Please introduce yourself, your background and tell us more about Dos&Co?
I am originally a barrister by training but, for the last nine and a half years, have been working with a small group of high net-worth families and individuals to provide them with outsourced family office services.
DOS & Co. acts as a ‘virtual’ family office; where clients already have a formal family office structure, we supplement that setup, plugging the gaps in resource and/or capability to take on discrete projects or provide ongoing support either legally, commercially or on an asset or project management basis.
For wealthy families and individuals, either young or new wealth or those who hail from overseas, who may not have formal family office structures here in the UK, we look after their UK family office operations (from properties, cars and companies to private bankers, headmasters, domestics staff, and even yachts and aircraft).
What are the main differences between traditional family offices and virtual family offices? Pros? Cons?
The principal advantage of a virtual family office is its ‘pay as you go’ structure. Generally-speaking, the cost of having a dedicated, stand-alone family office, particularly one with offices in central London, has gone through the roof as property prices and salary expectations have increased. While many families still feel the benefit of having in-house financial experts, for those matters which are more commercial, legal or operational, they often find that they don’t need a dedicated full-time resource.
While cost is a clear advantage, so too is the ability to learn from other wealthy families’ and individuals’ lessons. Family offices are, for obvious reasons, quite secretive and don’t often share best-practice or broadcast when they have made mistakes or learned lessons. By working with a number of different families, who each do different things but with lots of overlap, we are able to guide and inform our clients on the best (and, often, least expensive) ways of achieving their desires.
Many cite ‘availability’ as a drawback of outsourced family offices. The suggestion, of course, is that by out-sourcing, one cannot call upon expertise as one requires it. We don’t think that is the case; our clients all operate on the understanding that we want to deliver the best possible value to them – they also understand that if they have an emergency, we will drop everything to make sure that emergency is handled properly and effectively. The quid pro quo of that is that they also recognize and understand that, from time to time, they may need to wait for less urgent matters to be attended to. This has got to be the necessary corollary of any ‘pay as you go’ model.
What makes virtual family offices more viable over traditional family offices?
Aside from the obvious cost benefits I have alluded to, another key advantage of an outsourced family office is the level and sophistication of the technology employed. In order to deal with the complex and large-scale affairs of our clients, we have developed (and I’m sure other virtual family offices have done the same) some fantastic digital solutions to the sorts of problems that significant wealth can entail, which we are able to share with our clients. It would, in most cases, not be economically viable or sensible for each of our clients to have taken the risk or invested the necessary funds in developing those systems for their own use.
What are some of the recent investing trends that you’re seeing take place within family office investments? What about virtual family offices?
This is a great question and, with respect, I think highlights a core difference between a ‘traditional’ and a ‘virtual’ family office which, in turn, stems from a misunderstanding by many of exactly what a ‘family office’ is.
As a term of art, ‘family office’ is being employed increasingly by private investment managers who seem to consider that if they are investing family wealth, they are running a ‘family office’. We don’t necessarily consider that to be the case.
In our view, managing considerable wealth should be approached as one would approach managing a business. There are sales (investments), human resources, facilities, operations, legal considerations, capital expenditure projects and almost every other conceivable parallel can be drawn. The principal difference is that the ‘customers’ are the family and the wealth-holders themselves.
A ‘family office’ encompasses that entire business arrangement. Most of the ‘multi-family offices’ that we come across focus almost exclusively on that investment piece which, we believe, makes them ‘investment managers’ instead.
Where the concept of a ‘virtual family office’ gets interesting is that we consider that a virtual family office, by virtue of the level of trust placed in it, operates with a conflict of interest if it handles investment matters on behalf of the principals. The role of a virtual family office is to manage risk, mitigate down-sides and to run or assist with all other areas of the business. We are ‘wealth managers’ in the most literal sense of those words. The generation of profit through investment, necessarily, requires taking risks. It is for this reason that we consider that organisations should do one thing or the other, but never both.
