We recently partnered with Hedgeweek to explore the insights and challenges gleaned from their survey of family offices. The family office industry is growing and changing. Family offices have had to adapt to a new environment, from new sources of wealth to shifting strategies to confront challenges like higher interest rates and increasing complexity. The survey revealed a huge expansion in the family office market, with the total number of family offices tripling between 2018 and 2023, including both single-family and multi-family office groups.
The “great wealth transfer” is a major driver in the family office space, in which the post-war generation will leave their wealth to millennials. This has put generational preferences at the center of the trends in family offices, as the next generation begins to step into the decision-maker role in everything from technology to asset allocation.
A family office chooses where to invest based on a variety of factors, including expertise, interest political beliefs, investment priorities and risk appetite. For instance, younger generations tend to be more interested in sustainable ESG investments. Alternatives became more popular among family offices in the wake of the COVID-19 pandemic, and private credit remains the most in-demand asset class. Private credit offers attractive risk-adjusted returns, as well as diversification benefits and a hedge against market volatility. Hedge funds remain very popular among family offices, providing risk-adjusted returns and operational sophistication.
Technology is another area where generations have differing priorities. The survey indicates 37% of family offices report younger family offices encourage increased adoption of new technology. New technologies will help family offices stay ahead of change as the “great wealth transfer” accelerates in the coming years.
To learn more about the trajectory of the family office industry and how family offices can address the challenges they face as a result of the ever-changing landscape, download the "Family Offices: A New Era of Growth" report. Or, download the "Family Office Services" brochure to learn how SS&C can help you streamline your operations and reporting.
