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Family ties

Family ties

With more than a 100 years of history in The Bahamas, Holdun Family Office Limited sets sights on the future

The Bahamas Investor Magazine
January 1, 2017
January 1, 2017
Catherine Morris

When it comes to taking on new clients, Brendan Holt Dunn, chief executive officer of Holdun Family Office Limited, has a simple rule: “If it’s someone I wouldn’t have at my house for dinner with my family, then it’s not someone with whom I would want to do business. I wouldn’t take on a client that I don’t feel is also a friend.”

For Holdun, which serves around 15 high-net-worth families and has some $2 billion in assets under management, cultivating close relationships is key to providing top-quality personalized services, delivering consistent returns and ensuring growth not only for the current generation, but also those to come.

Five generations of wealth
Holdun’s present day operations have their origins in depression-era Montreal, where renowned industrialist and financier Sir Herbert Samuel Holt (pictured) built a vast business network, becoming one of the richest men in Canada.

In 1908, Sir Herbert had become president and chairman of the Royal Bank of Canada. During his tenure, the bank was hired to oversee The Central Bank of The Bahamas, bringing Sir Herbert to Nassau for the first time and beginning an association with the country that would last for generations.

“He came down here and fell in love,” says Holt Dunn, Sir Herbert’s great, great grandson. “Our family has been in The Bahamas for over 100 years.”

The Holts had a home in eastern Nassau and later in the grounds of what would become Lyford Cay. The latter property became a cherished retreat for the younger members of the family. Holt Dunn has fond memories of childhood visits to the islands. “I did all my schooling in Canada but I would always come back here for the holidays. We moved around a lot when I was young, so I didn’t feel any ties to a particular city in Canada, but The Bahamas was always my anchor. I always knew I’d be back.”

For four generations, the Holt family managed their fortune as a single family office but, in 2000, Holt Dunn’s father, Stuart Dunn, a successful businessman in his own right, decided the time was right to scale up.

“He had built his own businesses and he had done well, so he decided to just focus on the family,” explains Holt Dunn. “We had close friends who knew what we were doing and so we decided to start working with them and to manage their affairs the way we do our own family. It just grew from there.”

Before coming on board to run the family business, Holt Dunn spent time working under Jeff Everett, the president of Franklin Templeton Mutual Funds, in the research department in Nassau.

Despite the family legacy, Holt Dunn says he was never compelled to join his father in the office. “There was never any pressure from my family, but I was always aware of what was happening and I always had an interest in finance, which obviously my dad supported. Working with him was a seamless transition, there was nothing official, no titles. I just started working and I organically took on more and more responsibility.”

Transitioning to a multi-family office has its challenges, but Holt Dunn says Holdun hit the ground running, thanks to the family’s extensive background in private finance.

“The biggest challenge, coming from a single family office, is building the foundation required to service your new clients, most of which revolves around compliance and accounting,” he says. “We had that knowledge. Even when we were a single family office we were fully licensed and regulated so we’ve always known what is required. My dad built and sold two institutional money management firms, so we had already been operating under those rules and responsibilities.”

Bespoke services
One of first families to join Holdun’s multi-family office were the Meiers –long-term family friends of the Dunns. Bruno Meier, now Holdun’s vice- chairman, has since been joined in the office by his son, Claude-Philip, who recently became chief operations officer. Both the Meier and Dunn families invest alongside their clients, taking on the same risks and rewards.

“The Meier and the Dunn families are the largest clients and that is the way it’s supposed to be,“ says Holt Dunn. “When we look into an opportunity our money goes first; we take the risk before we put our client’s money in. The original family has skin in the game and that creates an alignment of interest.”

Holdun is comprised of five business units –a fully licensed Cayman Islands Trust Company, Holdun Financial Services, Holdun Investment Partners, Holdun Wealth Management and the Holt Foundation. This gives clients access to the full gamut of services including tax planning, accounting, trust services, estate planning, international asset protection and portfolio analysis.

All services are available from its Bahamas branch, which was established in 2014 and has just relocated to its new offices at the Albany Financial Centre. Holt Dunn says the priority now is to formalize the various departments within the company to streamline the business.

