Family Offices Set to Surpass Hedge Funds by 2030: Key Investment Trends and Wealth Management Insights
FAMILY OFFICE GROWTH TRENDS
Surging Assets: Family offices are expected to exceed $5.4 trillion in assets by 2030, surpassing hedge funds. This growth is driven by the increasing concentration of wealth and the shift in wealth management practices.
Rising Numbers: The number of single-family offices, which serve ultra-wealthy families typically worth $100 million or more, is projected to grow from 8,000 to 10,720 by 2030, according to Deloitte Private.
Privacy and Customization: Family offices provide more privacy, tailored financial strategies, and bespoke services, making them highly attractive to wealthy families looking to maintain control and flexibility over their wealth.
Wealth Concentration: As technology and globalization create winner-take-all markets, the ultra-wealthy, including centimillionaires and billionaires, are increasingly opting for family offices. The number of Americans with a net worth of $30 million or more grew by 7.5% in 2023 alone, reflecting this trend.
Shift in Investment Strategies: Family offices are moving away from traditional 60-40 stock and bond portfolios and increasing their focus on alternative investments such as private equity, venture capital, real estate, and private credit. Private equity alone accounts for 19% of their total investments.
Direct Investment Appeal: Many family offices are now engaging in direct investments in private companies, providing long-term "patient capital" that appeals to private equity giants and private company deal-makers alike.
Institutionalization of Family Offices: Modern family offices are becoming more institutionalized, resembling boutique investment firms with an average staff of 15 managing $2 billion in assets. The trend toward professional management, governance, and the use of technology is reshaping the landscape.
Geographical Expansion: North America leads in family office growth, with assets expected to rise by 258% between 2019 and 2030. By comparison, Asia-Pacific's family office wealth is projected to grow by 208%.
Hiring Surge: To keep up with their expanding responsibilities, 40% of family offices plan to increase staffing this year, and over a third are expanding their services or outsourcing more functions.
Succession Planning: With the average family office principal being 68 years old, succession planning is becoming a priority. The great wealth transfer, as trillions shift to spouses and the next generation, is expected to usher more women and inheritors into leadership roles.
*Credit CNBC + Deloitte
