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Horizons: Family Office & Investor Magazine

Club b: Insights from the World’s Original Family Office Network

Monday, March 04, 2019

This is a rare interview with Peter Fletcher, the Chair and Founder of the renowned Cub b. Club b has long been considered the gold star of Family Office conferences. We gain some insights into Peter Fletcher’s investment background and the decades of success of this private club and what is developing within the organization and where it is heading.

Matthias Knab: Peter, how and when did you get started in investing as a career?

Peter Fletcher: That interest began during my university days in the late 1960’s. I was going to school at night and started working as a page boy on the floor of the Montreal Stock Exchange which, at that time, was the first computerized stock exchange in the world.

When I had saved enough to travel (which I love to do – I was born to travel), I traveled across Canada headed to Australia where I stayed for five years and gained extraordinary experience in various areas.

Then, on my way back to Canada, I travelled around the world for two years. I traveled through Asia, across Russia and then across Europe, staying in London for some time as well as other countries before going back to Canada, where I had a job at the Montreal Trust Company.

In 1976, the Parti Quebecois, a separatist power, came into office in Quebec. Similar to what we have seen more recently with separatist movements in Barcelona, a lot of the bigger corporations left and set up branches and operations in another location.

I then got a job in Bermuda in the investment department of the Bank of Bermuda. It was very international – multicurrency – and we were one of the first banks to do it. In 1990, the bank sent me to Hong Kong to run the institutional trust side, and there I got to know investment managers and helped many set up. I was also on the Securities and Futures Commission (SFC) of Hong Kong which regulated all mutual funds and investment managers.

I was also involved with opening up many of the emerging markets for securities trading, such as India, Pakistan, Russia, China and Taiwan. It was a tremendous learning experience, and while there I met many skilled investment managers. At the time, one of the principals from a family office in Geneva came to Asia and they were investing weith a lot of managers. I helped them allocate and monitor investments with Asian managers. One thing led to another, and they offered me a job in Geneva to go set up their family office.

Matthias Knab: So is this the time your insights into family office needs truly began?

Peter Fletcher: Correct. That is how I ended up in the family office world, which is a really interesting universe. For example, I found out that in general when someone sells a business, three things happen. First, they don’t realize they are in a new business, the financial business. Second, they often think that they are – or have become – investment experts. But thirdly, and more importantly, they never hire enough staff. To give you some idea, I had a substantial amount of money to manage, but when I arrived in Geneva, they gave me just one staff member – a secretary. She was a lovely lady, but she was sixty-two years old. To give you some context, women retire at sixty-three in Switzerland, so that wasn’t exactly helpful.

This was all happening in the mid-1990’s. I was traveling an insane amount, allocating to hedge funds and private equity. Keep in mind that at that time, a large hedge fund was $200 million. Through my personal and business connections, I always had a deep, global network, and so, one night in London in 1995, I brought about eighteen families together in a private room at a restaurant to talk about asset allocation, managers, and such. This ended up being the first formal meeting of the soon-to-be Club b.

We ended up talking about a specific fund manager and then realizing that the people around the table were holding 83% of this manager’s offshore fund. At that time, things like cap intro or hedge fund databases weren’t even around. The business was much more relationship driven – everybody would exchange information and ideas. As investors, we also didn’t really care about 2 and 20 fees at that time because the managers were making 30 or 40% and also really protecting on the downside.

I continued meeting and working with other families, one in fact right here on the Cayman Islands. This taught me a lot about documents and corporate governance. In a way, my network helped me professionalize and build my own organization and investment procedures. For example, we now look at the offering documents first. Meeting a new manager can be a sexy thing, but if you don’t get past the documents, the whole exercise is to no avail.

Matthias Knab: Let’s go back to your family office meetings. How did the name Club b come about?

Peter Fletcher: I was having lunch with another family office in Chelsea, London in the mid-1990’s at a restaurant where Lady Diana supposedly often dined. It was a beautiful sunny day. After a nice bottle of chardonnay, we decided that we should set up a club because we had been meeting like this so many times already in all types of locations around the world. As we were in Europe, we thought it best to have a French name, so we called it the “Le Club,” and then we put the letter “b” after it to stand for ‘billionaire’ or ‘BS’. That is exactly how the name started, true story.

Then, we started to have ad hoc meetings around the world and in 2000 we decided to have a larger, conference-style meeting which has since become our signature event format.

We had our first formal conference with eighty families in Madrid in 2002 and now over seven- hundred families are part of Club b.

Matthias Knab: I know it is rare for you to speak publicly about Club b. Would you mind elaborating where Club b is heading these days? How are things developing within the organization?

Peter Fletcher: Yes, you are right – in twenty-four years, I have never given an interview about the Club b. It is rare because it is always my intention to maintain the strictly private and confidential ethos of the club.

