Five things the Duke of Westminster's life can teach family offices

The Duke of Westminster with the Queen   Photo by MJ Kim/Getty Images Entertainment / Getty Images

The Duke of Westminster with the Queen   Photo by MJ Kim/Getty Images Entertainment / Getty Images

The Duke of Westminster, one of the UK’s wealthiest individuals and biggest landowners, has died suddenly. He was 64. In the public’s perception, the duke will probably best be remembered as the personification of an English member of the landed, and privileged, gentry. He and his family were certainly wealthy. Forbes reckons the duke was worth close to $11 billion, making him the 68th wealthiest person in the world. But he was also the personification of the best practices of the English aristocratic tradition, based on the importance of stewardship, loyalty, and the welfare of all the stakeholders involved in the family’s estates, investments, and businesses.

Through inheritance and managing his wealth wisely Gerald Cavendish Grosvenor and his family owned large parts of London’s wealthiest neighbourhoods, as well as other property and land throughout the UK, and the rest of the world. The Grosvenor Estate was a single-family office because it managed just the money of the duke and his immediate family. It only, as someone once said, had one shareholder - the family. Family offices, and indeed, family businesses, can learn from the examples the duke set in the context of the investments and businesses he oversaw. Here’s five of them.


Tradition

There is no shortage of tradition within the duke’s family, given the fact that they can trace their wealth back to the 17th century, and probably even further. Titles, estates, and links to other aristocratic families, including the UK royals - the duke and his ancestors had it all, and for a very long time. But perhaps it is the longevity of the family’s wealth that is most impressive, and, indeed, most instructive to other substantial wealth owners.

No doubt luck played a role, but the English aristocratic tradition of primogeniture probably had a bearing on the longevity of the family’s wealth as well. Primogeniture, whereby the firstborn son inherits most, if not all, of the estate of his parents, was practiced well by the duke’s ancestors for more than six generations. Considered today old fashion and politically incorrect, not least because of its sexist overtone of the male heir inheriting everything, nevertheless primogeniture has kept great fortunes intact over many generations.

Although controversial, a modern interpretation of primogeniture, which is neutral to the inheritor's sex, might provide a useful foundation for keeping wealth together over many generations. One only needs to look at the longevity of the great aristocratic families of England to prove this. But the practice has also been followed by many of the great family business dynasties - and that’s because it often makes sense to do so to ensure the business stays intact for many generations.


Innovation

No great fortune - even one as vast as the duke’s - lasts for generations without innovation. The duke was aware of this and consequently initiated various changes to his investment group, which kept it up-to-date and entrepreneurial in outlook. This included setting up Wheatsheaf, an innovative subsidiary of the group that concentrates on investing in clean technology, food production, and land and water resource management.

The duke and his managers were also good at finding talent to manage his portfolio, including hiring Brandt Louie to be the chairman of Governor Estate’s Americas business. Louie is one of Canada’s most successful entrepreneurs but also comes from a family business background. Wheatsheaf’s chairman Alex Scott runs a successful multi-family office group and comes from a family business background as well. Governor also appointed a sustainability director to help direct the group’s strategy towards long-term outcomes.

Loyalty

The duke might have been good at finding excellent outside expertise, but he was also good at rewarding loyalty among his staff. The Grosvenor Estate’s chief executive Mark Preston is a good example of this. Preston has been with the investment group since he left university - that’s 27 years. OK, some might argue that Preston could offer more with outside experience. But not according to the duke, who valued Preston’s intimate knowledge of the business and loyalty over outside experience. Preston got the top job shortly after Lehman’s collapse and the start of the financial crisis. Outsiders say he’s steered the investment group through the post-financial crisis years successfully and is set to continue to do so.  

Wealth

If the watch company Patek Philippe modeled their famous advertising campaign slogan (You never actually own a Patek Philippe. You merely take care of it for the next generation) on any individual then it might have easily been Gerald Grosvenor. With a classic English aristocrat's concept of stewardship, the massive wealth he inherited was all about passing it on to the next generation. As he once said about his wealth: "Given the choice, I would rather not have been born wealthy, but I never think of giving it up. I can't sell. It doesn't belong to me."


Expertise

Family investments that last the longest and return the most over many years are often the ones the family best understands through their firsthand experiences. Gerald Grosvenor realised this and always geared most of his investments around land and property. OK, Wheatsheaf might not be part of this core investment theme, but it had links through its 21st-century take on managing resources connected to the land.