HSBC Private Wealth Solutions has been crowned the world’s number one family office business for the third year running. Anthony Effinger, author of the report on the rankings, speaks exclusively to this publication about the shape of the international family office space.

HSBC Private Wealth Solutions has been crowned the world’s number one family office business for the third year running in an annual ranking of the sector by Bloomberg Markets. Here, Anthony Effinger, author of the report on the rankings, speaks exclusively to this publication about the shape of the international family office space.

HSBC Private Wealth Solutions has retained its crown again as the world’s largest family office, adding 43 client families over the year. What do you think is the secret of its pre-eminence?

Reporting from years past suggests that HSBC Private Wealth Solutions is really capitalising on the boom in Asia. New millionaires and billionaires there appear to be tapping HSBC to handle their fortunes. Few firms have the name-recognition in Asia that HSBC does. The number of families - 340 - suggests that they aren't padding their figures with lots of smaller clients, either. Their average wealth per family is $404 million.

US firms continue to dominate the top ten, is this solely down to the US again being the powerhouse of global wealth creation now or are there other reasons for this?

Last year at this time, Asia had more millionaires than North America for the first time, according to the annual World Wealth Report by Capgemini and RBC Wealth Management. This year, North America added millionaires at the fastest clip of any region - 11.5 percent - and regained the top spot. The U.S. has been among the best-performing economies in the world lately, and the S&P 500 has returned 27 per cent for the year ended 1 Aug. The gains bolster fortunes held at US firms.

Also, US banks have been aggressive in wealth management because other areas are tough for them. Their trading activities are limited by post-crisis regulations, and lending doesn't pay the way it did when interest rates were higher. And many banks are still skittish about lending in general. They are pushing hard on wealth management out of necessity.

Do you expect the top ten firms to look dramatically different any time soon?

I think it's going to be hard to dislodge the biggest banks anytime soon. There will always be surprises among the fastest-growing firms, though. We would just focus on the non-bank firms, but the ones that offer real family office services deserve to be included. We're toying with the idea of adding single family offices in the future, and that would change the ranking, certainly. And we will probably break out registered investment advisers on their own at some point, too.

Miami-based boutique CV Advisors is number one in terms of growth (it has doubled its assets to $2.5 billion in the past year). What do you put this down to?

CV is an interesting firm. Their clients are all in Latin America, and the three founders say they do no marketing; every new client comes from a recommendation. They are starting from a smaller base than, say, HSBC, ($2.5 billion vs. $137.3 billion), which makes it easier to grow, of course, but they've clearly found a niche. Latin America has always been fertile ground for high-end wealth management. CV says they have an advantage being in Miami, which is close to the region by air, but in the US, where clients want to keep their money. The firm’s CEO, Elliot Dornbusch, was raised in Venezuela. Currency controls keep the bolivar at 6.3 to the dollar, while it trades at 29 to the dollar on the street. It's easy to see why holding money in Miami is more attractive.

There is a great deal of variety in terms of family offices offerings, with some eschewing money management completely to act as more of an overseer, others focusing more on lifestyle management and other very heavily into helping with business issues. What do you see as the “sweet spot” for targeting different types of client family offices are targeting?

Services are all over the board, yes. CV Advisors manages almost all of clients' money in house, and they buy high-quality corporate bonds, almost exclusively, because avoiding losses is their focus. Ascent doesn't manage any money for many of its clients - none. It makes money on softer services, like education and constructing family histories. Those are the extremes, I’d say, and they topped the list in terms of growth. The sweet spot is probably someplace in the middle, like at Constellation Wealth Advisors in New York. Founder Paul Tramontano says: "We want to be all things to some people." If you can do that, I think you'll make money in this business.

The fact that some family offices are now offering family historians is really interesting. How widespread is this and do you think this will become an important part of the offering? If so, does region dictate how appealing this is to clients?

The trend this year and last has been education - the idea that managing money isn't enough. A family office must educate the second- and third generations so they don't squander their wealth, or let it warp their personalities. Wells Fargo's Abbot Downing unit has a group of historians on staff, and now Ascent has hired one. The idea is that knowing one's history provides context that can guide philanthropic decisions and ground a person who might be overwhelmed by new-found wealth. I think this may have particular appeal in the US, where many of us know which generations of our ancestors came over here, and when. Genealogy services are also booming. Imagine having someone to do all of that work for you.