The Latest Family Office Industry Statistics Explained
The family office market is expected to grow $ 51.04 billion until 2025.
The statistic “The family office market is expected to grow $51.04 billion until 2025” refers to the projected increase in the total value of assets managed by family offices globally by the year 2025. This suggests that there will be significant growth in the family office market, indicating the growing trend of high-net-worth families turning to family offices to manage their wealth and financial affairs. The $51.04 billion growth projection highlights the growing importance of family offices in the wealth management industry and reflects the increasing complexity of financial needs and services required by affluent individuals and families.
Approximately 10,000 offices exist in the world today, meaning an approximate doubling over the decade.
The statistic suggests that there are currently around 10,000 offices worldwide, indicating a significant increase compared to the previous decade. The term “doubling over the decade” implies that the number of offices has roughly doubled in the past ten years. This growth may be attributed to various factors such as economic development, globalization, advancements in technology leading to the establishment of more businesses and organizations requiring office spaces. The rise in the number of offices can also reflect an expanding workforce and changing work trends, with more people entering the workforce and companies expanding their operations globally. This statistic highlights the dynamic nature of the global economy and the evolving landscape of work environments around the world.
Impacted by both the Mediobanca and Moncler deals, M&A activity drove reported total family office deal volume up 29% in 2Q 2020.
The statistic indicates that the total deal volume attributed to Mergers and Acquisitions (M&A) activities in family offices increased by 29% in the second quarter of 2020. This growth was influenced by two significant deals involving Mediobanca and Moncler. The combined impact of these deals contributed to the notable increase in reported deal volume among family offices during the specified period. The statistic suggests that M&A transactions played a crucial role in driving the overall activity and investment decisions within family offices, showcasing an uptrend in strategic acquisitions and partnerships during the second quarter of 2020.
Despite the digital age, only 30% of total family businesses have reported discussing issues such as digitization and innovation.
The statistic highlights that a significant portion of family businesses, specifically 70%, have not engaged in discussions or addressed key topics related to digitization and innovation in the digital age. This suggests that there may be a lack of awareness or readiness among these family businesses to adapt and evolve with technological advancements. By not prioritizing discussions on digitization and innovation, these businesses may be at risk of falling behind competitors and missing out on opportunities for growth and sustainability in today’s rapidly changing business landscape. The statistic underscores the importance for family businesses to actively consider and incorporate digital strategies into their operations in order to stay relevant and competitive in the modern business environment.
According to a Campden Wealth report, 68% of family offices globally now offer philanthropy services.
The statistic from the Campden Wealth report indicates that a significant majority (68%) of family offices around the world currently provide philanthropy services to their clients. This suggests that there is a growing trend among family offices to offer services beyond traditional financial management, such as assisting clients with charitable giving and impact investing. The finding highlights a shift towards more holistic and socially responsible wealth management practices within the family office sector, recognizing the increasing importance of philanthropy and supporting charitable causes among high-net-worth individuals and families.
Nearly 60% of family offices have experienced a cybersecurity breach, and despite recognizing the threat only 40% have a cybersecurity policy in place.
The statistic indicates that a significant portion of family offices, approximately 60%, have fallen victim to a cybersecurity breach, highlighting the prevalent nature of cyber threats faced by this sector. Despite this, only 40% of family offices have established a formal cybersecurity policy to mitigate and prevent such incidents in the future. This implies that a considerable number of family offices are inadequately prepared to deal with cybersecurity risks, potentially exposing themselves to further breaches and associated consequences. The statistic underscores the urgent need for family offices to prioritize cybersecurity measures to safeguard their sensitive information and assets from cyber threats.
Family offices hold an average 23% of their wealth in real estate, according to a survey by DJ Van Keuren.
The statistic that family offices hold an average of 23% of their wealth in real estate, as reported by DJ Van Keuren’s survey, highlights the significant allocation of assets towards real estate investments within this particular financial sector. Family offices, which cater to the high-net-worth individuals and families, demonstrate a strong preference for real estate as a vehicle for wealth preservation and growth. This allocation suggests that family offices view real estate as a stable and lucrative investment option, likely due to its potential for long-term appreciation and income generation. By holding nearly a quarter of their wealth in real estate, family offices indicate a strategic diversification strategy aimed at achieving a balanced portfolio and maximizing returns while minimizing risks.
More than half of family offices have a succession plan.
The statistic “More than half of family offices have a succession plan” indicates that a majority of family offices, which are typically organizations that manage the assets and affairs of high-net-worth families, have a documented strategy in place for transferring leadership and ownership to the next generation or designated successors. Having a succession plan is crucial for ensuring the smooth transition of responsibilities, decision-making authority, and wealth transfer within the family office structure. By having such a plan in place, family offices can mitigate risks associated with unexpected events or transitions, maintain continuity in managing family wealth, and provide clarity and guidance for future leaders and stakeholders.
Almost 70% of family offices expect to maintain or increase their allocations to direct investments.
The statistic suggests that nearly 70% of family offices anticipate either maintaining or increasing their investments in direct investments. This can be seen as a positive signal for direct investments, as it indicates a general level of confidence among family offices in this investment approach. Family offices are known for their long-term investment strategies and often have the resources and expertise to pursue direct investments, bypassing traditional investment vehicles like mutual funds or hedge funds. The statistic implies that family offices see value and potential growth opportunities in direct investments, and are likely to continue prioritizing this asset class in their portfolios.