Because we choose not to get involved with the investment side of the principals’ affairs, we are less exposed to their trends. Certainly, where we have seen in increase, particularly from overseas buyers, is in the acquisition of prime London real estate – we are able to assist our clients with sourcing, renovating and managing their London presences (from properties to staff, pensions, bankers, private members clubs, schools etc) – almost certainly a consequence of the recently-weak pound.
What are some of the biggest challenges that most family offices face that you’re trying to solve for?
Thirty to forty years ago, we were looking at three generations of wealth alive – grand-parents, parents and their (young) children. We are now in a place where, owing to extended life expectancy, in the next 30 years we can expect to have five generations of wealth alive at the same time. The youngest of these generations will have grown up in a very fast-paced, technologically-developed environment.
A good number of our clients come to us with antiquated systems, processes and records; sometimes scarily so. Part of what we are able to do, as trusted fiduciaries, is assist with ‘getting the house in order’; documenting processes; recording information and making it easily and readily accessible to facilitate that transition of wealth from one generation to the next.
This, sometimes, makes us unpopular, particularly where the client has an existing family office setup with long-standing incumbent staff – they fear becoming obsolete by this disintermediation of information (giving the principal wealth-holders direct access to their own affairs), but this couldn’t be further from the truth – by leveraging the power of our own wealth technology, we are able to free up family office resource for more interesting projects, for sensible planning and, ultimately, for the delicate and personal task of managing that slow transition of wealth from one generation to the next.
What are some of the latest technologies and solutions that you've introduced that have had a significant impact on your day-to-day operations?
One of my favorite systems is our secure internal messaging system that allows principals to collaborate and discuss their properties, projects and significant staffed assets (principally, aircrafts and yachts) but, more importantly, to allow their House Managers, Estate Managers, Crew and Captains to communicate in a secure, closed-circuit environment so as staff turn over, knowledge is locked in to the system.
We also have a great system for managing NDA’s at client properties (using facial recognition to assess and analyze threats to their security); a system for in-house travel management/ lifestyle/ concierge and PA’s to deliver travel itineraries and reservations directly to our clients’ phones, updating in real time as their plans change; and, perhaps most importantly, our Digital Family Office platform which ties all of their financial, real estate, significant assets and lifestyle requirements together into one useful app on their phones.
What are some of your go-to resources to stay abreast of the latest news and investments in your industries?
For us, the landscape which changes the fastest is definitely the legal one. That said, we work with some great private client lawyers, private bankers and with a handful of trusted advisors in art, property, aviation and security – it is these long-standing personal relationships which, for us, are the greatest source of useful news and information as the legal, financial and (perhaps most importantly) social landscape in London develops.
There is no shortage, we find, of people who profess to be expert in their fields, especially when it comes to managing the affairs of the UHNW population, but we are very discerning about who we let in to our circles – reputations are hard-won at this end of the market and, thus, jealously-protected.
What has been one book about business or finance that you’ve read and that you consider a must-read?
I’ll confess that I am, in the round, very wary of ‘business’ books; especially those that tend towards ‘self-help’. I have recently completed an MBA, however, and in so doing came across a slightly academic tome from 2006 called “Mastering Virtual Teams” by Deborah Duarte and Nancy Snyder. It is a little out of date now, given the intervening advances in technology, but I consider a lot of the lessons and their conclusions on a practical level to continue to ring true.
Even ‘traditional’ family offices, by virtue of the clients’ international lifestyles, with multiple household teams in different countries; remote teams working on estates, in chalets, on yachts and aircraft; and the clients’ senior business teams (who run their family enterprises), function very much as ‘remote working teams’ today. When working with an outsourced virtual family office, the same must, of course, also be true.
Which asset classes do you envision allocating client capital to over the next 12 months?
For the reasons set out above, we don’t really carry an opinion on clients’ investments, though for as long as the pound remains slightly suppressed, we would expect to continue to see an influx of overseas wealth into the UK prime residential property market.