© prof. dr. rolf tilmes, cfp, h on cfep page 1 background on the family office portfolio forums on...

© Prof. Dr. Rolf Tilmes, CFP, HONCFEP

Background on the Family Office Portfolio

Forums on Issues and Innovations in Real Estate

Prof. Dr. Rolf Tilmes

October 27th, 2006Berlin


Conceptually, the wealth management pyramid distinguishes three wealth segments with varying requirements for the FO

Ultra HNWI

Very High Net Worth Individuals

High Net Worth Individuals

Affluent

Number of UHNWI7.144

Financial WealthUSD 962 bn.

Number of HNWI767.000

Client View

Ind

ivid

ual

ism

Supplier View

Sta

nd

ard

izat

ion


The German U-HNWI segment grew by 81 % from 1997 to 2004

0,0%

1,0%

0,9%

0,8%

0,7%

0,6%

0,5%

0,4%

0,3%

0,2%

0,1%

Sh

are

of

U-H

NW

I in

HN

WI-

po

pu

lati

on

Number of U-HNWI in Germany Share of U-HNWI in HNWI-population in Germany

Quelle: Capgemini

0,93%0,92%0,90%

0,77%0,82%

0,86%0,89%

3.929

4.715

6.601 6.6016.931 7.000

0

1.000

2.000

3.000

4.000

5.000

6.000

7.000

8.000

1997 1998 1999 2000 2001 2002 2003

Nu

mb

er o

f U

-HN

WI 5.893

U-HNWI financial wealth in Germany: USD 962 bn.

Approx. 60 % to 75 % of total assets invested in real estate

U-HNWI financial wealth in Germany: USD 962 bn.

Approx. 60 % to 75 % of total assets invested in real estate

7.144

2004

0,94%


Cash

Real Estate

Own Business

Life Insurance

Paintings/Art

Antiques

Gold

Household

Jewelry

Vehicles

96,2 %96,2 %

96,2 %96,2 %

84,9 %84,9 %

67,9 %67,9 %

66,0 %66,0 %

54,7 %54,7 %

45,3 %45,3 %

43,4 %43,4 %

41,5 %41,5 %

37,7 %37,7 %

n: 53n: 53

Fin

an

cia

lW

ea

lth

Hu

ma

nW

ea

lth

Object Dimensions: Wealth Elements

The understanding of Private Wealth Management is diverse and differs by object and subject categories

Working capacity

Healthyness/fitness

Intelligence

86,0 % 86,0 %

83,7 %83,7 %

74,4 %74,4 %

n: 43n: 43

Children

Family

Esteem

Reputation

Values

Tradition

73,2 %73,2 %

70,7 %70,7 %

63,4 %63,4 %

56,1 %56,1 %

51,2 %51,2 %

51,2 %51,2 %

n: 41n: 41

So

cia

lW

ea

lth

Which elements are part of the total wealth of a person or a family?

Source: Research of Dr. Peter Schaubach: Family Office in Private Wealth Management; ebs FINANZAKADEMIE analysis


Which main goals do you currently pursue with your management of…

Wealth Preservation

Harmony

Wealth Accumulation

Quality of life

Wealth Transfer

Personal Networks

Quality of Life

Esteem

Wealth Preservation

n: 54n: 54

31,5 %

33,3 %

35,2 %

38,9 %

51,9 %

64,8 %

68,5 %

70,4 %

79,6 %

Asset Category

FW

SW

FW

HW

FW

SW

FW

SW

HW

Main Goal

Increase of Financial Wealth

Reduction of Work

Increase of Human Wealth

Increase of Social Wealth

Increase of Social Wealth

Increase of Human Wealth

Increase of Financial Wealth

Wealth Accumulation

Wealth transfer

Reduction of work

n: 54n: 54

14,8 %

20,4 %

22,2 %

22,2 %

24,1 %

24,1 %

24,1 %

25,9 %

27,8 %

29,6 %HW

HW

SW

FW

HW

FW

SW

HW

HW

FW

Asset Category Main Goal

FW = Financial Wealth HW = Human Wealth SW = Social Wealth

The understanding of Private Wealth Management is diverse and differs by object and subject categories (cont.)

Subject Dimension: Main Goals

Partly Real Estate-driven


The preferences for organizational designs of Family Offices are evident and driven by asset sizeWhich form of organization do you prefer for Family Office?

Unique Positionof Client

Aspect of Ownership

Given Not Given

ExternalSingle-User-Family Office

ExternalMulti-User-

Family Office

PrivateSingle-User-Family Office

CombinedMulti-User-

Family Office

4,8 % 64,2 %

26,2 % 4,8 %

Forein-Property

PrivateProperty


Minimum Financial Wealth Starting to Use a Family Office

The use of Family Offices is deemed to be useful already below current wealth classesFrom which size of financial wealth do you reasonable consider starting to use a Family Office?

