Stonehage Fleming may be unfamiliar to some advisers but its UK profile is set to expand exponentially following its acquisition of a London-based advice business.
The business in question, FF&P Wealth Planning, was amalgamated into the group in October this year. The deal followed the merger of family offices Stonehage and Fleming Family & Partners in 2014 which saw the new merged entity, Stonehage Fleming, become the largest independent multi-family office business in Europe, the Middle East and Africa. Stonehage Fleming, boasts more than $40bn (£31.7bn) of assets and employs more than 500 people in 11 offices in seven jurisdictions around the world.
The latest merger comes amid a turbulent period for the wealth management industry with the cost of regulation putting pressure on profit margins and thus driving the consolidation of businesses to create scale.
This consolidation was not the rationale behind the move, according to Anton Sternberg, head of the investment division at Stonehage Fleming.
He said: “We had a minority share holding in FF&P prior to the merger. We feel strongly about the value of long-term financial planning and we felt it was a high quality shop with high quality people in the business.”
The merger proved to be timely for the group, which sought to tap into the burgeoning demand for long-term financial planning and advice following the pension freedoms.
The amalgamation of FF&P Wealth Planning, which provides integrated planning and investment advice to wealthy individuals and their families, enabled it to meet this demand without the cost and time of developing a proposition from scratch, Mr Sternberg added.
Stonehage Fleming, like other family offices, has witnessed the flailing of the retail divisions of traditional providers such as private banks following the 2007 to 2008 financial crash – where the blame for global economic turmoil was placed upon these institutions.
In addition, the spate of product mis-selling scandals and things like benchmark manipulation did nothing to put banks in a positive light.
This presented an opportunity for family offices to pinch clients who became disillusioned with banks as a result of these misdemeanours.
Mr Sternberg said: “We took some clients from the banks but not as many as people might expect. Clients are very entrenched in their bank – notwithstanding of scandals. We have won business from clients who want a true independent financial adviser and not just someone who is keen to shift products.”
Mr Sternberg said that there is a misconception that family offices are solely focused on wealth preservation according to Mr Sternberg, adding: “We think the term ‘family office’ is overused. It means being involved in the totality of a family’s financial affairs and the way they look after themselves.”
Mr Sternberg added that the role of a family office has evolved from administration and implementation of financial matters to adviser and ‘gatekeeper’ between the family and their professional advisers.
Drivers
The group has previously identified the increasing complexity of wealth management; a spike in demand for professional advice; and a greater need for more sophisticated risk management amid unstable economic conditions as some of the key drivers for the change of the company's role.
Stonehage Fleming also operates its own investment products but this does not mean that the firm is less reliant on third party funds, Mr Sternberg added.
The Stonehage Fleming Global Best Ideas Equity fund, for example, aims to achieve long-term capital growth and income through investment in high-quality listed companies.
The fund has fared well since its inception in August 2013 – returning almost 49 per cent to 1 December this year (2016).
Mr Sternberg, who himself had a 10-year stint as an investment banker with Merrill Lynch, Hambros Bank and Charterhouse Bank, said: “That is just one arrow in the quiver. It is something that we started in 2009 after our clients’ experiences during the financial crisis. Our clients told us then that they wanted to concentrate on the best of breed blue chip type companies.
“We still look at loads of other fund managers.”
Mr Sternberg also makes the point that the company also actively supports families in the process of transitioning wealth from one generation to the next once the parents shuffle off their mortal coil.
To this end, the firm runs an initiative that allows participants to pitch a business idea in the style of Dragon's Den programme to interact with the younger generation and involves them in update meetings to teach the language of finance and erode inertia.
He said: “We think it is important for the next generation to understand the responsibilities of having that wealth and the importance of philanthropy. It helps us to engage with the next generation and bring the two generations together to discuss issues they would rather not talk about.”
Myron Jobson is a features writer of Financial Adviser
This article has been revised since the original publication
ANTON STERNBERG'S CAREER LADDER
2002 – Current,
Partner & chief Executive Officer, Investments, Stonehage Fleming
1999 to 2002,
Investment banking,
Merrill Lynch
1996 to 1999,
Corporate finance and M&A,
Hambros Bank
1992 to 1996,
Corporate finance and M&A,
Charterhouse Bank
1990 to 1992,
Financial analyst,
Sedgwick Group
1987 to 1990,
Chartered accountant,
Deloitte Haskins & Sells
