Someone ought to tell Bloomberg Markets magazine that size isn’t everything
Someone ought to tell Bloomberg Markets magazine that size isn’t everything. It has produced its second annual list of the top 50 family offices by assets under advisement and HSBC Private Wealth Solutions has come top, with $123.6 billion.
This is way ahead of Northern Trust with $90 billion and then BNY Mellon, Bessemer and Pictet back in the early sixties or late fifties.
What does this mean, if anything? Once you start considering the number of families who have given their money to these institutions, it seems to mean little. For example, HBSC has 297 families for $123.6 billion, which means each family has an average net worth of around $416 million, no insignificant sum.
Compare Bessemer, which has 4,101 families, who then have an average net worth of $22 million. Pictet didn’t reveal its number of families, save to say there were more than 50, but that gives an average worth of $1.15 billion. Some of the smaller firms have few but very wealthy families, for example 1875 Finance in Geneva or McCutchen Group in Seattle.
As a client, I’d want to know which firm had the best expertise of managing people with my level of wealth. I’d guess HSBC has a few super-wealthy families who bring that total up and presumably need intensive management, unlike some of the smaller families. How much you have under advisement doesn’t tell you about the clients, and the range is important.
(It is worth noting that these are assets under advisement, rather than assets under management, so the banks can’t even really to have anything to do with a certain amount of that money.)
So if we accept that size isn’t important, it must be what you do with it. This leads us to ask how these families’ investments are managed, and the table tells us nothing about that. If I wanted to choose a family office to manage my money, this chart would be of no use whatsoever. (For that, check out Spear’s family office index, of course.)