Study Reveals Globally, Family Offices Will Manage $9.5 Trillion by 2030
Last month I shared the news that, within about five years, there could be as many as 11,000 family offices (FOs) operating around the globe. This represents a 33 percent bump in the volume of FOs doing business. What’s driving this expansion? According to Defining the Family Office Landscape, a new report from Deloitte, a massive surge in individual and family wealth in recent years has resulted in the number of high-net-worth investors seeking guidance.
As of 2019, Deloitte determined FOs oversaw $3.3 trillion AUM. By 2024, that amount had grown by 67 percent with $5.5 trillion under FO management. With the volume of high-net-worth wealth snowballing, Deloitte estimates that by 2030 family offices will manage as much as $9.5 trillion on behalf of individuals and families.
As I advised in September, those FOs who hope to thrive in what will undoubtedly be a hyper-competitive environment may want to consider expanding the menu of services they provide to their clients. Among the recommendations I suggested: FOs may want to develop expertise in impact Investing to draw in a new generation of investors. Similarly, they may also want to sharpen their skills in alternative investments. We also suggested firms consider leveraging cutting-edge technologies to improve their back-office efficiencies.
(As we recently reported in our exclusive Avestix Insights newsletter, a growing segment of family offices now use artificial intelligence and blockchain technology to enhance processes and procedures.)
Tomorrow’s FOs: More Women in Leadership Roles and Increased Governance
The new Deloitte report offers additional insights family office executives may want to take into consideration as they map out their growth plans. For instance, the report finds a growing number of FOs now include women in key decision-making roles.
“Women now serve as the principals of 15 percent of family offices worldwide, reflecting a drive to create their own wealth and to take on leadership roles within the family enterprise,” according to Deloitte research. In North America, women serve in leadership roles in 12 percent of family offices. In Europe, about 20 percent of FOs include female decision-makers, while 18 percent of offices in the Asia Pacific 18 region do. Meanwhile, 21 percent of African FOs operate with women in leadership roles.
Another important reason women may be helming a growing share of FOs around the world is that the investor base now includes more women wishing to enhance their investment decisions using outside expertise. As Avetix noted last July, 60 percent of U.S. women currently invest in the stock market, and that share is expected to grow as women take control of a greater portion of the $30 trillion in financial assets that boomers will eventually oversee. Women are also on track to inherit about $80 trillion in the coming decades in the form of intergenerational wealth transfer.
Forward-thinking FOs may wish to capitalize on these trends by ensuring women occupy both leadership and advisory roles within their organizations to better meet the needs of female investors. Deloitte’s data also shows a growing segment of family offices are fortifying their boards with top-tier governance talent.
Defining the Family Office Landscape found that 73 percent of FOs have established boards, averaging four members, with just over half including family members, with outside expertise filling the remaining seats. In most cases (64 percent), board members have backgrounds in strategic planning, finance, tax, and legal services, while about 58-eight percent of boards have expertise in investment- and asset management.
Another trend that Deloitte identifies: FOs are branching out, and, in many cases, beyond their native shores. Whereas about 28 percent of family offices have multiple branch locations and most North American and European FOs operate secondary offices within their region, six in ten FOs in the Asia Pacific sector expanded abroad in North America and Europe. Going forward, Deloitte estimates about one in 10 FOs will likely open secondary locations.
Next Steps?
These are only a few of the trends and findings Deloitte included in Defining the Family Office Landscape. If you are an accredited investor with questions about family offices or an interest in uncovering alternative investment opportunities in technology, women-owned startups, or other emerging sectors, contact Avestix today.
