Family Offices on the Rise: Projected Growth and Investment Trends

• Family offices are set to grow from 8,000 to 10,720 by 2030, with assets projected to exceed $5.4 trillion.
• North America leads the expansion, with family office wealth in the region expected to reach $4 trillion by 2030.
• The shift towards alternative investments is evident, with family offices now allocating 46% of their portfolios to assets like private equity and venture capital.

Family offices, which manage the wealth of ultra-rich families, are undergoing rapid and dramatic growth. According to a recent Deloitte analysis, the number of single-family offices globally is expected to increase from 8,000 in 2019 to 10,720 by 2030. Their assets are predicted to increase even more substantially, from $3.1 trillion today to more than $5.4 trillion by the end of the decade.

A New Power for Wealth Management

The rapid expansion of family offices is altering the financial environment, preparing these companies to potentially outperform hedge funds in terms of assets under management. Family offices are now seen as the new fundraising elite, attracting interest from venture capital firms, private equity, and private corporations wanting to tap into their expanding wealth.

Rebecca Gooch, global head of insights at Deloitte Private, emphasises the magnitude of the growth: “The expansion has been explosive. It’s really in the last decade that we’ve seen an acceleration in family offices.”

This expansion is fuelled by two fundamental trends: greater wealth concentration and a revolution in wealth management. Wealth is becoming increasingly concentrated in the upper echelons of society, owing to technological advancements and globalisation, which have generated profitable markets and huge rewards for tech entrepreneurs. In the United States, the number of people having a net worth of $30 million or more increased by 7.5% in 2023, totalling $7.4 trillion.

A Changing Landscape

Historically, the ultra-wealthy have trusted their fortunes to private banks or traditional wealth management organisations. However, today’s high-net-worth clients prefer single-family offices for a more personalised and discrete approach to financial management. These offices provide personalised services, privacy, and a dedicated team that focuses on the family’s unique requirements and long-term goals.

Eric Johnson, Deloitte’s private wealth head, observes the change in preference: “Wealthy families now seek advisors who act in their best interests, rather than those incentivised to sell products.”

Dissatisfaction with traditional wealth management procedures, which can include pushing goods that are not in the client’s best interests, has also contributed to the emergence of family offices. Family offices provide an option that values customisation and impartiality.

North America Leads the Charge

North America is at the forefront of the family office revolution. From 2019 to 2030, the wealth of the region’s family offices is predicted to increase by 258%. Currently, North America has 3,180 single-family offices, which is expected to expand to 4,190 by 2030. In contrast, the Asia-Pacific area currently includes approximately 2,290 family offices and is predicted to reach 3,200 by 2030.

In North America, family offices’ total wealth has already more than doubled since 2019, reaching $2.4 trillion. This value is predicted to reach $4 trillion by 2030, highlighting the region’s dominance in the family office sector.

A Changing Investment Strategy

Family offices are also changing how they invest. Instead of typical stock and bond portfolios, they are increasingly investing in alternative assets such as private equity, venture capital, real estate, and private debt. According to the J.P. Morgan Private Bank Global Family Office Report, alternative investments now make up 46% of family office portfolios, with private equity accounting for 19% of assets.

Family offices not only engage in private equity funds, but they also make direct investments in private firms. According to a BNY Wealth poll, 62% of family offices made at least six direct investments last year, and 71% intend to keep up the pace.

Institutionalisation and Future

As family offices grow, they become more institutionalised, with larger teams and more complex operations. The average family office today employs 15 people and manages about $2 billion in assets. This institutionalisation is complemented by a shift towards more professional administration and governance, with many family offices now having various branches to service different family members or regions.

The following years are projected to see a huge transfer of wealth to future generations. The average age of family office principals is currently 68, thus succession planning will become increasingly vital. Women, who presently manage 15% of worldwide family offices, are likely to play a more important role in the future, reflecting broader changes in leadership dynamics within these organisations.