Family Offices Now Focused on Innovation, Sustainability

Family offices (FOs) have long been viewed as risk-averse wealth management firms catering to the needs of their high-net-worth clients, but a recent study confirms that generalization has become passé.      

In Global Family Office Deals Study, PwC found that most family offices worldwide have become “prominent players in an expanding array of investment deals across a wide range of asset classes.” Along the way, PwC found,  many FOs have evolved into “full-fledged family investment funds.”

Where are family offices putting their investment muscle?  

Globally, family offices are responsible for 15 percent of real estate investing and 14 percent of fund investing, PwC shows a transformation is unfolding. FOs have become “major players in funding innovation,” to the point that they are now responsible for 31 percent of startup investing worldwide. And, for many of those firms, artificial intelligence (AI) investment opportunities have taken center stage.

[Is AI Booming — or a Bubble? Find out.]

This eagerness to more aggressively support startups leveraging AI contrasts with the traditional FO business model, which centered more on managing the wealth planning, charitable giving, tax preparation and related tasks for their affluent clients.  

Impact Investing 

The PwC study — based on a decade’s worth of analysis of more than 11,000 family offices operating worldwide — found FOs are breaking free of old-school business models in other ways as well. For instance, many are now focused on impact investing on behalf of clients.  

“Family offices have been steadily increasing their impact investments over the past ten years,” says the report. “In the first half of 2022, impact investments accounted for more than 50 percent of their total investments for the first time, and this has been increasing ever since.” 

Topping the list of impact investments are education and renewable energy initiatives, which represented 29 percent and 24 percent (respectively) of FO impact investing in the first half of 2024. On the other end of the spectrum, affordable housing initiatives accounted for only about 4 percent of impact investments among the FOs surveyed.  

“A significant tipping point was passed in the first half of 2022, as ‘sustainable’ investments surpassed ‘traditional’ investments for the first time,” say researchers, who credit this development to the “influence of next-generation family members on their daily offices.” 

Generational Preferences 

This is a key point that financial advisors should note: generational investment preferences are undergoing a seismic shift and post-Boomer investors have different priorities than their older relatives when it comes to structuring investment portfolios.  

In general, Boomers are more comfortable building portfolios made up of stocks, bonds and other traditional asset classes. When investment discussions turn to advanced technologies such as AI (or blockchain, Web3 technologies, cryptocurrencies, etc.), they are more likely to voice skepticism. It’s equally likely that that skepticism extends to impact investing too.  

In contrast, Gen X, millennials, Gen Z and Gen Alpha investors look at transformative technologies like AI (and blockchain, crypto, etc.) and see opportunities for growth, innovation and democratized access. This comfort level may be partly attributable to the fact that these younger investors have grown up with these technologies and recognize that they are already reshaping nearly every industry.

If financial advisors and family offices intend to meet the needs of next-gen investors, they must recognize these generational preferences are already taking hold.  

How Avestix Can Help 

To help bridge this divide, Avestix has launched AVESTIX INTELL,™ a collaborative platform from Avestix created specifically to help bridge investment differences and better facilitate a seamless transition of wealth across generations. 

AVESTIX INTELL fosters collaboration amongst investors, influencers, innovators and family office executives and enables them to network, share ideas and succeed in a landscape of rapid transformation and unparalleled opportunity. 

Want to know more? Are you ready to be part of the AVESTIX INTELL community? Simply complete a membership application or drop us a line.