The transfer of businesses to family members may not always be appropriate, Marc Hendriks from Sandaire family office says in his interview with finews.asia.
Marc Hendriks, Asia is in the throes of a transfer of wealth from the originators to the next generation. How are the families coping?
Impossible to have a general response as each family will be having a different experience. However, we know from discussions with families that the approach of patriarchs and matriarchs tend to be an open discussion with other family members. Moreover, there is interest in knowing the experiences of other families, even if they are of a different culture, to see if there is anything to learn.
We at Sandaire find the owners to be generally curious and also quite modern in their outlook and willing to listen. Their priorities are, in the main, the same as other families to pass on their wealth with positive results rather than for the wealth to become a burden. There is also a recognition that the transfer of businesses to family members may not always be appropriate.
«Asian families have a greater risk appetite, particularly for direct investing into businesses»
It is apparent that a family will speak to other families in many instances to compare notes. There is also substantial support for families from people like ourselves and the private banks. Also the Business Families Institute of the Singapore Management University runs marvellous courses and special events specifically aimed to assist families.
Do you see differences between what European and Asian families prioritise for their wealth?
The most obvious difference is in the case of European families where the wealth has already been passed through several generations so the current holders act more in the role of trustees rather than entrepreneurs. In this case European families may adopt a less risky investment profile and are prepared to exchange lower investment return for capital preservation.
Asian families that are still primarily entrepreneurial because their main asset is the family business will tend to have a greater risk appetite particularly for direct investing into businesses. However, most families require a portion of their assets to be managed conservatively and be accessible at short notice.
Sandaire liaises with family offices around the globe. What do you learn from each other?
Sandaire was a founding member of the Wigmore Association in 2011 and today it comprises eight family offices from around the world. The Chief Investment Officers (CIOs) used to meet twice a year for one day and now we meet twice a year for two days each time.
«There is only one management fee»
I think that is evidence that, yes, we do learn from each other about how to manage wealth and the investment opportunities and traps that exist. In addition to the CIOs meeting the CEOs now meet annually to discuss and learn from each other about the challenges of running family offices. The ability to talk openly in a confidential and non-competitive environment with peers who are aligned in trying to do their best for their families must help us all to do a better job.
I also find that families who are not members of the Wigmore Association are keen to talk to the various members about issues and we are very willing to share our knowledge and experiences with other family offices.
How do you justify your fees compared to a private bank?
Our fee structure is very simple and completely transparent. There is only one management fee. Our belief is that our fees are easy to understand and compelling in the market place.
Of course other institutions may offer different services and therefore make pricing comparison difficult. So long as a client understands how much and what the total costs of the services are, it is good for the client to have a choice of providers.
Sandaire is established in Singapore. Would you consider another Asian office?
We have found Singapore to be a great place to have an office. The infrastructure is of a very high quality and the regulatory environment is responsive and helpful. There is a fertile community of wealth management providers and we enjoy being an active participant.
«Certainly the ingredients exist for a shock»
If an opportunity were to arise of establishing another office I am sure we would take a close look. But it would not be a case of either or. Singapore is very much a key part of our global activities.
Do you see any shocks in the second half of 2017?
One always has to be prepared for shocks! Certainly the ingredients exist for a shock be it from the febrile geopolitical environment, the high valuations of most asset markets or from the secular changes of ageing populations, slowing global economic growth and technology.
It is essential to monitor all of these developments and whilst it is not possible to anticipate the timing of shocks, be prepared and recognise when potential disruptions may occur. Financial markets have reacted quite calmly over the past year to a number of political shocks, but it would be foolish to expect this always to be the case.
Is Brexit a danger for Asian families?
The U.K. is a popular destination for Asian capital, particularly U.K. property, because of the well-established property rights and legal and financial services. To the extent that fears about Brexit cause asset prices to weaken then, it is an opportunity for Asian investors. The weakness of the pound also makes U.K. assets more attractive.
«I think the U.K. offers Asian families interesting investment opportunities»
We have been engaging with Asian families on U.K. property opportunities through Mount Kendal – a recent collaboration between Delancey and Sandaire, that was formed to provide real estate advisory services to families and clients of single and multi-family offices. So far Brexit has not dimmed any interest in the U.K. as an investment destination.
What outcome do you expect from the Brexit negotiations with the EU?
Nobody knows that. But the U.K. economy has been adept at responding to global changes in the past. And there is every reason to expect it to continue to do so in the future. Of course constructive discussions on the terms of Brexit would be best, not just for the U.K. but the EU too, and we hope that is what will take place.
But as important Brexit is, there are important opportunities elsewhere in the world, especially in Asia whose share of world GDP will increase to over 50 percent over the next decade.
The U.K. needs to be prepared to seize these opportunities too and this is best done by being a citizen of the world rather than of a single economic community. I think the U.K. offers Asian families interesting investment opportunities from property to direct investments in private companies despite Brexit.
Marc Hendriks is the Global Strategist at the Sandaire family office. He is also the founding and present Chairman of the Wigmore Association, a global collaboration of seven family office partners. Before joining Sandaire, Hendriks was Chief Investment Officer of Thomas Miller Investment. Prior to this, he was chief economist for Societe Generale, Swiss Bank Corporation and Baring Brothers.
