Back in the day family offices were so exclusive. They were like the Studio 54 of the financial world, exotic and with an extremely exclusive membership. OK, family offices weren’t as fun as the legendary New York nightclub, but the mystique around them added to their allure just like the best nightclubs achieve.
But these days they tend to be a bit more of a tawdry affair, partly because gaining entry to the exclusive club appears to be easier than ever. Any Wall Street and City of London-type running a hedge fund, or other similar financial firm can become one – so it would seem.
Here’s a list of hedge fund-types that have converted their investment businesses into single-family offices: George Soros, Carl Icahn, John Thaler, Stanley Druckenmiller, Michael Platt, Douglas Hirsch, Scott Bommer, Steve Cohen, Lam Poh Min…and the list goes on.
The family-office nightclub is beginning to look pretty full. Even one of Wall Street’s most flamboyant women investors Lynn Tilton wants entry. Last week, the so-called “Diva of Distressed” said she was converting her firm Patriarch Partners into, surprise, surprise, a family office.
Just as all this is happening, the in-crowd – the Steve Rubell and Ian Schrager of the family office world – are running for the exits. JB Pritzker of the Pritzker Group and a member of one of America’s wealthiest families told the Financial Times last year: “We’ve been at this quite a while and we don’t operate much like a family office. We are much more like a professional and world-class investment firm.”
Bill and Melinda Gates are understood not to want to call their investment group Cascade Investment a family office. Johan Andresen, one of Norway’s wealthiest individuals, doesn’t want his investment group Ferd to be known as a family office…and the list goes on.
Of course, family offices will continue to flourish and be an exclusive club of investors for many years yet – unlike Studio 54 they aren’t closing down. But, as the in-crowd begins to question the term – and look for the latest, hottest “nightclub” of the investment world – we might be watching the gradual rebranding of them into something completely different.