Stamford Privee Blog
21st May, 2013 - Posted by admin - No Comments
William Chan is founder and chairman of Singapore based multi-family office Stamford Privée, which evolved from a single-family office to an MFO in 2004. He founded Stamford after spending nine years with one of the largest Swiss private banks and a further three years with one of the largest independent trust companies in Asia. William holds the Chartered Asset Manager, Chartered Risk Manager and Master Financial Professional designations from the American Academy of Financial Management and sits on its Board of Advisors. He is also curriculum consultant to the Singapore Polytechnic on its Financial Markets modules and speaks regularly at financial seminars in the region.
Q: How does Stamford differ from other family offices?
A: We do everything from investment management and financial, wealth and estate planning through to trust and fiduciary services. Not all family offices will manage investments because they play a more administrative role or provide trust and legal experts that only look at certain parts of family affairs. We are not exactly like a bank, but we’re geared to accommodate significant families who may or may not want to set up a single family office (SFO). Such families may prefer to join a multi-family office (MFO) due to cost consideration or because of a lack of available talent. Alternatively they see an MFO as a way to learn about the family office environment and discipline. Armed with this experience and if they subsequently enlarge their asset size they are then in a better position to form their own SFO at a future date.
Q: Do you plan to bring on board more clients?
A: We probably have room for two or three more families – but expansion is a function of talent, since the more you manage the more staff you need. You may also need to bring in new skills depending on the range of needs of a new client family or the diversity of their assets, either by geographic location or asset class. For example, you may suddenly need legal experts in Indonesia or Thailand.
Q: What are the issues you face running an MFO?
A: When you manage a range of different families, there are confidentiality issue and they want to make sure that they are getting sufficient attention and service from the MFO. There also needs to be an alignment of values. For example, one family may be very conservative; another one might be involved in running a casino – so their goals and values may not match and they may have radically different investment models. A wealthy family different problems from say, a private equity client. For the family, it’s not just about making the next million, but about wealth preservation, legacy and succession planning, as well as reputational issues. Are you recognised as a “good family” or are you in the media for the wrong reasons, such as sibling squabbling over assets?
Q:What kind of approach should an FO take?
A: At Stamford Privée we set out a properly disciplined structure, looking at strategic and tactical asset allocation. These days the strategy is supposed to be defensive, for preserving wealth. A client with US$150 million that is dealing with, say, 15 private bankers would have no centralised dealing system, no long history with all the banks, no optimised overall allocation. But family office clients can sleep without worrying about that. Bankers operate on the basis of a salary and sales commission and therefore have an interest in encouraging client to use their products and services. But if you serve an family office, you need to be super-aligned with your clients and should be agnostic about how much a product pays. The mindset is very different. Equally families have issues around compensation as well. How do you incentivise your family office employees? If you overpay on performance, you may incentivise them to take risks you don’t really want to take. But if you don’t pay for performance, the employee may not be sufficiently motivated to optimise your risk-asset ratio. And if you recruit, say a hedge fund manger who’s managing US$200 million, you’ll need to pay a greal deal for someone whose expertise may be too specialised.
Q: How much investment management do you do in-house?
A: All our asset allocation strategies are generated in-house because we know the objectives of our families so intimately.
Q: How many hedge funds do you invest in?
A: That is very much a function of size of a family’s assets. If you have US$20 million in AUM, the sweet spot is probably about seven to 15 managers. But larger AUM’s may require many more to achieve a balanced allocation. These numbers are also in constant flux because the shelf life of a hedge fund tends to be about three-and-a-half years – either they become too big to perform well or returns start to drop off anyway.
Q: What about the types of strategies you prefer to use?
A: That depends on the kind of exposure you want and over what period of time. First, we will look at liquidity requirements – what cashflows each family will need – and then their longer term financial and dynastic goals. The final strategy must reflect all these considerations.
Q: How can you help a family that is not based in Asia but would like to be involved in the region?
A: We are arguably the largest Asian MFO based out of Singapore. Our in-house expertise offers more than a 100 combined years of market knowledge that is not only Asia-centric but also thanks to our international education and experience, seamlessly bridges the East-West gap. We know Asia and we understand how families think because we also have families.
This alignment cannot be over emphasised. We are not sell side and do not form relationships that are based on that. As a result families that are not based in Asia will find us a very comfortable partner with which to explore Asia’s potential while at the same time enjoying the security of having us as Asian partners in co-investments, deal flows and looking after their interests. As mentioned earlier, they may find a permanent home with us or they may gather the confidence and desire to set up their own SFO.