CH ISSUE Minding the assets isn t enough: you need to take care of the whole family, says Stonehage Fleming s Jacqui Cheshire

Transcription

1 CH CITYWIRE.CH Minding the assets isn t enough: you need to take care of the whole family, says Fleming s Jacqui Cheshire FOR SWISS INDEPENDENT ASSET MANAGERS

2 The of planning Today s international family office needs to offer more than just advice on investments, says Jacqui Cheshire. As Camilla Giannoni discovers, Fleming s holistic approach encompasses everything from succession planning and complex regulatory reporting to art management

3 When Jacqui Cheshire joined Fleming in May 2000, she was embarking on only her second ever job. Today, the South African heads the Switzerland Family Office division, of one of the biggest multi-family offices in the world, and oversees some $50 billion (CHF 49.2 billion) of assets. Cheshire, who is based in Geneva and started her career in s London office, embodies the international spirit of the multi-family office. The origins of Fleming date back to 73, when financier Robert Fleming set up the first associated business an investment trust in London, which continued to grow throughout the years. Over a century later, in 1976, was established by South African families as a family office in London. In 2000 the Fleming business was sold to Chase Manhattan, leaving the Fleming family with liquidity and allowing them to start managing their own wealth while gradually reaching out to new clients. Meanwhile, went through a series of mergers and expanded into Switzerland, opening an office in Neuchâtel in 1987, which remains the biggest in the country. In 2015 the two companies merged, giving rise to a well-rounded family office business boasting 11 offices in four different continents and looking after the wealth of more than 250 families. It truly was a genuine merger as the cultures are very similar. The business was very well-developed on the family office side, whereas the Fleming Family & Partners one had a bigger investment team, making it a very complementary combination, Cheshire explains. Of course, it is a challenge to run a big business across different locations. She is responsible for the three offices in Switzerland, located in Neuchâtel, Zurich and Geneva, as well as a legal team based in London. FAMILY MATTERS All multi-family offices place an emphasis on family assets. At Fleming, however, things work a little differently. Cheshire explains: We don t just worry about the assets, we take care of the whole family. As part of this holistic approach, Cheshire and her team deal with succession planning, aiding families in the development of philanthropic strategies, as well as doing the reporting for all the assets and looking after judiciary aspects. In 2007 they took an extra step by opening an art division in the London office to oversee collections belonging to their clients. In 2017, the department expanded by acquiring a Zurich business called Omniarte. There is currently a team of four who look after around 20 collections worth a total of $2.5 billion (CHF 2.4 billion). They deal with the administration of the collection by cataloguing, managing the insurance, looking after the legal aspects, aiding the acquisition and sale of the art, and with exhibitions. It is our job to protect not only the family wealth, but also their reputation It is our job to protect not only the family wealth, but also their reputation, Cheshire says. This has become increasingly important because there is an increasingly negative perception of wealthy families, she says. It is very important for a lot of these wealthy families that they are seen to be giving back to society, and what you find is that often clients have given a lot to charities over the years, but they have always done it very discreetly. They need to consider becoming more vocal and showing exactly what they are doing as a family, and we need to be able to help them with it. Chesire explains that in this sense, UHNWI are more vulnerable because people want to know what they do. In order to tackle this issue, she stresses the importance of preparing a social balance sheet to illustrate the family s contribution to charitable institutions. NAVIGATING REGULATION This is not the only kind of reporting that the Fleming team takes care of. The radical changes affecting the regulatory landscape, which have intensified over the past two years, are among the biggest concerns for Cheshire s clients. With the introduction of common reporting standards the automatic exchange of information between jurisdictions we had to help families understand what that was all about. An example is the introduction of the beneficial owners registers in the UK and the BVI, which change on a constant basis. As an international

