Discounts
Family offices, handling clients taking a multi-generational approach, are important sources of “patient capital”, investing directly in companies and privately held businesses via private equity, private credit and venture. With many existing firms’ valuations hit hard by the pandemic, this produces opportunities for family office investors – and some challenges, Tiernan said. 

“There will be a lot of companies that will need funding. There will be a lot of opportunities….one of the biggest challenges for single- and multi-family offices is going to be filtering and assessing where one can make investments into a company,” he said.

Certain sectors such as energy-linked businesses, for example, have been pummelled by the virus-induced selloff to oil. A report by Australian banking group (source: CNBC, 4 May 2020) noted that companies in the energy sector were hurt particularly hard in Singapore and South Korea, while in China, real estate companies were under pressure. 

Family offices aren’t going to rush into buying companies if they’re unfamiliar with the sector; there is also a challenge in funding start-ups in the current environment, although Golden Equator’s in-house investment teams can help clients move more rapidly than otherwise, Tiernan said.

A sensitive issue in the present environment is for wealthy investors not be seen as snapping up businesses at a heavy discount and being somehow perceived, however unfairly, as profiting from others’ misfortunes. On the other hand, experienced holders of large capital pools have a vital role to play in recapitalising viable firms and getting the economic wheels spinning again, Tiernan said. “It is very important to look at these issues with sensitivity.”

Asset allocation
“In mid-March…we were telling our clients to buy equities…and that had been based on a long-term view and that they had enough liquidity that they did not need to worry about that money being put to work. We have sold some of that now,” he said.

Asked about the partial recovery of equities after the dramatic selloff when the pandemic news broke, Tiernan thought that some equity markets had over-reacted to the stimulus measures of governments. Market levels don’t fit with the poor underlying state of the real economy, he said, echoing a view of several economists in recent weeks. 

“There is a higher-than-normal level of liquidity in portfolios….the key is flexibility,” he said. 

Risk awareness
The COVID-19 crisis raises the question of risk awareness on financial markets and human health. “When there’s a shock people think `I need better insurance than I’ve had’,” Tiernan said. 

“A lot of people’s investments have been lacking in insurance – I cast that term `insurance’ broadly,” he continued. “That is where good advisors should be thinking.”

Golden Equator Wealth is expanding its business; it has been “very actively hiring” and more hires are on the way, Tiernan said, adding that: “We see a level of opportunity and need for such a business as being very strong.".