Stonehage - SAICC - South Africa Israel Chamber Of Commerce

The world of the family offi ce – whether it is the
multi-family offi ce (MFO), the single family offi
ce or independent advisers – is still frustratingly
opaque. It is not immediately obvious who is competing
with whom or, indeed, who is doing anything at all. However,
in the past 24 to 36 months, there has been an increased
visibility and activity among UK-based operations
targeting the family offi ce sector. This is particularly so in
the MFO and independent adviser sector.
Although the term is somewhat elusive, a family offi ce
is, in essence, a wealth management fi rm dedicated to the
management of your family’s wealth. US oil billionaire
John D Rockefeller pioneered the concept when he set up
an offi ce over 100 years ago, dedicated to the management
of his family’s fortune. Legion are the number that have
since sprung up in its wake. Exact numbers are diffi cult
to come by, given that family offi ces, for obvious reasons,
have no need actively to market themselves.
Some family offi ces began as single-family offi ces before
opening up to outsiders and becoming ‘multi’, while
others were started with the combined fortunes of several
Stonehage
Giuseppe Ciucci confesses that he has ‘an unconventional
background’. His Italian family, from Tuscany, moved to
South Africa, where they worked in the wine and olive
oil industry, and he went on to qualify as a chartered accountant
and lawyer. He trained with Deloitte & Touche
before joining Stonehage in Neuchatel and then moved to
what he likes to call ‘the citystate of London’ in 1997, the
same year that he became Stonehage’s CEO. As both an
immigrant and an emigrant, he feels that his international
family background accords with the new global trend of
families moving about far more than 50 years ago.
families. There are those that focus solely on investment,
and those that provide a range of services in addition, such
as tax planning. All provide faultless and confi dential handling
of every aspect of an individual’s or family’s lifestyle.
Performance within any one offi ce is tricky to judge. It
is disclosed to a client before he or she signs up, but never
to the public. Every family client has a different target.
There are different portfolios – some sterling, some dollar,
some euro-based – for different family members within
the same family, and there might be a trust within one family
where several family members want to do something
much more adventurous.
Family offi ces provide a unique degree of control, not to
mention comfort. They deliberately restrict the number of
individuals and families for which they work, the better to
look after each existing client.
A family joins an MFO for signifi cantly greater cost effi
ciency (annual operating costs for an offi ce catering to
one family are estimated at £2 million to £3 million) and
far greater investment research than a single family could
hope to have. The bonus is a shared experience. Very few
of the issues which newer clients face have not already
been faced by existing ones.
The following pages provide insight on a small selection
of fi rms that are now actively operating in the sector,
primarily in London, and increasing their visibility daily.
They represent the new faces of the family offi ce arena.
They do not all do the same things, and there is no sense
of one being better than the other, but for a potential client
these fi rms should be among those on your calling list.
The selection, presented by Spear’s WMS in conjunction
with Scorpio Partnership, is based on our knowledge
of the UK and international sector. In the UK alone, we
estimate that there are between 250 and 500 family offi
ce businesses concentrating on aspects of managing the
fi nances of individuals and families. Not all of these are
MFOs, however. So, even in a supposedly niche market,
there is plenty of choice, if you know what you are looking
for.
Stonehage started in 1976 as a family offi ce for families
emerging from South Africa during those troubled times
and developed from a typical family offi ce with a trust
orientation to a full wealth-management entity, catering
to the upper bracket of ultra-high-net-worth individuals,
either in conjunction with their existing family offi ces or
as an entirely outsourced operation. ‘Family offi ces have
changed considerably. They were quite basic in the services
they provided,’ he refl ects. ‘The real opportunity in
this industry is the emphasis on investment opportunities
and treating family structures like public companies, with
the same kind of governance and transition issues.’