4 family office, regulatory variations always affect us. It does not matter which jurisdiction they take place in, chances are, in one way or another, some of our clients are going to be involved. We have to be on top of all of this to guarantee the best service possible. This is why geopolitical events also preoccupy the Fleming s clients. Families these days are more and more international. They have assets distributed in different countries and they need someone who coordinates everything, which is exactly what we do. LASTING COMMITMENT Cheshire believes in teamwork. As head of the Family Office Division for Switzerland, she takes care of different sides of the business: the managerial part, making sure all the single divisions efforts deliver good results, and the human aspect, which involves dealing with the clients, all while maintaining and increasing revenue. On top of this she is still responsible for a portfolio of clients, but the sheer amount of work does not scare her. Stressing the importance of teamwork and creating good working environments, Cheshire explains that If you work with wonderful people that are passionate about what they do, it is much easier to keep track of everything. You have to be a good example. You have to encourage the team so that they want to go out there and achieve, and you have to instil that in them. As an organisation we pride ourselves on the fact that the employees stay with us for a long time: I have been here for years myself. Providing continuity to clients is important at Fleming. We believe this is what differentiates us from the banks. We deal with people s personal wealth and matters that are very dear to their hearts. Clients want to know that they are going to be dealing with the same people for a long time. This is particularly relevant when talking about succession planning, one of the core services offered by the multi-family office, which helps clients ensure the right plans are in place to transfer wealth from one generation to the next. Cheshire says: The parents are often too scared to get the children involved. They don t want to face the fact that they are going to die one day, and they are reluctant to start planning the transfer of their wealth. In the next 10 years Cheshire believes a huge amount of wealth will be You have to encourage the team so that they want to go out there and achieve transferred to the younger generation, and she believes beneficiaries will need advisers of a similar age to them, whom they can trust to remain their advisers over the coming decades. Despite being an institution based on traditional values, we also want to appeal to a younger demographic, and this is why we have teams of young advisers and value technological development. We have recently received requests through our website and on LinkedIn from people who wanted to know more about the family office and to become our clients. BEYOND GATEKEEPING Being an international family office that deals with the assets of more than 250 families, Fleming does not have a one-model investment strategy, but instead adapts according to the clients needs. We deal with a broad variety of investment opportunities including direct investments, private equity and illiquid investments. We start by discussing long-term plans with the family. This helps us define the investment philosophy and consequently the investment strategy of a family. It is a very long-lasting process, because we need to understand how they deal with risk, potential loss and illiquidity. The investment team then weights the asset classes, deciding what percentages they want to invest in liquid assets and illiquid assets. The next stage is deciding which markets and industries the clients would like to invest in. In the case of certain clients, Fleming mostly acts as gatekeeper, meaning the clients give them permission to look into their bank accounts and see their direct investments. The investment team then collects data to provide the families with an overall view of the structure of their portfolio. That overview is then compared with the clients investment philosophy. What we often find is that there is a significant mismatch between a client s investment philosophy and the actual structure of his or her portfolio. This means what they would like to get in most cases cannot be achieved through the investment strategy they currently have in place. Our job is to make them match. In this case however, the discretionary power remains in the hands of the investment managers and of the banks. In other cases, the clients decide to delegate the asset allocation

5 process to Fleming, giving the investment team discretionary powers. Depending on the different families, sometimes they would give us full responsibility for their investments and sometimes the family office would only oversee a small part of their assets, Cheshire explains. Our investment strategy is very much based on protecting the existing assets instead of trying to grow them. Our motto is stay rich as opposed to get rich. In Switzerland they invest in longonly equity and long-only fixed income. They avoid structured products, funds and ETFs. It is important to keep a very simple investment strategy because it is something that they can understand. This is what the clients ask for. For this reason any kind of opportunistic investment made on a daily, weekly, monthly or quarterly basis is less relevant to their business than long-term projects. LEADING FROM THE FRONT Cheshire s plans for the business reflect Fleming s investment strategy: steady growth that prioritises the long-term future of the company. But that doesn t mean there s no room for innovation. When you start a new job it is not just a case of carrying on what has been done in the past; it is to look to do things differently, try to improve things and make things better and to do it sooner rather than later. At the moment Fleming is looking to get more Swiss clients and clients based in Switzerland. She believes wealthy individuals are desperately looking for an international family office. Even families that can afford to have their own family office would prefer a multi-family office she says, because they know bigger outfits will have the systems in place to deal with wealth administration and regulatory reporting. We have enough infrastructure to administer the wealth of the family on different levels and in different jurisdictions. We have seen cases of single-family offices deciding to collaborate with us, letting us deal with everything outside their jurisdiction. The international dimension is not Fleming s only strength. The Fleming family is still very much a part of the family office, Cheshire says. This is the proof that the family is still very central to what we do. The Fleming family is now in its sixth generation, and they have dealt with succession issues. If you look at the statistics, the third generation is the one that is meant to lose all the wealth, but they managed to keep it until the sixth generation. We become so central to the client and the family. They value what we do and our advice and we become trusted people to that family. This is the greatest satisfaction I get from doing my job. STONEHAGE FLEMING: OVER 140 YEARS IN THE MAKING FLEMING FAMILY & PARTNERS Robert Fleming sets up the business to invest in opportunities that included the emerging American economy. 73 The Southern Investment Trust is established as a family trust Robert Fleming & Co. established, incorporating the Southern Investment Trust Jardine Fleming is founded as a joint venture between Jardine Matheson and Robert Fleming & Co Fleming Family & Partners (FF&P) is formed to manage the Fleming family wealth following the sale of Robert Fleming & Co. to Chase Manhattan Bank (now part of JP Morgan) FF&P opens the doors to the first non-fleming client and establishes an office in Zurich 2002 FF&P adds wealth planning to its offering by acquiring a significant minority interest in Asquith & Partners, renamed FF&P Wealth Planning/FF&P expands its Swiss Asset Management business with the acquisition of Gebhard, Corrodi & Partners STONEHAGE FLEMING and Fleming Family & Partners merge. STONEHAGE Source: Fleming 1976 is established in London to provide family office services and to administer trusts, companies and other structures for client families Office opens in Neuchâtel, Switzerland, to broaden the offering and to leverage Switzerland s status as an international financial hub ABSA, one of Southern Africa s largest banks, acquires 85% of Offices open in Jersey and Israel Management buys back equity from ABSA to become equal partners becomes 100% management owned and fully independent. 20 Offices open in Cape Town and Johannesburg. Launch of Investment Partners, Property and Law services Zurich office opens. establishes joint ventures in USA and Australia. Launch of Philanthropy and Art Management services Geneva office opens. Launch of Global Direct Equity Strategy Offices open in Stellenbosch and Luxembourg.