global alliance with Rockefeller & Co, the US multi-family
office, in a deal which could have major implications for private
banks’ increasingly intense efforts to gain access to the ultra
high net worth individual (UHNWI).
The accord will see the French group take a minority equity
interest in Rockefeller, and entails Daniel Truchi, SG Private
Banking chief executive, and Marc Stern, chairman of Société
Générale Global Investment Management and Services for North
America, joining the 11-strong board of directors at
Rockefeller.
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“Rockefeller can help us to shorten the time it will take to access
the UHNWI market and to offer complete solutions for family offices
and UHNWIs,” Truchi said, citing the need for SG to offer “a
consolidated approach, both in terms of report and document
consolidation as well as managing financial and non-financial
assets”.
It is this approach which has seen family offices gain an
increasingly significant share of the wealth market. A study from
US consultancy Cerulli has found that 2 to 3 percent of private
wealth managers’ traditional market share is now captured by such
institutions.
“This is a deep trend in the market. More and more wealth is being
organised through family office structures in Europe and across the
world,” Truchi acknowledged.
For Truchi, a key feature of the deal is its scope. “If we really
want to target this market we cannot be on one level or another. It
has to be global – these clients are global”. Similarly, James
McDonald, president and CEO of Rockefeller, sees the move as a
“springboard” for the famous family organisation.
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By GlobalDataWhile private banks have made slow inroads into the UHNW space,
family offices have seen growth rates skyrocket. Assets under
management at Rockefeller alone rose by 60 percent in 2006 to $29.3
billion.
There is, however, the sense that larger family offices are also
reaching an impasse in their targeting of UHNWIs.
McDonald admitted that “the problem is there are only so many
relationships that you can manage as a boutique. Trying to actively
manage hundreds of relationships around the world means you simply
outrun your management scope as a small organisation. When you
start talking about this complex integration that the high end
requires, it’s actually almost impossible to do it on a pure
outsourced and open architecture basis”.
Other successful US multi-family offices such as US Trust and
Fiduciary Trust have long since been taken over by larger
institutions.
“These are now very small units inside very big organisations,”
said McDonald. “I don’t think any of the remaining big US
institutions would fit the ultra high wealth pure-play criteria
either,” he adds. Both SG and Rockefeller insist that a full-scale
takeover of Rockefeller is not on the agenda.
Rockefeller and SG will remain separately branded entities in their
existing markets, but McDonald says “there are great efficiencies
and overwrapping intellectual expertise which comes from having a
primary global relationship. Subject to the approval of both
boards, we will consider using the two names together probably in
other parts of the world – in Asia and where we believe the power
of the two groups will work very well.”
