Even Swiss banks, which have minded family money for centuries, are elevating their game. Zurich-based UBS AG, whose Global Family Office is No. 6 on the Bloomberg Markets list, is working hard to gain clients in Asia, where new dynasties are forming at the fastest clip.
The number of millionaires in the region rose 1.6% to 3.37 million last year, for the first time surpassing North America, which had 3.35 million, according to a report by Capgemini and RBC Wealth Management.
In Hong Kong, UBS dedicated the 48th floor of Two International Finance Centre to its "ultra" clients, those with at least $50 million in assets, says Amy Lo, head of UBS's ultra-high-net-worth unit in Asia. There, clients can meet with a fixed-income or equity specialist or talk with an investment banker about an opportunity to buy into a company preparing to do an initial public offering, Lo says.
Boutique family offices question both the big banks' level of service and their motivation; they say the banks are too eager to sell their own hedge and mutual funds to clients.
A federal judge last year ordered Citigroup Inc. to pay two clients $54.1 million for losses in a hedge fund that borrowed billions of dollars to try to extract higher yields from municipal bonds. Citi had pitched the fund to private-banking clients as a safe alternative to conventional bonds.
Citi spokeswoman Danielle Romero-Apsilos said in an e-mail that Citi acted appropriately at all times.
Lately, the boutiques have been emphasizing another low-margin service: family governance. Family offices convene clan meetings and help appoint councils whose members set an agenda for the family, Harvard's Davis says. Some bank-based firms are also providing the service. Ascent Private Capital has two experts on staff, both with Ph.D.'s in organizational psychology, who coach families on leadership, decision making and managing change. "We don't just help our clients manage wealth," Ascent's Cole says. "We help them manage the impact of wealth."
This delicate work can prevent breakdowns that might land fathers and sons, or brothers and sisters, in court, says Rick Pitcairn, chief investment officer at Pitcairn, a Philadelphia-based family office started by the descendants of John Pitcairn, founder of glassmaker PPG Industries Inc.
Pitcairn serves the fourth and fifth generations of Pitcairns, plus 41 other multigenerational families. Most have from $75 million to $300 million in assets, Pitcairn says. Unlike Signature and FMP, which serve mostly families that are newly wealthy, Pitcairn deals with old money.
"If you are able to serve one of these complex families in an excellent way, you have the added benefit of creating an annuity effect by forming long-term relationships," Pitcairn says. "While the margins may be smaller in the beginning, the opportunity to build and expand these relationships over time is far greater."