices. It can be hard to define what we do because it’s
largely driven by the changing requirements of our families. We go where
we need to go,” says Clark.

The fact that a family office is hard to define in strict terms is
well understood in the industry, as they come in many shapes and sizes.
This means sometimes the label is perhaps overused by firms that don’t
truly offer holistic and integrated wealth management.

However, Clark is not too worried about the effects of this on the
firms that do offer these services. She believes that through delivering
on the client experience at an individual-firm level, and working as
part of an organization that contributes to a stronger family office
sector within the industry, the rewards will be captured.

“We can’t control other people’s actions, we can only control our response,” she says.