Mellon to offer family-office services in Europe

Thomas Coyle

3 August 2006

Outsourced offering for Britain's ultra wealthy, then Germany's, Holland's. Mellon Financial is aiming its Family Office Services at Europe's ultra wealthy. In its first foray outside North America, the family-office processing outsourcer and custodian has set up shop in London, where it plans to work with U.K.-based Mellon affiliate Newton Private Investment Management to build a referral base.

Jim McEleney, formerly chief administrative officer for Mellon's Asset Servicing group, will lead the European initiative aided by John Elder, previously head of business development for London-based Newton.

Master custodian

Mellon's family-office platform is meant to provide back-office and custodial support to existing single-family offices that manage at least $100 million in assets. Mellon figures there are about 1,000 candidates for its services in the U.K.

The need for Mellon's services may in fact be greater in the U.K. than in the U.S., says McEleney, mostly because British family offices are less likely to have a master custodian -- even as asset allocation has broadened as family offices have embraced modern portfolio theory in the 10 to 15 years.

"Right now a family-office CIO has to look to disparate platforms to understand the family's holdings," says McEleney. In addition to providing as master custodial and web-based performance reporting, Mellon tracks held-away assets like hedge funds, private-equity holdings and personal-use property through permission-based mirror imaging. The platform also provides access to Mellon's wealth-planning and investment-management products and services.

Although Mellon views Newton, which has been providing wealth- and investment-management services to the U.K.'s ultra wealthy for several decades, as a vital part of its bid to win business in the U.K., it says it will also be working with "financial advisers, consultants and other professionals" outside of Mellon who specialize in the international ultra-high net worth marketplace to identify potential clients, including ultra-high-net-worth expatriates living in the U.K.

In addition to the U.K., McEleney says that Mellon is eyeing Germany and the Netherlands, which meet its criteria of having decent-sized centa-millionaire populations as well as wealth-management affiliates in place to ease the way to new business. In Germany Mellon has a year-old joint venture with Dusseldorf-based WestLB; in the Netherlands it can lean on ABN AMRO Mellon.

Mellon's Family Office Services group, part of its Boston-based Private Wealth Management unit, administers around $32 billion for 135 family offices in the U.S. -- FWR