Why do wealthy private investment companies love WhatsApp?

For the investment firms of the ultra-rich, WhatsApp is a one-stop-shop for everything from screening deals to finding the best surgeons.

Sam Nalin Copley, an investment adviser at a family office in London, runs a 970-person WhatsApp group for single-family offices and has seen it all, from checking credentials to finding co-investors to selling multi-million-dollar sets of dinosaur bones and Pokemon cards.

“If I need something at any time of the day, I can send messages to nearly 1,000 people about a new Bitcoin fund or ask who is the best tax lawyer in Germany,” he said.

Nalin Copley uses WhatsApp to organize meetings for the single-family office network he runs, Family Office Social.

The most valuable benefit is spotting fraudsters promoting deals, a common problem for family offices, Nalin Copley said.

“The family office space is the easiest financial space to be fake in,” he said. “If someone shows up and says, ‘Hey, I own a billion dollars in bitcoin,’ it’s very difficult to prove it one way or another.” “Now the group is large and powerful enough that we can check most things. Has anyone heard of this person? Has anyone ever made a deal with this person? If no, it would be very suspicious.”

Family office specialists told Inside Wealth that WhatsApp is suitable for messaging on the go and with people in different time zones. They also appreciate its privacy and exclusivity, as WhatsApp messages are encrypted and you can only message other users using their phone numbers.

Many of these groups, including Nalin Copley’s, have strict ground rules against promoting products and deals and gatekeeping against sellers or brokers. While financial companies such as investment banks face hefty fines for using WhatsApp, family offices are generally not subject to the same regulatory restrictions.

Robin Lauber, a Swiss family office manager, is a member of Family Office Socials and its WhatsApp group. Lauber said he prefers WhatsApp to email and LinkedIn, where he is bombarded with unwanted investment scams.

“WhatsApp is easy to use and convenient to manage,” said Infinitas Capital’s Lauber. “To be honest, I don’t read my LinkedIn messages.”

Erin Harkless Moore, who oversees investments at Melinda Gates’ family office, Pivotal Ventures, said she’s part of several groups where investment heads share deal flow, get advice on how to use AI and ask for help with recruiting. Recently, members discussed how to adjust their portfolio allocations in light of the slowdown in exits and lack of liquidity in their venture capital investments.

“It’s good to have forums with people who are in the same industry as you and doing similar work, just to see what they’re reading, or what they think is interesting,” she said. “I think it makes me a smarter and better investor.”

Using WhatsApp is also somewhat of a necessity for communicating with next-generation family members, according to Joshua Gentin, a family office consultant and third-generation heir to Sargento Foods. He is 45 and describes himself as an “email guy”, but said he had a WhatsApp group of six heirs aged between 21 and 35.

“We have to meet them there,” he said. “Sending email, especially to those 35 and under, is a real challenge.”

There are platforms designed for family offices and high-net-worth individuals, such as Trusted Family and Forge, that allow messaging. But WhatsApp is used much more widely, with more than 3 billion monthly active users worldwide.

R360 has its own app primarily for events but members still use WhatsApp by default, said Michael Cole, managing partner of R360, an investing community for millionaires. It has WhatsApp groups for different homogeneous groups, such as private aviation and outdoor adventures. The health, longevity and wellness group recently used WhatsApp to motivate each other during a fasting challenge.

Although WhatsApp is owned by a company deadCole said many members view WhatsApp as more private than the platforms they target.

“People love WhatsApp because there’s no one — what I would call ‘Big Brother’ or the perception of Big Brother — overseeing their communications,” Cole said. “They can create a collection any way they want.”

Cybersecurity experts warn that relying on the WhatsApp application comes with serious risks. It’s more secure than text messages (known as SMS), especially between different devices like Android and iPhone, said Tony Gibelli, of Annapurna Cybersecurity. However, he said that WhatsApp, intended for consumers, does not have features such as saving messages in case of investigation or lawsuit as Microsoft Teams does.

While messages are encrypted, Meta can track metadata, such as who you’re messaging and how often messages were sent.

WhatsApp messages are also stored on your device, which poses a security risk if stolen or lost. It also means family offices can’t block fired employees from accessing old messages, said Jordan Arnold of Getty Partners. Arnold said he has seen rejected employees threaten their former employers by leaking sensitive messages.

Instead of trying to convince family offices to stop WhatsApp altogether, Jabali encourages clients to only use WhatsApp for non-sensitive conversations like letting someone know they’re late for a meeting but not to request approval for a bank transfer.

“They are not a regulated entity, so they can do whatever they want,” he added. “People will use it for communication and seemingly innocuous activities, and I don’t think we’ll ever change that. But when it comes to business and running a family office, you can’t use it in your day-to-day.”