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Horizons: Family Office & Investor Magazine

Tobias Prestel: 50 Shades of Family Offices

Monday, September 21, 2020

Tobias Prestel is Founding Partner, Managing Director of Prestel and Partner Ltd. He has over 40 years international experience as an Entrepreneur, Publisher and Conference Director.

An interview with Tobias Prestel on Family Office secrets

Matthias Knab: Tobias, it has been ten years since you and your business partner Katja Muelheim have been organizing Family Office events globally. Each event sees over 100 Family Offices in New York City, London, Zurich, Dubai, Singapore and Wiesbaden near Frankfurt in Germany. I had the opportunity to attend your conferences in all these locations and appreciate the quality of your events.

So, throughout the year you are in contact with family offices globally. From your perspective, what are the common themes of family offices across those places, around the globe?

Tobias Prestel: It’s complex and fascinating. What do the family offices, wealth owners and family members who attend our events, have in common? For one, an interest in certain content. The interest on the investment side in private equity, real estate, impact & ESG investments is global. Tech and life sciences are key matters, as you are also covering it with your videos and your family office magazine. Other relevant topics include hedge funds, where you are a global intelligence leader, Matthias. A general theme we look into a lot (and more than others who only chase money) is family topics like family governance; solving challenges such as succession planning or family structures.

My favorite subject, due to global interest of our audience (and my own): Making money while doing good. We all can help to change for the better, while achieving a good return. Climate change for example is a great investment theme where huge returns are being made, and lots of impact investments help people and our planet while generating great financial results. A win-win!

Matthias Knab: Speaking about challenges, what would you say is your own challenge when it comes to creating family office events?

Tobias Prestel: To keep our promise, as we have been for ten years, which is having many more genuine Family Offices, wealth owners and family members attending our conferences than solution providers. And here is the challenge for us, there are so many different kinds of family offices, the bandwidth goes from say a single high net-worth investor to an entire investment bank - which is where we do not agree. Not all who call themselves a family office, are so in our eyes.

Matthias Knab: Like the 50 shades of family offices?

Tobias Prestel: Correct, there are so many different kinds of family offices as you can have many shades between white and black. When dealing with those entities, you need to make the correct differentiations.

Matthias Knab: So how do you differentiate between those 50 shades of family offices?

Tobias Prestel: The key differentiation is: there are those trying to sell you something, and those who are buying.

Another key question is, do you just look after your own family, or do you chase more families to join your operation?

Why are these distinctions important? Well, when it comes to our events, which, let me remind you, aren’t virtual but physical meetings, this makes the difference of meeting a peer, or meeting somebody who offers you something. Our job is to make sure that at our events, you meet many more people who are peers than people offering you something. And, again, this is a promise we have been keeping for over 10 years.

Matthias Knab: How do you actually go about making this differentiation in practical terms when you look at family offices?

Tobias Prestel: We judge by activity - not by wealth or fame.

For example, there are genuine Arabian Royals, truly wealthy and also great people, running offices where they “help others to do business in Arabia, and to co-invest”. In other words, they sell a service. But they call that entity a Family Office, and people get blinded by the big names behind. So what we do, we don’t look at wealth and fame, we really zoom in and try to understand the activity. In this case, the activity is being a solution provider, and that’s where we put them, not on the buy side as others would and do, unfortunately.

Matthias Knab: Please give us more examples.

Tobias Prestel: I had several phone calls in the past from business development executives of Fidelity, and Guggenheim Partners, two very well respected and huge firms with amazing people and great products. They don’t call me by accident, but regularly and ask for free tickets to our events, because they are a family office... Their position is that they are a family office, because they are owned by a family! I don’t agree because when your activity is to sell funds and wealth management, then you are a solution provider to me, no matter who is the owner, and how wealthy.

Most banks have a dedicated department looking after UHNWI clients. They themselves call these departments family office. I call these a bank department offering anybody a solution who wants it and can afford it....

You would be surprised how many solution providers looking for clients (the more the better) call themselves a family office. And, as you can imagine, that is also a condition that particularly family office principals and family members have developed a high sensitivity for. We try to minimize, as much as we can, their concern of “what am I being sold now?” We differentiate, to make sure our events are not a sales show.

Matthias Knab: That sounds logical, to look at people’s activity. So once you judge that activity, that’s it?

