Business

A commercial family office with a difference? Its new chairman thinks so

Wren Investment Office, part of a commercial multi-family alliance advising clients with assets of $11 billion, does not believe in taking success for granted. 

Newly appointed chairman Adam Wethered prefers to back enterprise: “Most fortunes are have been built by entrepreneurs. A family enterprise is a gathering of people who are related to each other. Investment should serve that enterprise, not the other way round.”

Wethered once met a potential client who enjoyed growth of 40% a year from his business and expected the same from his investments: “I wished him good luck, but I had to tell him this was unrealistic.”

Wren is 30% owned by WE Family Offices, based in Miami and New York. Spanish associate MdF Family Partners has a similar stake. 

Hispanic links are self-evident. The firms in the triangle employ more than 80 professionals, advising 110 families. Its scale, important in the MFO world, implies it has staying power. 

Family offices have learned to be suspicious of the motives of people who try to prise business – and fees – out of them.

Wethered believes multi-family offices can win their trust but only if they pull together a precise understanding of their clients and the way to meet their needs. 

“If you are a wealthy family, you need an architect who is going to help you with your office design, the right structure and a broad strategy for investments. You need to understand of the nature of the enterprise and its dependents.”

Wethered believes an approach employed by management consultants is best placed to deal with the issues. He also believes in client focus which he saw in his early career as a barrister at London’s Inner Temple prior to 1976.

He went on to see management consultant McKinsey in action during his 24-year career at JP Morgan, where he held several positions before becoming its head of private banking in 1997. 

“I learned how McKinsey earned trust by carrying out a diagnosis to prove their worth to a client.” One of their conclusions was that the people making money at JP Morgan never spoke to the people who were spending it. As a result, there was a breakdown in understanding which needed fixing.

Wethered took on board the importance of using in-depth analysis to learn to tell people what they needed to hear, as opposed to what they wanted to hear. 

To warn a principal, he says, that his business was failing because it was run by his brother-in-law who happened to be deeply unpopular among his team, who did not dare to speak truth to power. 

Wethered believes myths grow out of a complicated mix of emotions, facts and opinions best unravelled by consultants experienced in finding a way forward.

To develop this approach Wethered set up multi-family office Lord North Street with William Drake in 2000.

Wethered recalls advising a family whose breadwinner had died: “They were spending too much money, but they needed to be told. And no one, even the professional head of the family was prepared to do so. He may not have understood the extent of the problem. He may have been too scared. 

“So we told them the facts. That the family needed to sell assets, including some they may have enjoyed owning.”

Wethered once met a potential client who enjoyed growth of 40% a year from his business and expected the same from his investments: “I wished him good luck, but I had to tell him this was unrealistic.”

Wethered is critical of investment consultants who like to draw up shortlists to replace unsatisfactory managers rather than testing out the way the arrangements have been working.

“There is quite a cosy relationship between those wealth managers and consultants because they refer business to each other, and it’s the same suspects.”

He also has reservations about MFOs whose team kowtows to their founding families: “You need to be a professional services firm to attract talent, rather than trying to preserve your family’s wealth with a few clients on the side.” 

Lord North sold itself to rival MFO Sandaire in 2014. After staying for two years, Wethered spent another four at a small adviser, Owl Private Office, before going to Wren.

Wren’s chief executive is Michael Parsons, who won the blessing of MdF of Spain, previously a Lord North associate, to set up Wren in 2016.  Sandaire subsequently failed to achieve take-off and sold itself to Schroders this year. 

Wethered believes Wren is nicely placed to advise on the way family offices can achieve a sense of enterprise.

“A family may have a sensible arrangement already. But they could be doing better and getting a ton of product thrown at them.

“Our job is to understand what they need, what they want and what they have. And then we can give them a choice on how to go about it.”

It has lately been approached with succession projects due to Covid-19: “A lot of the older generation are expecting the newer ones to get more say.” He believes that next generation’s digital skills have become increasingly important.

Wren stands ready to finds clients independent advisers to cover every contingency while drawing on its own experience to advise on the decision. Wethered expects to contribute in several areas, including corporate finance. 

The backing of WE Family Offices provides an important lift to Wren’s standing.

It so happens its chief executive Mel Lagomasino took over the running of JP Morgan’s private bank as Wethered was leaving.  

She went on to run GenSpring Family Offices before her sudden exit to start WE.  She has served on the boards of Walt Disney and Coca-Cola and become a trustee at Carnegie Corporation. 

All this sounds rather formidable, but Wethered says: “She’s a lovely person, very sensible. Someone who families feel confidence in.” She also has a loyal staff. Her two lieutenants Michael Zeuner and Santiago Ulloa both worked with her at GenSpring.

WE has B Corp sustainable certification and shares Wethered’s passion for family office enterprise backed by a robust set of financial statements.

Associate MdF of Spain was co-founded by Daniel de Fernando who used to work with Wethered at JP Morgan, where he supervised a broad range of client portfolios. 

He went on to run BBVA’s asset management before building up MdF. He has agreed to become Wren’s investment chief. His co-founder at MdF is Jose Maria Michavila who trained as a lawyer and became a long-serving politician in the Spanish government. 

Like WE and Wren, MdF advisers prefer to sit on the same side of the table as their clients. But they know they need to do their homework first.

 

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