How to assess the quality of Family Office Conferences
With the rise in the number of family offices we also see family office conferences sprouting like mushrooms. And there is an actual need for those conferences. According to an EY estimation, the number of family offices worldwide surpassed the mark of 10,000 - a tenfold increase since 2008. While this figure shows how popular family offices are, it shows especially how recent the trend to establish a family office is and more importantly that 90% of all family offices have existed for less than 10 years.
For any newcomer, whether an employee, a start-up or a family office, a healthy and reliable network is key and in order to establish such a network one has to surround oneself with his peers. While the increased number of family office conferences correlates with the growing number of actual family offices, principles and sponsors alike should look closely at what type of event they are getting themselves into.
Global vs. Local
Living in a globalised world does not mean we all have become one. Globalisation connects different regions of the world with each other through means of business and trade, communication, travel and exchange of knowledge or innovation. It does not mean that we have given up on cultural and religious backgrounds or that socio-economic as well as geographic, climatic and political circumstances are uniform. And this applies to family offices as well.
While all family office share fundamental properties at first glance, they differ greatly when looking closer. Family offices that have existed for several generations are often more concerned with wealth preservation, as more recent additions to the family office club might still strive for wealth creation. Many African families have generated their wealth in the telecommunication sector, which was state-controlled in Europe for decades, preventing family-owned business from playing a significant role. German families, traditionally strong in manufacturing and naturally shy of publicity have little in common with some of their American counterparts who are not shy of flaunting their wealth, which far more made in the technology business than in Europe. In progressive Scandinavia families tend to hand over the management of their private office to external managers, while Middle Eastern families keep a firm grip on everything they own.
Those examples serve the purpose of making clear that regional conferences trump global ones. Attendees of a Middle Eastern family office summit should make sure that the delegates are Middle Eastern too. Hosting an event in Abu Dhabi or Qatar does not suffice to call the event Middle Eastern. Both, family offices and sponsors are better served attending smaller events that host a mostly homogeneous crowd. Families will meet their peers with similar backgrounds, challenges, interests and investment strategies, while sponsors can fine-tune their pitches and service offers to a clearly defined audience. For a matter of fact, one size does not fit all.
AUM in the room
A considerable number of conferences boasts with the total amount of assets under management of all attending family offices. While the conference hosts intention is clearly to attract paying sponsors, the opposite effect is the case with those who understand the family office conference business. Firstly, by throwing around numbers families are discouraged from attending. They will wonder whether they have to reveal their AUM or if the host is undertaking unnecessary due diligence to obtain these figures - both would not be appreciated by families.
Secondly, an experienced sponsor or regular conference attendee knows that this number is absolutely irrelevant. Having 100 million, 10 billion or 1 trillion of managed assets in the room makes no difference to the likelihood of securing funding from an investor or acquiring a new client. If an investment project does not convincingly promise an attractive ROI or is simply not a fit for the investor, the fund raiser will leave the conference with his or her pockets empty - no matter how many billions each investor might have stacked under their pillow.
As a rule of thumb: when the AUM of attending families is the key argument to sell a summit, then probably not much else speaks for a participation.
Sponsors often ask - understandably enough or not - whether the host can guarantee a minimum number of face-to-face meetings. This is usually a sign that the sponsor is not quite convinced by their own product and requires the conference host to push a family into a meeting they might not been interested in. What good can come out of a meeting that one party is obliged to enter? If the product and the sales pitch are right, family investors will seek out the sponsor all by themselves. Families tend to attend conferences out of free will, because they hope to be able to engage with other families and sponsors alike.
Conference organisers promising face-to-face meetings take the families, the only asset they have, hostage and will loose this participant irrevocably. No-one except the family themselves should have the control over their own calendar and decide whether or not to meet with a private bank, asset manger, blockchain expert or real estate developer.
There are two possible outcomes of pre-arranged meetings. Either the promised family office turns out not to be a real family office, or the genuine family office is not aware that a meeting with them has been promised.
Pre-arranged meetings can work only if requested by the family, who is aware of the attendance of a specific sponsor and are eager to engage as they previously have heard or read about them.
Number of deals closed
Another popular question with potential sponsors is the one concerning the number of deals closed. Any number given is doomed to be incorrect or entirely made up. In order to answer this question, two conditions would have to be fulfilled: the conference would be required to follow up with all sponsors and investors in order to keep track of closed deals that originated at their event. And they would have to do so for a long time, as a deal might be closed 6-12 months after initiation at the conference. Additionally, sponsors and investors would have to reveal truthfully their investments or deal flow. It is the conference organiser’s job to provide the best possible platform for deals to be originated, not to interrogate participants about their business activity.
It is undoubtedly exciting to shake hands with a well-known member of a royal family. Even those disparaging such an encounter have sweaty palms once asked to a private room to meet His or Her Royal Highness.
A considerable number of countries in Europe and almost all countries in the Gulf are monarchies. As the Gulf monarchies are absolute monarchies, meeting one of their representatives can mean direct access to a decision maker on matters of financial, as well as political and economic importance. Whereas royals in Europe are mostly controlled by their respective governments and fulfil representative purposes. The fact that a European royal can attract a crowd without being able to make any decision of substance is, however, still proof of their representative value.
Having a Prince or Princess as special guest of honour to open a conference is a great achievement for every host and can speak for the quality of the event. If, however, the list of speakers resembles the guest list of a royal wedding, families and sponsors should be wary. Royal family members of standing are unlikely to share the spotlight with other royals.
Royals with a high public profile raise the profile of the event on the outside. Sometimes, however, a royal family member casually mingles with the delegates and unpretentiously chats away with guests. This was the case when HRH Prince Ali of Jordan, who attended the Middle East Family Office Investment Summit in Dubai in February. Prince Ali opened the event in a keynote speech, speaking about his football related charity projects and social enterprises and then joined the guests to mingle. Though he left earlier than most delegates he returned the following day just before the official closing, jumped on stage and engaged in an hour-long Q&A session with the audience alongside Khaled AlFahim, President of the UAE Triathlon Association.
SFO vs. MFO
Every family office is given its raison d’être by the clientele it serves. While families with smaller fortunes opt for the multi family office, larger family wealth is managed out of a single family office dedicated to the needs of this very specific family.
MFOs are tricky attendees and not without value as they act as investors and represent wealthy families. But they are also service providers looking to onboard more clients and sell their services. They are hermaphrodites - investor and service provider at the same time.
Wearing the investor’s head, a MFO will not want to be treated as a service provider, while paying service providers are unhappy with an audience full of multi family offices who are effectively competitors looking for fresh capital just as much as for investment opportunities.
However, even some single family offices are not too pleased about being thrown in the same pot with MFOs. A viable solution is a compromise by identifying MFOs as what they are, namely multi family offices.
By charging MFOs a discounted participation fee sets them apart from single family offices who should generally attend for free, but treating them preferred over sponsors as MFOs have an actual investor side to them. Also, on guest or speaker lists, as well as on their delegate badges they should clearly be marked as what they are.
Sponsors should do their fair bit of research and check if a FO is a SFO or a MFO if it is not clearly market as either one of them. And the same advise goes out to any SFO delegate planing on attending a family office event, unless they do not mind whether they encounter fellow single family officers or multi family officers.
Like with everything in life, quality has its price and a high quality event promises higher ROI. Finally, even the highest quality event with a steep price curve has options for smaller budgets. A sponsor just needs to understand his audience, leverage the sponsorship most effectively and ask for help from an expert.