Billion Dollar Family Offices Now Get Direct Access To Investment Bank Trading Desks

In what probably should come as a surprise, but most likely won’t, it appears that multi-billion family offices are getting access to trading desks that smaller offices and retail traders can’t access.

We know, you’re shocked.

Offices with at least $1 billion are increasingly bypassing private bankers and are allowed to go direct to investment bank trading desks, according to Bloomberg. 

Luigi Pigorini, Citi Private Bank’s region head for Europe, Middle East and Africa said: “Some of them are so sophisticated and have such buying power. We have them trading directly with some of our desks in the markets division. There’s not that many, but there’s quite a few and that number keeps growing.”

The number of family office style firms has surpassed 10,000 globally over the past 10 years, including the offices of names like Bill Gates and Michael Dell. Last year, the average family office had assets of $917 million, according to UBS. The offices with direct access to desks at banks like Citigroup generally trade equities, forex and futures. By having a direct line to the trading desk, they can get the undivided attention of traders and get access to some products not traditionally offered through the private bank. 

Family officies like Eric Schmidt’s Hillspire LLC have gone out of their way to hire staff with experience in institutional investing. Their CIO, Massimo Iacono, previously worked as a relationship manager for institutional clients in Turin, Italy. 

Goldman Sachs has employees specifically set aside to deal with family office needs. They focus on everything from lending to philanthropy – and Goldman is looking to hire more employees to act as these types of liaisons. 

Andre Portelli, co-head of investment for Barclay’s private bank said that Barclay’s “…gives wealthy clients access to private equity and debt deals handled by its investment bank.”

A top banker at UBS has warned that billionaires are bypassing financials institutions as they engage in private transactions, noting that almost 85% of all family offices make direct investments. 

Pigorini concluded: “We love to have clients that sit on the other side of the table and know exactly what we’re talking about. They have the knowledge and experience to understand the most sophisticated ideas that we can propose to them.”

As long as the fees keep rolling in, right Luigi?