After appointing its first employee in
1972, Myer Family Office has become one of the most high-profile
multi family offices in Australia, and is targeting more growth in
its domestic market. William Cain looks at what it
takes to build a successful UHNW proposition.

Myer Family Office,
an Australian multi family office, has seen an uptick in interest
from clients who have become disenfranchised with global investment
banks, according to managing director Graham Reeve.

In an interview with Private Banker International,
Reeve said he believes there are opportunities to grow the business
further in the Australian high net worth segment as clients start
to demand quality service over complex products.

But he said it was too hard to predict changes in the business’s
assets under management for 2009 because of market volatility.

“We are moving into a golden era for family offices, where
clients have realised what they want and that it is delivered well
through the type of model we offer,” said Reeve. “We have already
noticed that we are picking up clients disenfranchised with the
global investment banks.”

Myer’s main growth strategy is from referrals through existing
clients. It also markets itself in domestic rich list publications,
works with media on issues its prospective clients are interested
in and presents at client seminars.

Some family offices have pursued growth by organising mergers or
joint ventures with private banks, like Rockefeller & Co in the
US, which last year sold a stake in itself to SG Private Bank, but
Reeve said that was an unlikely strategy for Myer Family Office
(MFO).

“I would be surprised if we joined up with a bank, and that is
because the philosophy of banks here is totally different to the
model we supply,” said Reeve.

In particular, Australian banks tend to focus a lot of their
resources on lending products.

PBI’s survey of the Australian wealth management market
(see PBI 245) showed some of the retail banks claimed as
much as 80 percent of their private banking profit from lending.
Myer’s fee structure is based on charging a daily rate for tax and
accounting services and basis points for funds under management and
portfolio administration.

The Australian market for family offices has around 10
businesses which could be defined as genuine multi family office
operations and a further 200 single family offices. That compares
to 3,000-3,500 single family offices in the US and 500-1,000 multi
family offices.

Philanthropic work

MFO grew out of a tax and accounting vehicle for the founder
member, Sidney Myer, and carries on the philanthropic work he
started when he donated one-tenth of his estate to what was then
the Sidney Myer Charitable Trust. It appointed its first employee
in 1972 to service one branch of the family and started serving
non-Myer high net worth families, with a minimum investment of A$30
million ($19.4 million), in 1999. Most of its clients have wealth
of between A$30 million and A$250 million. In addition to its tax
and accounting specialisation, MFO has developed its investment
offering, an internal custody platform and a cash trust transaction
banking service.

“We have also moved into the softer services like
intergenerational planning and family-type issues which are more
steeped in family psychologies,” said Reeve. “To have that all in
one place is attractive to clients and differentiates us from a lot
of players in the marketplace who tend to rely more on
referrals.”

The Myer Family Office has created two of Australia’s largest
charitable entities, which led to MFO creating a specialist
philanthropic services team to work with clients on their
philanthropic objectives.

Since prescribed private funds – trusts which businesses,
families and individuals can make tax-deductable donations into –
were introduced by the Australian government in 2000, Myer has
created around 50 of the 769 which have been set up in total. Its
main competitor in this area is Goldman Sachs JBWere.

“Most other private banks offer very limited philanthropy
activities, although some brokers now have philanthropy teams,”
said Reeve.

He added that while a number of banks targeted the ultra high
net worth space in Australia, there were only a few organisations
that can provide them with the services they need.

“Everyone wants a piece of this segment because they think it is
straightforward to do, but what many do not realise is it does not
come easily,” said Reeve. “You have to really stay close to the
client and give them the personal service they demand. If you don’t
do this, the client sees through it.

“They have become disenchanted with structured products being
rammed down their throats and are often left with something worth
less than what it should be. They have become very cynical about
this and are waking up to those who are not sitting on their side
of the table.”