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HSBC Is World's Number One Family Office Business For Third Year Running

Wendy Spires

6 August 2013

has been crowned the world’s number one family office business for the third year running in an annual ranking of the sector by assets under advisement by Bloomberg Markets magazine.

In the 2013 ranking, HSBC Private Wealth Solutions claimed the top spot with $137.3 billion in AuA, derived from 340 client families. Since last year the firm, part of Hong Kong/UK-listed HSBC, has boosted its assets by 11 per cent from $123.6 billion and added to a prior client base of 297 families.

Commenting exclusively to this publication, Anthony Effinger, author of Bloomberg Markets magazine's report on the rankings, put the continued pre-eminence of HSBC down to the explosion in Asia’s high net worth population in recent years and the power of the bank’s brand in the region. “New millionaires and billionaires there appear to be tapping HSBC to handle their fortunes. Few firms have the name-recognition in Asia that HSBC does,” said Effinger. He also pointed to the firm’s relatively low client base (340), meaning that each client has a very significant average wealth of $404 million.

(The achievement comes a day after HSBC issued its results for the six months to end-June. To view those results, click here.)

In second place for this year - as for last - is , which has £112 billion in AuA from 3,457 clients. Having gained 23 per cent  in AuA (from $90.0 billion) since last year, the Chicago-headquartered firm is the ninth fastest-growing FO business; however Northern Trust is down from 4,101 client families last year, suggesting that the new ones it has taken on are somewhat larger.

Another business which is growing fast is third-placed Bessemer Trust, which is ranked eighth fastest-growing, having advanced its AuA by 25 per cent since last year to reach $77.9 billion, having had $62.4 billion last year. Bessemer, which came in forth place last year, has gained 100 client families and now boasts 2,200.

In fourth place in the 2013 league table is BNY Mellon (last year’s number three), which now has $76 billion in AuA from 400 families. Its assets have grown 18 per cent in the past year (from $64.5 billion), despite the firm losing 24 client families.  

Fifth for this year was Geneva-based Pictet, logging $57.3 billion in AuA, a figure remaining flat from last year. Pictet retains its fifth spot from last year, despite the Swiss firm having fewer than 50 clients.

Just outside the top five, for the second year running, is UBS Global Family Office, which has $47.5 billion in AuA. Its AuA grew by 27 per cent from $37.3 billion last year – making it the fifth fastest-growing family office business, but it should be noted that included within that figure are transfers from within the bank. Data on the number of clients was not available for the Zurich-listed banking giant, which - with $1.71 trillion in total AuM - is the world’s number one wealth management firm, according to Scorpio Partnership’s Global Private Banking Benchmark for 2013. It is also interesting to note that at the end of last month Bloomberg reported that the bank’s chief executive, Sergio Ermotti, has said in a conference call that UBS has “a penetration of one in two billionaires in the world.”

Rounding out the rest of the family office rankings are CTC Consulting/Harris myCFO ($35 billion in AuA from 312 clients; assets up 6 per cent); Wells Fargo-owned Abbet Downing (£32.2 billion in AuA from 594 clients; assets up 5 per cent); US Trust ($31.1 billion in AuA from 162 clients; assets also up 5 per cent); and Wilmington Trust ($24.6 billion in AuA from 436 clients; assets down 23 per cent).

Both ends of the spectrum

The rankings, which are published by Bloomberg Markets magazine, look at the top 50 family offices internationally and so include all kinds of players, from the bank-owned businesses which dominate the top ten to much smaller independent institutions. As such, it identifies some interesting stories of white-hot growth. Top-ranked in terms of growth is Miami-based CV Advisors, which now has £2.5 billion in AuA from 41 clients and has doubled its assets over the past year. Elliot Dornbusch, who runs CV, told Bloomberg Markets that its impressive growth has come from the addition of just six new families (the firm targets the Latin American super-wealthy).

Effinger said that CV advisors has “clearly found a niche” in serving Latin American clients. (The firm’s chief executive, Elliot Dornbusch, was raised in Venezuela.)

“Latin America has always been fertile ground for high-end wealth management. CV says they have an advantage being in Miami, which is close to the region by air, but in the US, where clients want to keep their money,” said Effinger. “Currency controls keep the bolivar at 6.3 to the dollar, while it trades at 29 to the dollar on the street. It's easy to see why holding money in Miami is more attractive.”

Meanwhile, the second-fastest growing family office for this year’s ranking is a very different type of institution. Minneapolis-based Ascent Private Capital Management is owned by US Bancorp and this year recorded very impressive 96 per cent asset growth to hit $4.4 billion in AuA in 2013. Ascent, which has 60 clients, is targeting wealth creators (which comprise around 60 per cent of its roster), and while clients must have at least $50 million in assets the firm will also include the client’s business in a reckoning of their wealth. The aim is to build bonds with clients well before a liquidity event takes, Michael Cole, Ascent’s president, told Bloomberg Markets magazine. 

There is another interesting contrast to be drawn between CV and Ascent is their wildly different models: the former manages virtually all clients’ money in-house (mostly buying high-quality corporate bonds in a bid to preserve capital over chasing stellar returns), while the latter doesn’t run any money at all and rather focuses on softer services like education and constructing family histories. “Those are the extremes, I’d say, and they topped the list in terms of growth,” said Effinger.

Effinger’s report highlights the growth in family offices offering a family historian or the like, in recognition that the second and third generations must be educated about the origins of their fortune to help them to avoid squandering it or becoming warped by wealth.

“The trend this year and last has been education - the idea that managing money isn't enough… Wells Fargo's Abbot Downing unit has a group of historians on staff, and now Ascent has hired one. The idea is that knowing one's history provides context that can guide philanthropic decisions and ground a person who might be overwhelmed by new-found wealth,” said Effinger.

“I think this may have particular appeal in the US, where many of us know which generations of our ancestors came over here, and when. Genealogy services are also booming.”