The former CEO of Rothschild Trust Group talks about his new role and explains how he sees the role of MFOs developing
David McLellan, who this month joins Stonehage as executive director and head of its London family office, will bring to the firm a clear conception of the role of multi family offices. It is a role, he says, that many firms who describe themselves as MFOs don’t actually fulfil.
The primary responsibility of an MFO, according to the former chief executive officer of the Rothschild Trust Group, is to work so closely with the family that it practically becomes an extension of it. But this requires offering more than just advisory and concierge services, as important as those are. Here, it’s all too easy to cut corners, says McLellan.
‘Unfortunately, in their attempt to minimise costs, achieve economies of scale and provide efficient service, many so-called MFOs are too superficial in their scope, knowledge and understanding and are ill-equipped to fulfil the role of trusted advisor.’
That they fulfill this fundamental responsibility is even more important given the present economic conditions, which make the complex financial affairs of wealthy families even more intricate. Wealthy European families, says McLellan, are particularly vexed by issues surrounding the generational transfer of wealth.
‘Many often fail to preserve such wealth beyond the second or third generation; usually and frustratingly this is often due to a lack of trust and communication within the family.
‘It’s therefore critical for multi-family offices to maintain sophisticated, trusted and long-term family relationships, keep up-to-date in terms of trends, regulation, legal and tax changes and, importantly, not only just assist a family with wealth and risk management but also help to educate the younger generation.’
Stonehage’s appointment of McLellan, an English and Australian qualified lawyer, is the MFO’s second director-level hire of 2013, following Rupert Hague-Holmes appointment to the firm’s Jersey office in January.