Sandy Loder, a fifth-generation member of the Fleming
banking and investment management dynasty, tells Ian Orton how his
new advisory firm, AH Loder Advisers, helps fill a gap in the
wealth management market and the importance of ‘softer’ advisory
skills in dealing with often difficult families.
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Preservation and conservation underpin virtually all wealth
management models. Clients want to earn a decent return on their
assets. More importantly, however, they do not want to lose the
integrity of their assets over the longer-term, especially when
they have to trust them to the care of a wealth manager.
Unfortunately, however, this rarely happens.
Take family-owned businesses, for example, which often underpin the
wealth of many families. Irrespective of the jurisdiction the
survival rate of these businesses is poor, with few lasting more
than one generation. And even if assets are assigned to wealth
management firms, the transition from affluence to gentile poverty
may be merely postponed.
The aeroplane analogy
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By GlobalData“To some extent it is just a question of
demographics and normal wealth dissipation,” says Sandy Loder, who
has just launched a new London-based firm, AH Loder Advisers. “The
fact is that stock-market returns will be insufficient to sustain a
family that is constantly being augmented by the arrival of new
members. Asset pools can only sustain very low annual pay-out
ratios if the integrity of the underlying assets are to be
maintained.
“So unless the asset pool can be augmented by
new injections from the family business or ‘new’ family members,
eventually the aeroplane lands and future generations will just
have to get jobs. Unfortunately, however, they may never have been
prepared for this eventuality.”
Loder talks about the challenges
inherent in both family-owned business and wealth preservation from
first-hand experience.
Leaving FFP
A fifth generation member of the banking and
asset management dynasty founded by Robert Fleming in the late 19th
and early 20th Century, he spent the past 18 years working for the
family firm and its successor, Fleming Family & Partners (FFP),
a London-based multi-family office, before launching his own
advisory firm in February.
Loder says his move was dictated more by his
desire to pursue his own goals, rather than any desire to leave
FFP. He maintains a relationship with FFP through its
next-generation programme, which he continues to run after.
AH Loder Advisers focuses on the entire
spectrum of issues associated with wealth management from an
advisory perspective with the aim of ensuring the longevity of
assets.
Loder says it offers a number of distinct
attributes with the first objectivity based on independence.
“I am not ‘selling’ anything other than advice,
unlike bank asset managers or other firms that manufacture
‘product’ in some shape or form,” he says.
“The second thing is the range of interests
covered, many of which are not even considered by conventional
wealth management firms that claim to offer a comprehensive or
holistic wealth management service. The third is the experience
acquired over 18 years of working for a wealth management firm and
multi-family office.”
Four fundamentals
Loder says his firm has four related
specialities covering wealth management; the family business,
especially in relation to governance, strategic positioning and
succession planning; education and training with a focus on
next-generation education, mentoring and family gatherings; and
advice on services such as property, concierge facilities, fine art
security and philanthropy.
The themes relate to the typical cycle
associated with the emergence of a family whose wealth comes from
direct equity, or a business owned by the first generation.
The first element covers issues relating to the
creation of a conventional wealth management strategic plan and the
manner in which this will be implemented.
The second element covers family
business-related considerations, in relation to education on
governance-related issues and the family’s involvement as well as
succession planning.
Education provides the third element, with a
considerable emphasis on next-generation training, an area in which
Loder has considerable experience.
This can help younger members of a family use
the wealth and intellectual capital already acquired to establish
the basis for successful new businesses that can help augment
family members’ wealth.
The fourth element covers the provision of
advice on a variety of services, such as property and fine art as
well as philanthropy, security and concierge facilities.
Soft skills
Loder’s service has a distinctive ‘soft’ side
to it. But, he notes, these are areas that conventional wealth
management firms tend to overlook, which can be of importance to
the long-term health of a family.
Many of these activities can – and are –
provided by a family office. The problem is, however, that as a
family grows the cost of a family office can increase considerably.
Eventually the family may have to merge the family office with
another or open the office to other families to spread the cost
load. And, as the family office morphs into a multi-family office,
the original ethos, as well as some of the facilities provided to
family members, can evaporate.
The multi-family office may end up looking like
just another wealth management firm, something that has effectively
happened to both Bessemer Trust and Rockefeller & Co, two
former single family offices.
That space between the client and the private
banker is the gap that AH Loder Advisers hopes to fill – where
advice can be accessed readily. Something his small but growing
number of clients have already realised.