“We are working on creating more structured roles within the company, to be more like how an institution would run. We don’t want to be too formal, we just want everyone to come in and know who the point person is for certain discussions. It allows the office to work a little more efficiently.”

Clients must have a minimum of $1 million in assets to use Holdun’s services, but Holt Dunn says the typical client is closer to $30 million or more. Unlike some family offices, the company doesn’t charge a flat fee for all services, but allows clients to pick and choose according to their individual needs.

“We have always realized that everyone has different requirements, different risk tolerances or different time horizons for their portfolio. Not everyone needs a

full service, so we purposefully created everything as independent divisions within the company. We aren’t a bank. I don’t want to force anyone into relationships that we make money on but which are of no value to them.

“We are a bespoke organization and that allows the client to get to know us, see how we work together and then we grow from there. We never squeeze people for extra fees. I would rather have a great relationship with the client and provide value.”

Communication is key
For Holt Dunn, a successful family office is one that puts its families first. He sees his role as a trusted, independent advisor, but adds that this comes with certain challenges.

“Our job is to take every single piece of wealth a client has, regardless of the asset class, and put it all together in a simple consolidated report. Then we dive into the details. The biggest issue is usually over-diversification and over- concentration.”

Another issue, he says, especially when it comes to the first generation, is that the person who has made the wealth knows how all the pieces of the jigsaw fit together, but they haven’t necessarily shared that with their family. “With those people, the issue is what if they die tomorrow? Does their wife or husband know where all the money is? Do they know who the lawyers are? Do they know where every account is?”

To counter this issue, Holdun creates what it calls “the Bible”–a comprehensive report of a family’s wealth which is updated as needed. Holt Dunn says: “We have all that and we put it together so if anything happens, there is one less stress for them. We can take that off their shoulders so they can focus on their family.”

Guiding principles
Even the closest families can develop friction. To smooth out potential problems before they arise, Holt Dunn says it’s important for families to identify what he calls their “guiding principles.” “Ours are transparency, accountability, participation and education,” he says. “But every family is different, every family has a different dynamic.”

Regardless of a family’s guiding principles, Holt Dunn says communication and education are always vital. “Communication is challenging, but it is necessary if you want a cohesive and well-functioning family. Education is critical for anyone, anywhere in the world, but when you are about to inherit wealth there is a separate education. You have to prepare them for that succession. You don’t want the next generation to get that money and blow it.”

And he speaks from experience. Holt Dunn says he was raised not to take his own wealth for granted, but to see himself as a custodian of the family fortune. “My grandfather was ridiculously successful; he was a hard act to follow, but it’s whether you rise to the challenge or sit back and live off the inheritance. We’re not allowed to do that. That’s my education and upbringing. We try to make sure that everyone in the family understands that the money we have is not for us. It is to support future generations and prepare them for a challenging world. You need to be constantly growing that capital to be able to pass it down.”

Educating its younger members isn’t just good for the family, it also makes good business sense, says Holt Dunn, who believes investing in the next generation is fundamental to that family’s success. “The most valuable asset a family has in its portfolio is human capital. Human capital has the biggest potential for growth, but if it’s not managed properly, it is also your biggest potential liability. If you can support and encourage the younger generations they are going to build the wealth of the family.”

A growing niche
The family office first originated in the sixth century when stewards were appointed to manage the king’s wealth. This concept of “stewardship” evolved over the years to meet the needs of the ultra wealthy such as the Rockefeller and Morgan families who were among the first to formally adopt their own family offices.

Formerly considered a niche market catering only to top tier families, family offices have grown to become one of the fastest growing investment vehicles in the world today. Following the financial crisis of 2008, the market saw an uptick from nervous investors wanting more control over their assets and now industry experts estimate that there are between 3,000 and 5,000 single family offices in the US.

Holt Dunn agrees that family offices are becoming more popular and attributes this to their independence, flexibility and focus on the future saying: “Institutions have more of a short-term view on their performance, which is contradictory to what a family office does. Most family offices have very long-term views, so whatever happens to the market daily or monthly really isn’t that relevant. Banks have a lot of pressure to perform and show results every quarter. Banks are there to safeguard your assets, but I don’t think you should have everything under one roof. You need someone on top of it all who is independent and conflict-free.”

