Family offices are increasing in number and in influence, with a rapid increase in assets.
Ernst and Young estimated in its 2016 Family Office Guide that there are over 10,000 single family offices around the globe. At least half of them have been set up in the past 15 years.
Around 2,350 family offices around the globe have at least $50 million in assets, including single-family and multifamily offices, according to FINTRX, a family office data and research firm in Boston.
FINTRX also reports the offices on its platform manage an average of $900 million in assets, an increase of 38% over the past year.
A typical family office has a longer investment horizon and looks at 75-100 deals a year. Additionally, more family offices are also looking at impact investing—investments for profit that also aim to have positive social outcomes.
Some family offices are taking advantage of the 2017 tax law changes and taking part in the Qualified Opportunity Zone programs.
Why the growth in these family offices? The rich are getting richer because of low interest rates, a sustained economic recovery and a long bull market on Wall Street.
For instance, Spectrem Group reported in 2018 that households with a net worth of $5-25 million were up 32% from five years earlier.
Greater wealth creates more complexity and the need for a family office.
Family offices and philanthropy
Signs point to continued growth in this arena, which is important to note since many offices also manage the family’s philanthropic giving.
The Global Family Office Report 2016, created by UBS and Campden Wealth from surveys of 276 family offices, found that 50% of those in North America have a clear strategy and focus for their philanthropy, with another 8% involved in philanthropy but without such clarity.
These families have found charitable giving is a way for multiple generations of a family to engage around a common cause that looks to solve problems and benefit others.
The beauty of family generosity is that it’s not just for those with a family office—generosity is for all, regardless of net worth.
Photo by Haley Phelps on Unsplash
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Published July 9, 2019
Topics: Family Business