The Club b is a thought leader and idea generator and is fortunate to have some of the world’s brightest allocators as members.

The wisdom of the collective Club b membership consistently provides fascinating and productive insights. For example, a lot of the investment themes we discuss come in different waves. At present, these discussions center around direct equity deals and people wanting to co-invest.

Co-investing can be like herding cats – it is not easy to do, and it takes tremendous discipline. I always tell people to figure out what would happen if something goes wrong. Like, what if one of the key parties leaves? In addition, families should be focused on deep operational industry expertise that other members bring to the table, and evaluate co-investments even if the key party is charging fees.

I think it is generally understood that you can only operate on the highest level if you have the best talent, so family offices who really want to excel also need to attract talented people since they are really competing against investment banks, hedge funds, and money managers.

The Club b events always feature family office-centric themes to help guide families through myriad issues they may be encountering. For example, issues like hiring the right staff, dealing with transition, coping in crises and collectively allocating family assets are highly-charged topics within family offices. It was always my vision that Club b help families navigate these major issues through gold star events that promote global family office member connections and the exchange of innovative thoughts and ideas.

Through the Club b events and initiatives, it can be very helpful with so many family groups working together since you have many sets of eyes rather than just your own looking at a deal or a certain issue. To have that kind of strategic and focused insight is invaluable.

Members have suggested starting a membership model, and we are considering that just so we can expand our staff. This would also help us to build technology systems, platforms and tools to connect families, not as a “business” as such, but as systems governed on the same non-commercial and private ethos the Club b was built on.

At a time where more and more family offices are setting up, we can all be of help to each other and form a platform that is purely peer-driven and not commercial-driven by other peoples’ interests.

In addition, I have been able to foster relationships that I never could have imagined. Over the years, I have found that Club b is an amazing group of resourceful people. For example, undertaking due diligence on a group investment and/or individual we are probably one degree of separation in the investment world.

As mentioned, what I do also notice is that it seems that families never have enough staff to handle the money they manage. We have tremendous expertise in our member group and can offer a lot of value for existing as well as new family offices that are starting out – those who are looking for best practices and ideas to avoid some of the pitfalls.

Families want to be part of the Club b experience where they can listen to illustrious speakers and connect with other families in a unique event atmosphere. We hold annual events and this year we are hosting our upcoming asset allocation events in Montreal (May 9th – 10th) and Monaco (November 6th – 8th).

I have always been motivated by the clarity and influence of connections – it is always about connecting with the right people for the right answer. It is truly through the power of the Club b peers and wisdom of the crowd that resources and relationships are fostered.

We have been having events for twenty-four years now and, currently, we operate within a referral process that is working really well with applications growing consistently every week.

Over the last ten years, we have also started developing the Club f – which stands for ‘family office foundations’ which places an emphasis on the next generation.

The Club f is essentially a project of Club b and upholds the same ethos of privacy, non- commerciality and referral system; nevertheless, it is entirely philanthropy-focused.

I probably don’t have to tell you that many of the next generation have a social conscience. They want to change things, and they have the desire to approach philanthropy differently.

With the Club b, I always knew what the DNA was, what really drives our people. They want to connect, exchange investment ideas, information, and be part of a thought leadership process in a trusted environment. That is really what the Club b is all about. But I have found the next generation to be even more embracing of the collaborative approach. This is extremely interesting because, traditionally, a lot of the older family foundations were often managed by ego and legacy. They were not really about collaboration or connection, but instead seemed ‘to stay in their own universe’.

The Next Gen is changing Family Office Structures Right Before Our Eyes

However, this structure is changing right before our eyes. I see all of the groups becoming more empowered and efficient in their work because of their willing participation and engagement in the peer-driven platform of Club f’s global community of donors.

The Club f is about connecting the next generation and others to create a more collaborative initiative and has already produced a number of amazing events and round tables in Madrid, Singapore, London, Montreal and other locations. The events are imbued with lots of positive energy and resourceful, committed people setting out and collaborating to do good locally and globally. We are having another Club f event in Toronto from March 21st – 22nd. This upcoming event will help to guide families toward proper and effective donation whilst honing in on very important social impact and social change themes.

This event is for single family office foundations and will be especially unique as it will be more conversational and collaborative in nature in a confidential setting, helping family foundations work through their philanthropy challenges and goals in an engaging and thoughtful way. There are so many new philanthropic foundations, and families often face the issue of where to put their philanthropy dollars and philanthropic energy.

Ultimately, with Club f, we want family philanthropy to have an impact and real meaning – through the enjoying experience and fulfillment of collaboration.

Matthias Knab will be participating in the Club f event in Toronto March 21st – 22nd. Single Family Offices and Family Office Founders can get in touch with Peter Fletcher by emailing Horizons@Opalesque.com or through the contact form of Club b.



 
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