43% of Family Offices believe technology is underleveraged.
The statistic that 43% of Family Offices believe technology is underleveraged indicates that almost half of these organizations feel that they are not fully utilizing the potential benefits of technology in their operations. This suggests that there may be untapped opportunities for Family Offices to improve efficiency, enhance decision-making processes, and ultimately achieve better overall performance by investing in and leveraging technology solutions. By recognizing this perceived underutilization of technology, Family Offices can potentially make strategic investments and advancements in technology to better support their goals and objectives in the dynamic and competitive landscape of modern finance and wealth management.
70.74% of Family Offices are optimistic about 2021.
The statistic “70.74% of Family Offices are optimistic about 2021” indicates that the majority of family offices, which are entities that manage the wealth and affairs of high-net-worth families, have a positive outlook regarding the upcoming year. This level of optimism suggests that these institutions may anticipate favorable market conditions, economic growth, or other positive factors that could benefit their financial positions. The statistic provides insight into the sentiments and expectations of a significant portion of the family office sector, highlighting a general confidence in the prospects for 2021 among these influential wealth management entities.
First-generation wealth makes up 68% of family offices.
The statistic “First-generation wealth makes up 68% of family offices” indicates that the majority of wealth managed by family offices is created by individuals who are the first in their families to accumulate significant assets. This suggests that self-made entrepreneurs and successful business owners are the primary source of wealth for family offices, rather than inherited wealth that has been passed down through generations. This could imply that individuals who have built their wealth through their own efforts and entrepreneurship are increasingly seeking professional management and financial services to preserve and grow their assets for future generations.
The US-based families own 32.7% of the total family office wealth.
The statistic “The US-based families own 32.7% of the total family office wealth” indicates that families residing in the United States collectively possess about one-third of the overall wealth managed by family offices worldwide. This statistic provides insight into the significant concentration of wealth among American families compared to families from other countries. It suggests that the United States is a prominent hub for high-net-worth individuals who utilize family offices for wealth management and preservation. Additionally, it highlights the influence and economic power held by US-based families within the global family office industry.
More than half of family offices don’t perform formal annual risk assessments.
The statistic suggests that a significant portion of family offices do not engage in a structured process to assess and manage risks on an annual basis. This indicates a potential lack of proactive risk management practices within these entities, which could leave them vulnerable to unforeseen challenges and threats. Without formal risk assessments, family offices may struggle to identify and address potential risks effectively, leading to potential financial losses or disruptions to their operations. It highlights the importance of establishing robust risk management processes to safeguard the interests and assets of family offices.
More than 75% of family offices believe they will meet or exceed their long-term targeted returns in 2021.
The statistic indicates that a significant majority of family offices are optimistic about their investment returns for 2021, with over 75% of them believing they will meet or even surpass their long-term targeted returns for the year. This level of confidence suggests that family offices are generally positive about the outlook for their investment portfolios despite the economic challenges and uncertainties brought about by the COVID-19 pandemic. The statistic reflects a strong belief among family offices in their investment strategies and their ability to navigate the market successfully to achieve their financial goals in the long term.
15% of family offices reported a decrease in the overall quality of relationships with external managers due to the COVID-19 pandemic.
The statistic indicates that 15% of family offices experienced a decline in the quality of their relationships with external managers as a result of the COVID-19 pandemic. This suggests that a notable minority of family offices faced challenges in maintaining strong working relationships with their external managers during the pandemic, possibly due to disruptions in communication, business operations, or other factors. The decrease in relationship quality could have implications for the effectiveness of collaboration between family offices and external managers in managing investments and portfolios, as trust, communication, and support are essential components of a successful partnership. Understanding the impact of external factors like the pandemic on such relationships is crucial for family offices to adapt their strategies and ensure continued success in their investment endeavors.
Family offices are holding an average cash weight of 5.1%, down from 6.1% last year.
This statistic indicates that family offices, which are entities that manage the financial affairs of wealthy families, are currently holding an average of 5.1% of their total assets in cash. This figure has decreased from 6.1% as reported in the previous year. The reduction in the cash weight suggests that family offices may be deploying more of their assets into investments other than cash, such as equities, bonds, real estate, or alternative assets. This change could indicate a shift in investment strategy towards seeking higher returns or diversification away from cash holdings. It is important to note that variations in cash weight among family offices may be influenced by individual financial goals, risk tolerance, and market conditions.
Asia is becoming a dominant player in the global wealth landscape with over 50% of total family office assets under management in the region.
This statistic highlights the significant shift in global wealth dynamics, indicating that Asia has emerged as a prominent player in the family office sector by managing over 50% of the total wealth assets. Family offices, which cater to high-net-worth individuals and families, are increasingly choosing Asia as a preferred destination for managing their wealth. The region’s growing economic power, increasing number of wealthy individuals, and favorable regulatory environment have contributed to its rise as a dominant wealth management hub. This trend reflects Asia’s increasing influence and attractiveness as a key player in the global wealth landscape, with implications for investment opportunities, wealth management strategies, and the overall financial ecosystem.
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