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Multi-family offices (MFOs) are gaining in
prominence, as the external asset management
(EAM) market expands alongside the number
of ultra-high-net-worth individuals (UHNWIs)
and wealthy individuals seek a more individual
and concentrated relationship with their wealth
management professional. Savvier clients are
taking a renewed interest in wealth management
practices and what products and services are
available to them, leading to an evolution in the
industry.
Savvier clients are taking
renewed interest in wealth
management products and
services, leading to an evolution
in the industry
The lure of external asset managers (EAMs) lies
in the deeper understanding clients receive and
the more bespoke solutions provided for their
wealth management needs.Rather than a focus on
pitching products and services as was the practice
of banks in the past, EAMs are client-focused.
Such offices can provide products and services
from numerous banks to their clients, providing
a holistic and more diverse choice – MFOs take
this approach to the next step offering bespoke
lifestyle concierge services - traits highly prized
by the new breed of UHNWIs that are entering
the market. This results in a better alignment of
interests between clients and financial advisors.
EAMs provide clients with a
deeper understanding and more
bespoke solutions
The UHNWI Market
As the latest Wealth Report from Knight Frank
indicates, the number of UHNWIs grew by
around 5,200 last year alone, meaning a total of
65,335 people have been classed as an UHNWI
within the last ten years.The number of billionaires
reached 1,844 last year; an increase of 82% from
2004.
The number of UHNWIs grew
by around 5,200 last year
Knight Frank
In the US, the popularity of EAMs has grown with
a number of larger firms supporting expansion
into this area. This has been described as a
“genesis” by Forbes, as well-established banking
organisations seek to expand into this lucrative
new area and benefit from the increase in prized
UHNW clients.
A “genesis” of well-established
banking organisations seeking to
expand into the EAM Market
Forbes
GROWTH IN EAMS PRESENT NEW JOB
PROSPECTS FOR WEALTH MANAGERS
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In the EU, particularly Switzerland, thousands of
EAMs have been set up. But it is not the case
that EAMs are enjoying a windfall of business just
in these more traditional wealth hubs, emerging
markets such as China, India and the South Pacific
are also housing more UHNWIs than ever before.
Asia overtook North America as the region with
the second-largest number of UHNWIs in 2014,
the same Knight Frank report discovered.
UHNWIs in Asia now hold net assets of $5.9
trillion. By 2020, it is predicted that UHNWI
assets in the Asia-Pacific region will reach $22.6
trillion and a further 20,127 individuals are likely
to see their wealth increase to $30m-plus in this
region within the next decade. The number of
ex-bankers moving to the Asian market because
of this will result in managed assets in the region
increasing to $70 billion by the year 2017.
MFO Regulations
As the number of UHNWIs and MFOs increase,
more regulations are coming into force.
Traditionally EAMs are subject to less compliance
than other banking sectors, but as an article on
Bloomberg published earlier this year notes,
more focus is being given to the legislation and
regulation of such offices. Financial intermediaries
such as EAMs are feeling the grip of stricter rules
and as such the candidates considered for these
positions require knowledge and experience of
these changes.
More focus is being given to
the legislation and regulation of
EAMs
Bloomberg
In Singapore, the government has been striving to
carve the city out as a leading wealth management
centre for UHNWIs within the last decade.
In 2011 the Association of Independent Asset
Managers (AIAM) was created to help ensure the
region stands out as an ideal business location for
MFOs and EAM practices. While the number of
EAMs within the market is still low compared to
the EU and Switzerland, the movement of EAM
pioneers within the last few years has helped
to establish the region as a pioneering area for
investment and the AIAM has helped to increase
understanding of EAM opportunities and set
guidelines for these practices.
As the number of entrants to the market and the
number of clients increase, the need to appear
competitive is driving forward more regulatory
requirements. The aim of the AIAM is to
“establish, preserve and increase the reputation
and professionalisms” of the EAM profession
and MFOs in Singapore. The Dodd-Frank act
passed in the US in 2010 and the Alternative
Investment Fund Managers Directive (AIFMD),
adopted by the EU in 2011, also offer a similar
level of regulation to EAM and MFOs in these
markets. The AIFMD in particular imposes pan-
European regulations on alternative investment
fund managers to report and disclose information
on clients to the relevant authoritative bodies.
What this means for recruitment
EAMs looking to expand in what is a growing
market are having to comply and actively invest
in the expertise required to remain competitive
and attract and retain the wealthiest of clients.
High-quality, experienced professionals are being
recruited to help oversee and facilitate growth
and remain compliant, with a focus given to a
candidate’s client portfolio and their ability to
connect with UHNWIs.
EAMs looking to expand have
to comply and actively invest
in the expertise required to
remain competitive
As a result,the barrier to entry into EAMs is lower
but more emphasis is placed on the future growth
of client relationships. As modern UHNWIs seek
less restrictive relationships with their wealth
management professional than affluent individuals
of the past (the prominence of entrepreneurial-
gained wealth is far more prominent now than
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inherited wealth, and as such these clients have
more of an interest in how their assets are
handled), flexibility is a highly desired trait within
such offices.
The barrier to entry into EAMs
is currently relatively low – more
emphasis is placed on the future
growth of client relationships
This is a selling point for candidates looking
to move into this area. Not only is there less
segmentation than within traditional banking
departments, but there is flexibility within the
role (the ability to work from home, set specific
working hours and be more autonomous) and
more options for relationship development with
clients. The bonuses offered in EAMs are often
more generous as well, as they are tied into the
revenue generated by an individual; this increases
the incentive to maintain positive working
relationships with UHNWIs.
As both well-established banks and independent
financial advisors seek to benefit from the rise in
UHNWIs and the emerging prominence of MFO
offerings, recruitment opportunities in the sector
are increasing.
5. This guide has been brought to you by
Carlton Senior Appointments, part of
the Phaidon International group.
Carlton Senior Appointments is
a specialist provider of Wealth
Management recruitment solutions
across Europe, the US, Asia and the
Middle East.
We believe every professional should
benefit from the advice of a trusted
partner throughout their career.
Contact Carlton Senior Appointments,
for more information about career
opportunities in this sector, or if you are
looking to expand your team.
Contact us today:
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info@carltonseniorappointments.com
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