The growing popularity of family offices is not just attracting clients, but also those from a private banking background that want to work in the industry. “Family offices are the next evolution for wealthy individuals, but they are also the next evolution for successful private bankers. Most of the people we bring on [as employees] are private bankers, because they realize they can serve their clients better with us. That is where we see growth. Overall, I do think multi-family offices are the way of the future. It is the best way to service your clients, if run properly and conflict-free.”

Family by name, family by nature
While the concept may be becoming more mainstream, the exact definition of what constitutes a family office is still ill-defined and Holt Dunn says this can lead to opportunistic businesses trying to exploit clients.

“There are a lot of people who slap the family office label onto their name, but it’s not really a family office. In my opinion, a real family office is a company set up to manage the affairs of a family. The founding family is supposed to be a client. There are a lot of asset managers who might manage assets for families, but don’t have the same risk. They are making their money off the fees they charge, whereas we make more money off our portfolios.”

Another issue with the rise of multi- family offices is a corresponding rise in globalization. Today’s wealthy families are seldom all in one jurisdiction and having family members dispersed across the globe adds another layer of complexity. This is something Holt Dunn sees in his own family.

“In our family, for the first time in generations, there are people who live outside of Canada. That creates a tax issue. Dealing with families and different generations is becoming harder and harder with globalization, and it’s becoming more expensive. You want to make sure that your structure, which is completely transparent and completely legal, is fine with any changes that might happen [due to relocation].”

Holdun has offices in Montreal, Toronto, The Bahamas, The Cayman Islands and Miami to serve both its Canadian and international clients. At present, the company does not take on American clients–a decision that Holt Dunn says is due to the strict reporting requirements from that jurisdiction.

Future generations
The global financial community has turned its attention to offshore jurisdictions such as The Bahamas in recent years, leading to increasingly burdensome regulation focusing on transparency and compliance. While some in the industry are wary about how this will affect the sector, Holt Dunn remains optimistic citing the country’s continued appeal and longstanding reputation.

“The Bahamas is a good jurisdiction,” he says. “It is well-known as an international financial jurisdiction and lots of people are coming here. I love The Bahamas. You want to be somewhere you enjoy living and I think The Bahamas has all that. Some banks are pulling out, but banks are giant global organizations, they will always move in and out [of jurisdictions]. It doesn’t mean The Bahamas itself is a bad jurisdiction. It is a great place to be based in, to live in and to do business in. I see a lot of opportunity; it has great potential.”

Living and working in Nassau, Holt Dunn tries to strike a good balance between his life at the office and his life at home with his family. The father of two young children, he prioritizes family time, while making the most of the tropical climate. “Our family is very athletic. I’ve played sports my whole life. The beauty of The Bahamas is that you can be outdoors every day, so we go swimming with our kids and get them into sports. It’s a great environment.”

In raising his children to be part of the Holt family legacy, Holt Dunn says he is adopting the same approach his father took with him.

“As a father, my job is to support my children in whatever they want and let them dream big. I want to make sure I give them every opportunity, but not enough so they think they can just party. It is a balancing act. I’m not going to pressure them, but if they want to [join the business], I’m more than happy. The goal is to pass it down. This is not a business we are going to sell. What we’re building is not for us, it’s for future generations.”

And future generations look set to inherit a strong and expanding company. Holdun is growing steadily, mainly through referrals and word of mouth, with the founding family always eager to make sure a new client’s philosophy fits with their own.

As the company grows, it faces a question common to many multi-family offices: how do you increase business while retaining the kind of intimate and personalized service clients want? For Holt Dunn it is about adhering to his core rule that clients should always be friends. “We’re lucky in that we’re not desperate for assets. I don’t have to go around taking clients just for the sake of taking clients. We’re going to be very selective and decide based on whether our values and beliefs match. I never want to be big enough that I don’t know every one of my clients.”

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