Tobias Prestel: Matthias, you coined the term 50 shades and you are right, it is complicated and complex. How do you judge a genuine private single family office, which enjoys sharing great deals they find, with other family offices, without a commercial interest? Where is the fence between buy side and sell side? It is opaque and a private world, it is not easy to see if someone is offering co-investments only sometimes, or all the time as a solution provider and as a business model. And when you ask: I am always surprised how much one who chooses so, can stretch language, to create opaque smoke bombs.......

Matthias Knab: Your examples are entertaining, can you give us some more?

Tobias Prestel: Well, here is another one. One of the world’s richest family has a family charter that says if you appear in the media with an interview, or if you go onto any stage in public, you lose everything you have! No surprise nothing is known about these family members – they prefer privacy over losing it all. And that is a general tendency: Most pure private investors and family members have no desire or reason to promote themselves. They have nothing to sell, why should they? This is why we are so grateful to all those sharing their expertise and experience with peers at our private events, even though there is zero commercial aspect for them. “Only” the joy of exchanging views and opinions with peers, and being inspired.

Another example of this opaque space without specific definitions: There is a family office conference organizer claiming to be a family office himself. Funny fact: There is no substantial money, no family history, no family business, only fake claims. How is this possible? As I mentioned, many private large wealth owners appreciate total privacy, which means you find nothing online about them. As a consequence, if there is no data, no background whatsoever about someone to be found online, this can then be also taken as a good sign.

However, this very same dynamic is then also skillfully exploited by some. In such a scheme they only need to make sure there is nothing about their history online, and then be brave enough to pretend and claim things, invent a “family story”, and show themself around good people - preferably with pictures taken as some sort of proof, to gain credibility. Beware.

Matthias Knab: I know exactly who you are talking about. However, if you really dig into the person and these claims, it is possible to find out the truth. Usually, genuine family offices have significant experience and resources to do due diligence – and an excellent sixth sense to spot if something just isn’t right – and quite a few contacted me and shared their findings which were exactly as you described.

So, what do you suggest if someone wants to go to an event to meet genuine family offices and wealth owners, to meet those who are not only trying to sell you something?

Tobias Prestel: To avoid the famous “room full of barbers trying to sell each other a haircut”, just spend a little time online: Look at the speakers for a start. Don’t be impressed by big names, instead try to find out their motivation by looking at their activity. Are these trying to sell you something, are they commercial? Or are they private?

Also look at the sponsors: If you find big names with good reputation, that’s generally a good sign. If the sponsors are mostly unknown names, you can assume the organiser’s motivation is only making money by taking small funds for a paid-for ride.

Next, read the program: Is this knowledge and expertise, or are there upfront pitches, maybe even one-on-one meetings? Which genuine investor goes to such pitches? I think as many, as the most beautiful girls in town go to speed dating – it just doesn’t happen, normally.

Then make your own decision if you want to go to a deal flow event where you get pitched, or if you want to meet genuine family office peers who are usually not happy to be pitched at events.

Genuine private family offices go to events to a) meet peers and b) to learn something, to get inspiration. As a solution provider, you meet them through your expertise - not through a hard pitch like in the institutional world.

Matthias Knab: Going back to the 50 shades, we learned you judge by activity, buying or selling. Can you differentiate a bit more for us what shades do you see, like are there any categories?

Tobias Prestel: We like to say there are private family offices, and there are commercial ones. Private family offices have different shades, some also offer co-investments for example, but offering others something is not their main activity.

A private multi family office in our eyes is defined by looking after a set certain number of always the same families only. As soon as you open up to more and more external families, once you are a commercial multi family office, where is the difference to a commercial wealth- / asset-manager? Maybe the question of in-house or external money management? Still, you hunt clients.

An advisor looking after several families, allocating assets to different providers depending on each client’s individual needs, can make lots of sense. If these MFO advisors look for more clients than those they already have, then they are however a solution provider. Which is nothing bad, only something we need to be aware of, especially in the light of our promise to have more wealth side in the room at our events than providers.

Matthias Knab: What else do you recommend to judge an entity calling itself a family office?

Tobias Prestel: Apart from looking at their activity, spend some time online. For example Google/Bing or use the highly recommended non-for-profit foundation’s search enging ecosia.org, also LinkedIn is a powerful source. But at the end of the day, nothing, no Zoom or phone call replaces a personal meeting.

This, by the way, is also what we hear from family offices who continue to invest during the pandemic: they continue working with people they have physically met before. That doesn’t mean they are not starting to build new relationships in the virtual world.

But before putting some larger amounts of money to work, the physical relationship is still foundational. We humans all have a special sense which only works face to face, and this for us is another reason we love our real events with real people in real locations.

 
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