The family business of family offices

Two very different families have created thriving businesses by managing other families' financial affairs, helping them to stay together long after they needed to.

When a family business is sold by its second or third generation, the various siblings and cousins generally take the cash and gallop off, just getting together for Christmas and weddings. The deep dynastic teamwork that comes with a family business is at an end.

But not always. The alternative is a family office, which are all the rage these days for families that have a “liquidity event” and sometimes before that, when the business is so successful it has a liquidity event every day.

It does have a nice ring to it, doesn’t it? The “Bloggs Family Office” speaks of innate prosperity and permanence, something to which every patriarch and matriarch would aspire for their heirs.

I spoke to two family offices this week, to get a sense of how they operate. First, Australia’s biggest -- the Myer Family Office -- and then perhaps the smallest, the Boyce Family Office. They are both in the business of running other families’ affairs as well as their own, but in very different ways.

The Myer Family Office was set up in 1980 after the department store business founded by Sidney Myer was merged with Coles. That was their liquidity event; before that the company itself ran the family’s affairs.

Sidney and Merlyn Myer had four children -- Baillieu, Ken, Marigold and Neilma -- who in turn had 14 children and more than 40 grandchildren. The fifth generation is now well into production.

A big part of the reason they are still together as a family business, even though they are not in business, is the operation of the family office. The business these days is philanthropy, through the Myer Foundation, as well as investing. The total wealth is estimated at more than $2 billion.

When Myer family members turn 16, they are sent a letter inviting them join one of the committees they are interested in. When they turn 18, they can join the Foundation as a member.

Knitting it all together is the Myer Family Office, but these days only about 20 per cent of its operations involve the Myer family itself. It’s now a business in itself, charging other families a retainer to manage their affairs.

The MFO started taking outside clients in 1996 and has grown organically since then to be Australia’s largest and best according to Euromoney for the past two years running. They’ve thought about acquisitions, but have never found anything worth paying goodwill for.

It’s a bit like a Swiss private bank, except it’s not a bank (although they have a cash management trust you can access through ATMs).

In fact Martyn Myer, the chairman of MFO and son of the late Ken Myer, says: “We’re the exact opposite of a bank. You never tell the bank all your affairs, but our clients tell us everything.”

The minimum liquid wealth to make it worthwhile is about $30m, and MFO has clients worth up to $250m and more. After that, most have their own family office.

They pay a single quarterly retainer that covers everything: tax returns, investment management, legal and compliance, trusteeship, payment of bills, philanthropy, you name it. But the main thing is that they manage a family’s affairs in an integrated way, and provide a way for the family to stay together after it stops needing to.

Is it a profit centre for the Myers? Martyn Myer demurs. “The main benefit of this arrangement for us is that it gives our family office more scale and higher quality staff. We have 100 employees including some great expertise in banking, law and accounting.”

At the other end of the scale is Richard and Lea Boyce, running the Boyce Family Office from a serviced office about 100 metres up the road from the sprawling Myer offices in the Melbourne CBD.

Richard acts as a kind of services broker for wealthy families. They have a couple of staff, and basically Richard sources whatever services a family needs from external providers and then helps manage their affairs as a kind of non-executive director. They started 12 months ago, and now have 12 clients.

The Boyce family has a rich and fascinating history of its own. Richard’s great great grandfather, John Boyce, emigrated from Ireland in the early 1800s and set up one of Australia’s first newspapers, the Manning River Times in Taree, NSW. It’s still going strong as part of the Fairfax Media group.

The newspaper passed to John’s son Charles, who bought out his three siblings. Two of them, Leslie and Norman, trained as lawyers and set up in practice in Sydney as Boyce & Boyce.

Eventually they split up and Leslie went to London with his family and, blow me down, he rose to the top of British society. He became Sir Leslie Boyce -- a hereditary knighthood no less -- and the first, and so far only, Australian-born Lord Mayor of London.

Sir Leslie Boyce also became very rich. Among other things, his children were taken to school at Cheltenham College in a Rolls-Royce.

But Sir Leslie was worried about what those children might do with his money, so he established a trust for each of his grandchildren, to pay for a private school education which would then give them cash at 21.

Richard Boyce was one of those grandchildren -- a 'trust-fund kid', as he puts it. He was well educated in private schools, with the trust fund also paying for his bicycles and cars, and then he got $12,000 when he turned 21.

His father John, who was born in England, emigrated to Australia in 1967 and Richard was born here. He trained as an accountant, and then in 1996 his cousin Michael (Norman’s son) rang to ask him to join his accounting firm, Boyce Chartered Accountants, because he was about to retire.

It was a pretty big regional firm, operating in Moree, Dubbo, Orange, Goulburn and Cooma with 150 staff and 12 partners.  “What could I do?,” says Richard. “I felt like I didn’t really have a choice. I was the brand.”

So he and Lea moved to Moree and for 12 years (six in Moree and six in Dubbo), Richard was the name partner of Boyce Chartered Accountants.

In 2010 his father fell ill and Richard and Lea decided to return to Melbourne, where he was hired by Pitcher Partners to set up their family office practice. He did that for three years until he and Lea decided to go out on their own last year.

So the Myers and the Boyces found their way to the much same place via very different routes.

The Myers: starting in Russia, where Simcha Myer Baeski (Sidney Myer) was born, to Australian retailing aristocracy and then running the oldest family office business.

The Boyces: starting with a little Aussie newspaper through to the British aristocracy, then back to Australia and running the newest family office business.

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