On Wednesday evening, Agreus joined IQ-EQ in hosting an evening of content, conversation and champagne.

More than 60 Family Office professionals congregated at the Philip Mould Gallery in Pall Mall to hear about the marriage between Family Offices and Trusts, talent attraction, retention and compensation and, given the incredible setting, Art.

IQ-EQ’s Head of Private Wealth UK, Alex Dean offered an introduction to the event which was followed by Agreus Co-Founder Paul Westall who presented a holistic overview of the Family Office landscape in a post-pandemic world including investment trends, compensation and ambitions for the year ahead. The host of the event, Philip Mould, then explored art as an asset class, offering his top tips for success and touching on the key things to avoid which in his opinion, included contemporary art.

While each speaker brought their own specialism to the discussion, some commonalities appeared within each which stressed the importance of Emotional Intelligence both in hiring, retaining and compensating talent and finding the most suitable service provider. Each speaker also spoke about impending regulation following the Archegos Scandal and the impact it is having both on the relationship between Family Offices and their Trusts and the demand it is creating for trusted in-house legal and compliance professionals. A lot of credit was also given to Family Offices which are noticeably embarking on a journey of professionalisation.

Here is also a summary of the key points made by each speaker:

Paul Westall, Co-Founder of Agreus Group offered a list of organisational considerations for Family Offices which started with the tangible next steps wealth owners should take before embarking on a journey of establishing a Family Office. This included a focus on Cultural Fit and Compensation and everything in-between;

  • Purpose should always be the priority and it must be the first step a family takes in establishing an office. Paul offered two contrasting examples to illustrate this point; a Philanthropic focused Family Office and a high growth Investment Focused Family Office. These two examples were touched upon at different moments within the presentation but for this purpose were used to describe the very different cultures they boast and the personalities and pay required by the people who serve them.
  • Cultural Fit is the biggest consideration a Family Office must take before hiring. When a new hire is joining not just the Family Office but in many ways, the family behind it, cultural fit is vital and Paul went beyond making a simple statement by elaborating on the four types of Family Office culture, Clan, Hierarchical, Market and Adhocracy. He went on to describe the personalities each of these cultures require and how you go about finding them.
  • Equally as important as attracting the right Family Office talent is retaining them and compensation is a huge part of this discussion, especially given ‘The Great Resignation’ we find ourselves in. This goes far beyond matching bankers salaries in Paul’s opinion and means instead, aligning interest and attaining longevity though the use of long term incentive plans such as co-investing.
  • In summary, people are the key to the success of your Family Office and therefore your biggest asset. With more than 60% of the total costs of a Family Office allocated to staff compensation and benefits, it is a hugely important matter and one you must get right.

Steve Sokić is IQ-EQ’s Group Head of Private Wealth and offered his view on the post pandemic landscape. He started by asserting that many traditional wealth preservation methods are extinct, whilst others have retained their allure. He spoke of the upcoming intergenerational wealth transfer expected to exceed $15TRN over the next decade and highlighted the trends he thinks are driving and shaping this massive transition. These include:

  • Globalisation, both in the context of global investments and family members living in different locations.
  • A considerable step up in wealth governance, with Family Offices adopting sophisticated, institutional-like practices in the structuring of their wealth.
  • A shift in asset allocations and how those allocations are made. Not only are we seeing increased interest in alternative asset classes, but also changes in how Family Offices invest in those asset classes, with a focus on direct investing – echoing a point made earlier by Paul, who noted that 67% of family offices have made direct investments since the pandemic began.
  • A heightened focus on ESG and impact investment and a realisation that they are in fact two different things.
  • Increased use of technology for better aggregation of data and reporting across multiple jurisdictions and asset classes, and a greater demand for technology within the Family Office.

Steve then went on to speak in depth about trustee options available to family offices, including the pros and cons of insourcing, outsourcing and a third alternative covered extensively in the Agreus and IQ-EQ report titled the Hybrid Family Office, which describes the harmony of a half-outsourced, half-inhouse model for Family Offices and their Trust professionals.

The final note of the evening was given to the real host of the event, Philip Mould, who offered a glimpse into his journey from university art dealer to gallery owner. Having befriended a genealogist at university, Philip would purchase portraits dating back to the 17th century and together with his friend trace forward the descendants of the subject, selling them the remarkable and historical portraits of their ancestors. What he described as a “lost faces bureau” became a fantastic business model and looking back, Philip offered the room of Family Offices some tips into making a success out of art as an asset class. His top tips included:

  • The greatest art pieces can be summarised in no more than two sentences.
  • Look for pieces of history that are so emotive, there will always be at least one person out there who will treat it with the respect and price-tag it deserves.
  • Purchase artworks that can truly never be bettered. He used the example behind him, the earliest portrait of Elizabeth I as Queen. History cannot be rewritten and therefore this piece can never be bettered.
  • He described the 1900 – 1950 era as a sweet spot, particularly within English Art as while Paris, Berlin, New York and other cities rose in popularity, English artists and particularly female artists were forgotten. Galleries wish they were more diverse today because of the incredible and popular female art they missed out on.
  • Philip also joked, ‘make sure your artist is dead’.

He used this as an opening to talk about the difference between classical and contemporary art and how even the most classical pieces today do not always receive a return on investment as what might have been magnificent is no longer fashionable. While the next-generation of investors are more attracted to contemporary art pieces, there is no guarantee these pieces will hold their value, the artist may retire or move onto pastures new, or, be denounced. By choosing a renowned artist who is no longer with us, you are investing in a reputation untarnished.

The content was followed by an evening of conversation, champagne and celebration as the Family Office audience welcomed the return of in-person events amongst like-minded peers, old and new.