As it is high time that this news service took a deep dive into the German single-family offices sector, we talked to some of the country's banks who serve it, and set out the scale of what this sector holds.
In this detailed feature, WealthBriefing looks at the Germany-based family offices industry, one that can sometimes slip under the radar of the international business media – with certain key exceptions, such as when it came to light that a German couple involved in the Pfizer vaccine programme were backed by a family office. This feature, which runs in two parts, starts with an examination of the territory, and the role of German banks. The second part features comments from three prominent Swiss banks which also serve this market. (This news service took a broad look at Germany's wealth sector some time ago. A lot has happened in the intervening years.)
Germany’s family offices market is not as closely followed as those in the US, or even the UK and Switzerland – perhaps reflecting an English language media tilt – but its collective size means that banks have been rolling out business units to serve it.
This news service took time out from the usual 24-hour news mayhem to look into how large the German single-family offices (SFOs) sector is and, what major domestic and international banks’ strategy is towards serving this market.
There have been scores of commentaries, surveys, white papers, and even books about the world’s family offices market. Banks, research institutes and others crank out several surveys to work out what single-family offices want, how banks can serve them more effectively, and trends about pay, technology problems, and more. This tends to be a broadly English-language area, with many reports coming from the US, for example. Amidst all this, the German-language market perhaps falls under the media radar. (On a separate tack, banks certain banks and service providers will also talk about their “DACH” regional approaches – Germany, Austria and Switzerland.)
Banks also seek high-margin business as cost pressures and other forces to continue to bite. This means that family offices are seen as lucrative, long-term clients worth cultivating. But to do the job properly takes time and resources. Players such as UBS and Deutsche Bank, for example, are involved in the market; local players include centuries-old Berenberg, in Hamburg.
“There is an acceptance by German business families that the family office is a worthwhile structure to set up and has its advantages. The German single family office market is approximately the same numerical size compared to the British market,” Alastair Graham, founder of Highworth Research, told this news service. (Highworth is a database on SFOs worldwide. This news service is its exclusive media partner. To register for the firm’s database, click here.)
“However, there are significant differences between the two markets. The German SFO market is almost entirely domestic in its nature, while the UK one, for example, has a higher share of founders who come from overseas, as does the Swiss market,” Graham said. “In the case of the UK market, the Highworth Single Family Office Database shows that 28 per cent of single-family offices have founders who are not British, while the Swiss SFO market has 34 per cent of founders who are not Swiss.”
The Highworth database shows a total of 228 German SFOs, varying in size from tens of millions of euros to multi-billions. (As with all these matters, calculating the exact size of the SFO market isn't easy because some family offices will go to considerable lengths to stay anonymous. The size of the sector can also be exaggerated, including structures that arguably aren't family offices at all.)
Banks must appreciate these differences and position accordingly. In talking to several German, Swiss and international lenders, several common themes emerge: SFOs are preparing for NextGen assumption of control of business and wealth; there is more focus, it seems, on active asset management, including direct investing; SFOs need continued support for areas such as cybersecurity, and the sector is seen as growing at a steady clip.
Mostly, German family offices tend to be linked to the country’s Mittelstand sector of small, medium-sized, and large manufacturing and service sector companies that are typically family controlled/and/or owned. Carmaker dynasties are among the richest family office players. For example, there is the eponymous family office of the late CEO of German auto giant Volkswagen, Ferdinand Piëch. By far the largest is FERI AG, one of the family offices linked to the Quandt family behind automaker giant BMW.
In one memorable case, it turned out that the couple involved in
the development of the BioNTech
Covid vaccine – distributed via Pfizer – had been backed
by a German family office, Athos Service GmbH.