In response to requests from families to make our manager selection available to them, the Family Investment Office was established in 1999. From the outset, it was our intention to differentiate ourselves and the service we offer to individuals, their families and their trustees. The key is to provide wholly independent, institutional quality advice that goes beyond merely selecting and managing a portfolio. We strongly believe that our clients benefit from an integrated process that identifies their specific needs with regards to...
Risk profiling
- How each client individually reacts to the trade off between long term reward and short term volatility.
- Establishing a personal "volatility benchmark".
Asset allocation and risk management
- Combining investment classes to create the optimal portfolio to reflect the selected volatility benchmark.
- Controlling this risk.
Manager selection
- Selecting the best managers in each of the selected asset classes.
- Providing comprehensive reporting on performance.
We maintain that each of these components demands rigorous and continued management, a fact often overlooked by private client asset managers.
Another way of describing what we do is that we help to provide answers to these commonly asked questions.
- Who are the good fund managers?
- Can I combine the best managers for my family?
- How do I monitor them?
- What level of overall risk should I take?
- How can I get clear reporting?
- Who can I trust to give me independent advice on all of this?
- How do we make this tax efficient?
The importance of strategy
We place significant emphasis on forming a clear view on strategic asset allocation with our clients before moving on to manager selection. Naturally, poor manager selection can undermine the benefits of a sensible asset allocation but if the overall strategy is incorrect, no amount of manager selection skill will compensate for the wrong allocation.
We also believe that for strategic asset allocation to be valid it has to be conducted on advice which is wholly independent from the fund management products which may be selected.
We operate a range of asset allocation "Profiles" based on the volatility tolerance of our clients. These follow the colours of the rainbow with Violet as the most defensive at 3% annualised volatility and Red as the most aggressive at 12% volatility. We operate allocations in Dollars, Euros, Sterling and Swiss Francs.
Our approach to manager selection
We are unusual amongst the small number of European multi family offices in that we conduct our own in house research within all the asset classes. Research is the key word. Unlike most other managers, we do not have a range of internal products to offer. Instead we allow ourselves the flexibility of identifying and investing for our clients with the best individual managers available – rather than the ‘best’ internal solution.
Our manager research extends to managers of equities, bonds, high yield bonds, private equity, equity hedge funds and non correlated hedge funds. We are focused exclusively on researching funds rather than managers of segregated accounts. This is because we like to sub-divide each asset class between a number of specialist managers and retain the ability to switch at short notice if we become concerned with the fund in which our clients are invested.
Custody
We do not handle client money. For each portfolio we agree a choice of first class custodian with our clients and generally take a discretionary power to instruct the custodian as to which funds to buy and sell. In the case of the conventional asset classes (equities and bonds) we will normally hold individual funds for each client but for hedge funds and private equity it is not generally feasible to hold individual funds and we have created our own transparent multi-manager structures to enable Family Investment Office clients to use our selection process.
International planning and tax mitigation
We act for many European families with cross border trust and tax issues. Client agreements can be established with any of our European offices (London, Geneva or Paris) depending on the convenience and fiscal planning of the client.
We work closely with our clients' tax advisers generally in mitigating tax on investment returns as far as is possible. We have considerable experience in reconciling the investment and tax issues for the main tax protective structures. We seek to maximise the investment returns within the tax constraints. We should emphasise that we do not give tax advice and do not accept responsibility for this aspect of planning.