Introduction and need for research
While global wealth is growing at an unprecedented pace with 300,000 UHNWIs (individuals with more than $30 million in investable assets) controlling $27 trillion worldwide, very little is known about family offices, important wealth management institutions for affluent families. Since the foundation of the Medici Bank in Italy, the earliest form of these asset management organisations, the industry — perceived as analogue and non-innovative — remained secretive for centuries until it caught the attention of researchers about a decade ago. With the opening of an increasing number of family offices, especially in emerging markets, Asia-Pacific and North America, these wealth management institutions are receiving more attention from the public, other companies and science.
Although a handful of academics are working on specific topics such as family governance, and consultancies or banks are producing high-level industry reports, to date there has been very scarce academic work for a variety of reasons. This makes family offices an under-researched topic. In particular, there is still no scientific analysis that summarises the most important developments in the family office landscape and presents the current changes within the organisations.
Methods
To fill this research gap, we conducted an extensive review of academic papers, practice-based literature, web articles and podcasts. Together with four semi-structured interviews with family office leaders and researchers, we were able to identify developments in the areas of organisational structure, governance, use of technology, generational change, collaboration and investment strategy.
Types of Family Offices
Although family offices are tailored to their families’ needs and thus are very individual, two main types are in existence today:
The most frequently mentioned motives for the foundation of a family office are the separation of asset management from the family business, a liquidity event due to the sale of a company or inheritance. After establishment, wealth preservation and transfer to the NextGen as well as the preservation of family cohesion are the primary objectives of family offices. Apart from the increasing number of family offices, the above mentioned motives and objectives of family offices are not changing, but we have noticed developments in the following areas:
