How do those with more money than most of us can ever dream of like to invest it and more importantly ensure they hang onto it?
It would be fair to presume they rely on banks and the experts they employ in order to make their money work for them.
When you are talking thousands you might go to a bank, millions you’d see an investment manager, but a new type of firm has been established to help families with rather more than that.
These small and specialist firms specialise in advising high net worth individuals on their financial affairs and offer one key difference which sets them apart from the banks insofar as they don’t have their own products to promote and sell.
Until recently there was no such firm in the UK outside London but Sorbus Partners, which was founded in 2012, is a multi-family office aiming to establish this model in the Midlands.
Offering something different was paramount for founding partner Max Thowless-Reeves, a former executive director with UBS Wealth Management, who set up Sorbus Partners with Tom Hall, a former director for UBS Investment Bank.
“We felt the service being provided by private banks to very wealthy clients could be improved upon and decided we could come up with a different business model for looking after these clients,” Mr Thowless-Reeves said.
“We eliminate all the conflicts between ourselves and the clients so the clients can be sure we are acting in their best interests.”
He added: “Private bank acts both as a distributor and manufacturer of investment products.
“If you go along and say ‘what should I invest in?’ they have a vested interest in saying to invest in their in-house products – not what is the optimum product but what would optimise their profit.
“We don’t manufacture products, we have nothing to sell.”
As the only organisation of its kind in the Midlands Sorbus has been building steadily and surely since it was set up.
It was able to trade profitably from the off and has no debts or shareholders. It also has a low profile and does not advertise and says its vision is a long-term one.
It has attracted a “big hitter” from the Midlands’ finance world in the shape of Steve Hollis, the former Midlands KPMG chairman assuming the role of chairman of its advisory board.
Sorbus’ client base consists of a small number of ultra high net wealth entrepreneurs, with assets of between £20 million and £50 million, some of who were dissatisfied with private banks.
Although they are looking to grow and recruit a number of staff, the firm sees a strict limit on the number of families it will advise.
Mr Thowless-Reeves said that was an important part of the business case – to remain small and nimble.
He added: “We are a one to few business and do not even aspire to have dozens of families.
“In fact when we get to a certain size we will almost certainly shut the doors.”
He added: “Some people think you can grow a business forever without damaging service quality our belief is we can’t, you can only manage a certain number of clients before you cut yourself too thin.
“When we feel our services may be impacted by taking on business we won’t take it on.”
As to the type of clients they advise they can be wide-ranging but are more often than not people safeguarding family wealth built up over generations.
Mr Hall said similar relationships between clients and firms exist in different fields, but Sorbus Partners was a first for this city in terms of the finance sector.
He said: “Maybe generations of their family have become the best in business at something and they go from being the best in their business to having to manage the income from that – which a completely different skill set These are our typical clients.”
The business model relies on a closeness with clients, again moving away from a bank model.
Mr Hall added: “We prefer to be compared to a family lawyer who sits at their side of the table versus having an account with a bank and the bank not being on your side of the table. If don’t have them on your side of the table then you can have conflicts.”
Being in the Midlands is important too, as Mr Thowless-Reeves explained.
“There are a lot of wealthy families here who are getting poorly served by a shiny suit coming out of London,” he said.
“At the moment they have to go to London and it is very difficult to provide a good service when you are based away from the family yo are looking after. It is a big advantage to have someone close to you geographically..
“It is important to be there for your client and you can’t do that if you’re based in London, Zurich or wherever.”
It is estimated there are around 4,000 family offices globally, most of which are in the US, though the concept has been around in Europe for centuries.
Sorbus’ legal counsel/head of compliance Mark Trafeli, has his own take on the bank versus family office issue, likening it to conflicts of interest in medical matters.
“The idea if you go to a doctor is that you know you are getting independent advice tailored to you and they are supposed to help you.
“Imagine a scenario where they are working for a pharmaceutical company and your ailment is tailored to what the pharmaceutical company makes. It would be saying I don’t work for you – I am working for this company and selling drugs to you.
“There would be a conflict and that is the business model Sorbus are breaking away from.
“We sit on the client’s side of the table, help them navigate the right way through and say what they are buying and what it is costing them.”