Anthony Hilton: Tough times for those who guide the wealthy

Meanwhile, the fact the family has made a lot of money in one area does not always mean they have the golden touch that allows them to make money everywhere else. Some are less gifted than they think they are, and less knowledgeable — and it must be said not always very good at listening to advice.

As a consequence, running a family office is rarely straightforward, and is a world removed from conventional investment advice and fund management. Interestingly, however, if the investment results are analysed regionally with a split between North America, Europe and Asia, it was Europe that performed best last year. It was still not good but it is counter-intuitive, given the perception that Europe is currently the world’s basket case. It also hints at another notable behavioural feature, not just of these but of all investors. Family offices could in theory go anywhere in the world to invest but still prefer assets relatively close to home.

It’s interesting, too, that the mood has changed since last year. Though Europe did best in 2015, its families are now the most gloomy — particularly in contrast to North America, where the tone is highly positive and upbeat. This is despite the uncertainty around the US economy, which is surely nearing the end of a prolonged upswing and the even greater uncertainty concerning the outcome of the November Presidential election.

Family offices are about much more than investment. Indeed, many regard their primary purpose as hand-holding — helping the very rich cope with the vagaries of life and the financial, tax and legal challenges that come with having people and money spread all over the world; balancing the needs of older family members who want income with younger ones who want growth and maybe finance for their own pet projects; striking a balance between the financial needs of the businesses from which the fortune is derived and the desires of the family who live off it. Thus is not surprising that costs are higher than in conventional asset management. The job is a lot more complicated.

Another interesting thing is how the assets are deployed. Bank of England chief economist Andy Haldane recently ruffled feathers in the fund-management world by suggesting individual private investors might be more comfortable putting their pension pots into property rather than the stock market.

What is interesting, looking at the averages of family office portfolios, is how they seem to have a similar instinct. About half the money goes into alternative assets of some kind, but predominantly property and private equity — with the latter also benefiting from a growing disillusionment with hedge funds. Typically only a quarter of the assets will be in equities, which are split roughly two to one in favour of developed over emerging markets.

The report leaves one feeling that, popular though they are, family offices are still looking for a model that really will work down the generations. Most are relatively young, set up in the Nineties, which means the first generation needs soon to hand over to the next. Managing succession is not something they have been good at in the past, so it will be interesting how it works out this time round.

The other issue lurking in the background is the whole principle of what they do. There is a growing global backlash against inequality, which is also coming out in a resentment against companies which appear not to be paying their fair share of tax. It will be interesting to see how family offices — whose raison d’être is the preservation of wealth for those who almost by definition have not earned it and who achieve this with a single-minded focus on tax and estate duty planning — navigate these currents.

If the public and political mood continues down its current path, they may find themselves subject to rather more scrutiny than they have been accustomed to.