Ultra-Wealthy Clients Remain Key to Family Office Success
The face of family offices (FOs) is changing. Once FOs were primarily viewed as trusted, risk-averse conservers of wealth for ultra-high-net-worth clients, but that role is morphing. Increasingly, FOs are emerging as funding sources for early-stage startups and proponents of alternative investment opportunities like blockchain and AI. Yet, despite this evolution, ultra-wealthy clients remain the bread and butter for family offices around the globe.
As JP Morgan Private Bank recently determined: “While there has been an increasing familiarity and interest in family offices, our research indicates that they continue to be largely the domain of families with significant assets. Globally, the average total net worth of the families being served by the surveyed family offices is $1.4 billion.”
This is great news for family offices because JP Morgan found that the pool of prospective ultra-rich clients continues to expand. In 2004, about 157,000 ultra-high-net-worth individuals owned 9.6 percent of global private wealth. As of 2022, 395,070 ultra-rich individuals collectively controlled more than $45 trillion, or about 10.6 percent of all global wealth. This upward trajectory will likely continue, say JP Morgan analysts.
More Clients, More Firms
"By 2027, the global ultra-high-net-worth population is expected to increase to a total of 528,100 people, up by 133,000 individuals from 2022, and the level of global ultra-high-net-worth wealth will increase by $14.9 trillion to an estimated $60.3 trillion” the bank determined.
In a separate study, Deloitte reported slightly more than 6,100 FOs were in operation worldwide as of 2019. In 2023, that number grew to 8,030 family offices worldwide. By 2030, Deloitte projects there will be nearly 11,000 FOs doing business around the globe.
It is worth noting that JP Morgan’s estimation of the current global family office landscape dwarfs Delotte’s calculations. The bank estimates there may now be as many as 20,000 single-family offices in operation worldwide. But one thing both sources agree on: More family offices are coming.
What’s driving this surge in popularity of family offices?
JP Morgan Private Bank lists a multitude of factors that have made FOs attractive to high-net-worth clients seeking investment guidance, starting with the “desire for privacy, control and customization.” Family offices “also simplify matters by providing coordinated oversight of a vast array of financial and personal assets, and [serve] as a single point of contact for families with complex balance sheets.” The firms also appeal to investors that have a “desire to engage in direct investments, where there is interest and mindset alignment in addition to the potential of better value and return.”
Serving a New Generation
How can up-and-coming family offices stand out in what is becoming a highly competitive market? One solution might be for FOs to broaden the scope of services they provide.
As Avestix CEO, Susan Lindeque, explained in a recent interview, a new generation of investors is emerging that is as focused on incentivizing societal enhancements as it is generating returns. Family offices seeking competitive differentiators may also want to lean into impact investing as well as investment opportunities leveraging new technologies such as artificial intelligence, robotics and quantum computing.
Next Steps
Although family offices continue to focus on the needs of ultra-high-net-worth clients, they must recognize that those needs are evolving as the markets evolve. Simply put, the family office landscape is changing. To help FOs keep pace with the changes, Avestix launched AVESTIX INTELL,™ a collaborative platform from Avestix created to bring together investors, influencers, innovators and family office executives, allowing them to network, share ideas and succeed in a marketplace made up of rapid transformation and unparalleled opportunity.
Want to be part of the AVESTIX INTELL community? Simply complete a membership application or drop us a line.