Multi-UserFamily Office

Single-User Family Office

7,1 %

33,3 %

19,0 %

4,8 %

9,5 %

< 2,5 Mio. Euro

> 2,5 Mio. till 5 Mio. Euro

> 5 Mio. till 10 Mio. Euro





>100 Mio. till 250 Mio. Euro

>250 Mio. till 500 Mio. Euro

> 500 Mio. Euro

16,7 %

4,8 %

2,4 %

2,4 %

0,0 %

0,0 %

2,3 %

14,0 %

4,7 %

30,2 %

18,6 %

7,0 %

14,0 %

7,0 %

2,3 %

n: 42n: 42 n: 43n: 43

Average: 35,74 Mio Euro(without four extremes: 19,60 Mio. Euro)

Average: 152,15 Mio Euro(without four extremes: 84,16 Mio Euro)


Importance of Financial Wealth Service Categories

Cash and asset management are the most important services – real estate management is not in line with total asset share

Management of Daily Assets

Cash and Asset Management

Real Estate Management

Corporate Venture Management

Insurance/ Risk Management

Art Management

n: 51 n: 51

n: 50 n: 50

n: 50 n: 50

n: 42 n: 42

3,06

3,19

2,73

3,99

Declining Importance

3,19

n: 52 n: 52

n: 52 n: 52 2,08

4,08

n: 52n: 52

Naming encoded as 'very important' = 1 till 'very unimportant' = 5


Trust to Family Office

Trust in and competency assessments of bank-related Family Offices is across all major categories lower than for auditor/ tax-related ones

Bank-related Family Office

Auditor-/Tax-Advisor-related Family Office

10,4 %

58,3 %

25,0 %

6,3 %

6,3 %

Daily Assets

Cash-/Asset Management

Real Estate Management

Corporate Venture Management

Life Insurance Management

Art Management

Management of (working) Capacity

Management of Intelligence

Management of Physis

Managem. of Social Standing

Legal- and Tax Advice

Personal Office

Management areas

12,5 %

n: 48n: 48

4,2 %

2,1 %

2,1 %

2,1 %

2,1 %

4,2 %

12,5 %

22,9 %

27,1 %

35,4 %

0,0 %

20,8 %

n: 48n: 48

2,1 %

0,0 %

0,0 %

58,3 %

2,1 %

14,6 %


Private Real Estate Management merits a distinct approach in the FO context – and will be a major performance driver

Private Wealth Management

Management of Non-Real Estate-

Portfolio

Management of Real Estate-

Portfolio

Fin

anci

al E

con

om

ics

Real Estate Economics

isolated integrated

integ

ratediso

lated

Private Real EstateManagement

Management of Single-Investments

PREM Services in Family Office

Single Object

Optimization of locations, object analysis and assessment, financing, tax optimization, rental management, facilities

management, …

Real Estate Portfolio

Assessment and optimization of real estate protfolios, hedging of currency risks, measurement of value creation / performance attribution of single object to portfolio, market

assessment, …

Total Portfolio

Wealth planning and structuring, cash flow management, return optimization, estate planning, financial planning,

controlling of overall strategy

Souce: Tilmes/Schaubach, PREM


Hypotheses for profitable growth in Family Office and Wealth Management business in Germany

Positioning• Define Family Office-strategy: pure play “Assets under Advisory” vs. “Assets under

Management”• Consider Wealth Management: Re-bundle traditional Private Banking Services with extended

personal interaction

Offering• Focus product range: Purely being independent from own product selling will generate access to

UHNWI – shift to third party product distribution as access is the limiting factor – not the product• Extend product offering: Offer new, advice driven service (Estate Planning, Real Estate

Management, Risk Management) and move from Financial Wealth to Human and Social Wealth• Use teaming: Networking with external advisors is key to cover the entire wealth – which is more

than just money

Staffing• Re-power/Re-tool staff: Invest in your own Human Capital and train core competencies in

advice-driven business


Contacts for further questions

Prof. Dr. Rolf Tilmes, CFP, HONCFEP

Honorary Chair for Private Finance and Wealth Management at the European Business School International University Schloss Reichartshausen, Oestrich-Winkel

Head of the Institute for Private Wealth Management, Frankfurt

Academic Director of the ebs FINANZAKADEMIE, a Post-Graduate Training Company of the ebs, Oestrich-Winkel

Tel.: +49-163-8827703

E-Mail: [email protected]

© prof. dr. rolf tilmes, cfp, h on cfep page 1 background on the family office portfolio forums on...

Documents

total wealth

wealth elements

wealth segments

financial wealth hw

human wealth sw

financial wealth usd

wealth management pyramid

number of hnwi