Global CIO Office: Investment and Research Services for Asia’s Growing Army of Family Offices

Gary Dugan and Johan Jooste have launched the Global CIO office in Singapore, that will provide outsourced investment ideas and research services to multi-family offices. Dugan is Chief Executive Officer of Global CIO Office and Johan Jooste is Managing Director. Their current firm, Purple Asset Management in Singapore, will continue as before and Purple’s joint owners, the UK’s Fry Group and the Independent Strategy Group, will back the new venture with funding and resource. Dugan and Jooste met with Hubbis in July to explain their vision.

Jooste begins by explaining that Purple Asset Management is a Singapore entity created in 2016 by the UK wealth advisory firm Fry Group and that is also 50% owned by the Independent Strategy Group, which he says is principally a Fintech provider, but that also supplies financial services and portfolio management to the IFA market in the UK.

Jooste explains that Fry and Independent Strategy Group are making their platform and technology available, helping to leverage the type of outsourcing facilities that Global CIO Office will be providing.

Bespoke and independent

“We do not need to go out and get any of this ourselves,” he explains, “so we can concentrate on offering bespoke research and use the platform to roll out our offering in a discretionary format for larger accounts also. For the types of clients that we are targeting, they do not have the scale or financial resources to be able to offer these services to their end-clients at the right price points and also at sufficient margin to operate themselves. And we are offering white labelling if they wish, so it appears as if this is entirely their offering.”

Dugan and Jooste are therefore launching the Global CIO Office under Purple Asset Management. “Based in Singapore and owned by the same two entities but with a totally different target market,” Jooste reports, “the CIO team will be looking after ultra-wealthy segment of multi-family offices and possibly also outsourcing research and fund management services to some of the independent asset managers based in Singapore and across the region. Actually, under the Purple brand we already have some of those clients signed up locally in Singapore and elsewhere in Asia.”

Dugan explains that regulatory approvals are essential, so with Purple Asset Management in the background, Global CIO will obtain its own full CMS license in Singapore. “This will help us to interact with companies or individuals who could become customers in other jurisdictions because the regulatory environment here in Singapore is seen as very strong indeed,” he remarks.

The typical client

Jooste explains that Global CIO’s ideal client will be a small to medium sized family office, with assets of USD50 million and upwards, that is fairly recently created and that is likely to require research support, for example offering views of certain asset classes.

“These entities are also likely to require discretionary fund management for global mandates,” he reports, “so we see considerable demand for that sort of service, based on a very considerable amount of market research we have conducted and of course our deep knowledge of this wealth market in Asia.”

Jooste explains that it is a common hurdle to overcome for new family offices to provide the level of service to their clients that those clients might be used to, especially if they are moving off a leading private banking platform.

Outsourcing excellence

“Overcoming that challenge is where we come in,” he says, “and out of that challenge and overcoming it will come a flow of interesting transactions and advisory assignments, covering for example private deals on the equity and the debt side, possibly including due diligence on deals on offer. A typical transaction might be private equity deals too small or too niche for the private banks, or where the deal organisers prefer to keep the investor group tighter, or where they don’t want to make a marquee-style launch. These are all opportunities that we anticipate will flow from the main business line, for which we see considerable traction in Singapore and in the UK.”

Research as the catalyst

Jooste believes that there is great value in the research and experience that he and Gary Dugan can bring to the table. “Research we might supply does not simply result in a buy order, or not, it is very often the starting point for a request for more for insights, for someone to bounce ideas off, to consult with people like us – with our combined 60 years plus of experience, our additional angles, our bespoke approach and our deep range of connections to help analyse opportunities effectively.”

Dugan explains that there are two key motivations for setting up the outsourced CIO services. “First,” he comments, “I have remarkable experience across many institutions and many jurisdictions, so I want to put that to best use for clients. Secondly, I find the wealth industry is in some disarray, going through a monumental change as clients are often very upset with the kind of service they are getting and with the investment proposition. I think unfortunately at this point in time private banking is still driven by the front office, not by the investment professionals. Many private bankers are breaking out on their own and need the support of good quality research and high-quality product ideas. In short, this can be better defined as helping the client rather than ripping the clients off.”

Plugging the gaps

Dugan delves deeper into what he sees as the malaise in the wealth industry. “When I started in the UK, I worked for a small brokerage company that was selling single ideas. Then the private banking became more of an asset management business, helping clients build a portfolio of ideas. But cost pressures and revenue targets have combined to reduce private banking to more of a brokerage style, offering single ideas, whereas actually clients look for a portfolio of ideas, diversification and the opportunity to achieve their long-term wealth goals. We now want to be the catalyst for making sure that is again what is on offer.”

Dugan believes that Global CIO will be able to compete effectively with the private banks in some of the key areas. “The multi-family office is typically set up by front office people who soon realise that there is quite a considerable cost if they take attempt to provide all of the investment services that a private bank would offer,” he observes. “Our objective is to make it very simple for them, we will explain that they don’t really need a CIO but can secure that expertise with flexibility and at reasonable cost through Global CIO services. We can offer expertise on all of the different aspects of the private banking investment proposition at speed, as well as access to all the information and data necessary without taking on the considerable costs of having terminals and data providers on tap in their office.”

Expertise at a manageable cost

Dugan adds that access to the depth of experience that he and Jooste can offer would be prohibitively expensive for family offices to hire in-house. “For those family offices that, for example, open a small office with perhaps USD100 million under management to start with, they can get access to that experience immediately, for the time-frame and to the extent that they require,” he notes.

Dugan adds that many CIOs in larger private banks today offer perhaps 10 to 15 years of experience. “However, I personally think that they need at least 20 to 25 years of experience to be truly effective, so I think there is a huge gap that we can fill for these operations.”