Murray Bender: RBC Investor & Treasury Services is pleased to present insights on the future of asset and payment services across the globe. Today’s podcast features Johan Lindberg, Managing Director and Head of Client Coverage for the Nordics at RBC Investor & Treasury Services, discussing how family offices are evolving in the asset management space.
Thanks for joining us, Johan.
Johan Lindberg: I’m pleased to be here today, Murray.
Murray Bender: Johan, what are you seeing as some of the recent trends or developments in the way that family offices are managing their assets?
Johan Lindberg: Well, the first thing we see is that family offices are increasingly using investment funds, not to invest in, but as a vehicle for their own investments. And this trend is rather new for the asset servicing industry. So we, as asset servicing banks, we have not seen these clients. If we go back 10 years, they weren’t really here, not at least in the amounts that we see today. So it’s definitely an increasing trend that we see and probably fueled by a number of factors, but I would argue the gathering of assets is one, but also that these clients are becoming more and more institutional and sometimes they’re also growing out of the private banking relationships that they traditionally are in.
Murray Bender: Can you elaborate just a little bit more in terms of what’s driving this change for family offices to become more like institutional asset managers?
Johan Lindberg: What we see, Murray, is that the family offices are looking to access investment banks and their expertise. So in gathering assets, consolidating assets, they become a larger client, and in so they get access to expertise that they also can be choosing in between. So, typically, if you are independent, you can have one investment bank for a certain activity and another investment bank for another activity. And again, placing those orders or managing those assets through this investment fund vehicle, and that drives, of course, cost down and it provides these family offices with independence and new tools I would argue.
Murray Bender: How are regulators and service providers responding to the move towards increased institutionalization of asset management within family offices?
Johan Lindberg: That’s an interesting one. I think what we have seen for the last 10 years or so is that the fund domicile, or markets like Luxembourg, has been early in adopting their legislation to attract these type of players, so family offices. So that’s an example. Regulators have prepared their regulatory framework to attract these companies. But also, we see that the legislators providing new laws around partnership, for instance, for the private capital industry has been a help to the family office industry as well. So we have seen more and more family offices taking advantage of using partnership structures, like the SCSp in Luxembourg, for instance, would be an example, which fits their way of managing assets for larger families, where the family members become limited partners in effect of the structure. It fits them quite well.
I would argue that’s one trend that started a long time ago or at least some years ago, but it also has been picked up recently by the family office segment of the market since they are, you can say, piggybacking a little bit on the private capital industry that started to use these partnership structures a long time ago.
Murray Bender: Looking to the future, Johan, how do you see asset management within family offices continuing to evolve in the years ahead?
Johan Lindberg: Well, I think the trend is here to stay and providers like ourselves, banks that are in wealth management and asset servicing, would have to see the two activities bridge, if you like, in order to follow these family offices in their development.
I think also the trend of multi-family offices is here to stay because of some of the factors that we already discussed, the gathering of assets and the institutionalization of that part of the industry as a whole. So I think the growth in size, the institutionalization, and basically the demands from that client segment will put higher requirements on the industry as a whole, but will probably benefit the clients of these family offices going forward.
Murray Bender: Thanks for sharing your insights on family offices, Johan. We really appreciate your time today.
Johan Lindberg: Thank you for the opportunity, Murray.
Murray Bender: Today’s podcast has been brought to you by RBC Investor & Treasury Services and we hope you found it useful. For additional insights on the future of asset and payment services, including our previous podcasts, visit rbcits.com/insights.
I’m Murray Bender. Thanks for listening.
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