Independent and owned by its 46 partners – mainly former
lawyers and accountants, with a smattering of former investment
bankers – Stonehage has 300 employees and caters to the
needs of approximately 1,000 families. Although it began as a
service for the South African Diaspora, its focus has increasingly
been on European families based in London. ‘Stonehage
is multi-disciplinary and multiskilled and we are experienced
at managing complex fi nancial affairs that span several continents’
says Ciucci. ‘Most MFOs are based in one or two places.
We have offi ces in Switzerland, South Africa, Israel, Jersey,
the UK and the US, as well as a strong affi liate network of
partners worldwide. These are different jurisdictions but we all
speak the same language. There are 46 partners in our “family”.
Compared to us, UBS is a Behemoth. We are competing with
banks trying to sell products as opposed to solving problems,
and with the smaller boutiques trying to offer investment opportunities.
Other full-service family offi ces tend to be more
region or country-focused.’
Stonehage relies on referrals from existing clients, but also
receives introductions from lawyers and accountants, who are
subject to strict regulatory frameworks, as well as from investment
banks. The typical minimum starting-level for a family is
a net worth of $25 million. Stonehage has found that families
tend to move in packs based on nationality, so an Irish family
moving might encourage another 20 families to follow suit.
Stonehage hosts a number of events such as concerts, art exhibitions
and golf days, which allow clients to meet each other,
but Ciucci says the company is very careful about the way they
approach this. ‘We still believe that money talks and wealth
whispers. It’s the culture of this fi rm that discretion is everything.’
Even so, Ciucci insists that his Swiss professional background,
with its emphasis on accuracy, the work ethic and
discretion, has been absolutely vital in shaping him.
‘I’m a great admirer of the Swiss and their approach
to handling global wealth. There was a time when
Swiss Banks were seen as expensive and had not kept
up with developments in global wealth management.
Their approach was characterised by a basic investment
portfolio, high charges, protection of money and
very little return. In the UK, there had been a paradigm
shift caused by the impact of the US investment banks,
with their more aggressive attitude, their emphasis on
the bottom line, their wafer-thin margins and their high
returns. The Swiss are now making a comeback.’ he
says. He is not especially concerned about the Labour
government’s recently announced proposals to impose
a fl at annual levy of £30,000 on Non Doms. However
‘there is still a question mark about nondoms who have
been in the UK for over ten years,’ he says. ‘Whatever
happens, a number of countries could benefi t and Switzerland
is one of them.’
Over time, Ciucci believes that Asia is where the opportunity
for the family-offi ce industry lies. The wealth
management industry in Asia is undergoing a period of
change, from a model of possession and control to one
with greater governance and accountability.
‘We have an abundance of work in our time zone
here in London, where the families we look after are
Anglicised, culturally mixed, and in the main are resident
non-domiciled. Earlier generations of wealthy
Greeks and Italians who came to live in the city-state
of London educated their children here. Because their
children are Anglicised, they consider an English-style
MFO as acceptable, even if they’re based in Rome or
Athens.’
When asked to name any other key fi gures at Stonehage,
he singles out Harold Gorvy, who is one of the
doyens of the industry, an 80- year-old who used to
head up accountancy fi rm Arthur Andersen in South
Africa. ‘He’s going to have a contract for ever,’ he says.
‘We adore him here.’
Ciucci loves Italy and maintains the family tradition
of pressing olive oil at his home in Luca, Tuscany. He
and his wife Kathleen have been together since university,
where they studied law. He speaks four languages,
but his wife trumps this by speaking fi ve. Ciucci is actively
involved in a South African AIDS charity called
MaAfrika Tikkun as well as the Stonehage Charitable
Trust, to which the fi rm donates a percentage of profi ts.
‘It’s part of the culture here,’ he insists. ‘In our experience,
if you do good things, good luck follows you.’
Otherwise, golf is his ‘biggest passion besides my wife
and daughter’. A member of Wentworth Golf Club, he
admits to an ambition to play all the best courses in the
world at least twice and counts as his favourite Kingsbarns,
near St. Andrew’s, in ‘sacred Scotland’, where
‘every single hole has a full ocean view’.