Sound Off: with Michiel van Cranenburgh
In this Month’s Sound Off: Michiel van Cranenburgh, member of the Finos Advisory Board. Michiel is an international wealth management and family office executive with senior and board-level leadership experience in banking and professional services.
Finos: Name the biggest challenge (that comes to mind) that the (multi-) family office industry faced recently, and how did they overcome it?
Michiel: Multi Family Offices (serving multiple families) are a relatively new phenomenon in the advisory world for wealthy families. Whereas Single FO’s were already being set up by very wealthy families more than a century ago, partner-owned MFO’s are still a relatively young industry. Services provided by MFO’s differ from one to the next as their client proposition is very often tied to the profile and background of the partners.
A MFO can be an investment manager, a private equity vehicle, an administration unit, a personal butler service, a legal/fiscal advisor, a trust company or any combination of these roles. The biggest challenge? Being a truly independent advisor that always works in the interest of the clients. I would say that many MFO’s still have a long way to go here.
Finos: How did you see the use of technology used by the industry change in your career/lifetime?
Michiel: MFO’s are typically not early adapters of new technology. One has to keep in mind that families expect their advisors to be very discrete and keep to the highest standards of privacy and confidentiality. However obvious this sounds, it often translates into a misconceived notion that keeping data and files stored physically is more secure than in a cloud-based solution. Or that consolidating reports from different providers is best done through an Excel sheet maintained by the bookkeeper.
At the same time, we see lots of personal data of family members being exchanged with external providers in unprotected PDF’s attached to emails. All this, while technology is of course evolving fast, offering solutions that are both more reliable and efficient. FO staff have a challenge in both keeping up to speed with new developments as well as convincing their client family members to adopt new technology. Embracing these kind of solutions is often more natural for younger, next generation beneficial owners that were brought up with technology.
Finos: In an industry where trust is key, and personal service is the name of the game, how can a trust company grow and keep the personal touch in service delivery (i.e. not lose the client’s trust).
Michiel: A very good question indeed. I think there are natural limits to growth for a MFO as a result of this personal element of the service. Clearly this is more true when the nature of the MFO services is closer to the personal side of a family (lifestyle services, next generation planning) than in the case of a more ‘standardised’ asset management service that can be rolled out to multiple clients.
Some MFO’s make a conscious choice to not go beyond a handful of complex clients to ensure the personal approach remains at the heart of their offering. Of course, this has to be matched by a corresponding level of compensation to make the MFO a viable operation with good prospects for continuity.
Finos: What advice would you have for the next generation of (multi-)family offices considering the shift in mindset of the younger family members’ generation?
Michiel: I believe that next generations will always weigh the pros and cons of continuing with the MFO that served their parents against the risks and benefits of moving to a new service provider. Heritage plays a key role in wealth transfer and the transferring generation has often gone to great lengths to structure and organise their wealth in the most optimal way – for themselves. Education of the next generation therefore needs to commence at an early stage to ensure that the right balance is found between preservation of certain traditions and experience from the previous generation with the innovation and modernisation that a next generation can bring. A good FO is a key contributor to and coach of this process.
Finos: If you would start a new multi-family office from scratch today, what are the top three things you would focus on to differentiate yourself from the crowd?
Michiel: 1. Go above and beyond the regional/national approach found in most MFO’s today.
2. Combine truly diverse skill sets by creating a team of different backgrounds
3. Enforce a pricing model that pays a fair fee for the quality of the service rendered to the family.
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