Wegelin & Co, Switzerland’s oldest bank, has established a dedicated family office service team in Lausanne to take advantage of what it describes as a “huge” shift towards private banks as service providers.
The five-man team will form part of an expanded 100-strong office in the city as Wegelin continues to increase its private banking presence in French-speaking Switzerland.
Managing partner Adrian Künzi told Private Banker International that the bank decided on setting up the family office team following interest in their quantitative equity strategies. Recent research (see PBI 246) showed single family offices were increasingly turning to private banks for outside services, a trend Künzi said had been noticeable in the past year.
“This is exactly why we have set up a team called family office services,” he said.
“We are targeting family offices as clients, which allocate mandates to particular service providers.”
Künzi added: “There is a huge trend to the more niche players and boutique asset managers. With the experience of the last few months, they will move from the large banks because they’re all mainly state owned.”
Künzi said the new team would work on providing family offices with a different type of service, which would take into account the special requirements of the SFOs.
“We have realised family offices have specific needs in terms of reporting, access to information and we aim to treat them as another institutional investor, but with slightly different needs,” he said.
“Family office needs are closer to those of a private client, but the size of the assets requires them to be treated in a different way – they sometimes want daily interaction with the manager, which means you have to have a specific team to deal with them.”
However, there are some in the industry who believe the trend of family offices giving investment mandates and other services to private banks is unlikely to last.
Mark Nixon, director of institutional clients and family offices at Merrill Lynch, said the issue of counterparty risk and the relationships wealthy families have with private banks in Switzerland had seen the switch to a more conservative investment policy. But he expected the trend to revert back to the norm in the next two to three years. That view was backed up by Andreas Feller, head of wealth management solutions at Swiss private bank Vontobel.
“We are trying to benefit as much as we can in this area from the strategy we have, but when markets recover, or if there is an extended rally, we will start to lose out again as business returns to more transaction based alternatives,” he said.