Why is the family office industry growing so rapidly?

Why is the family office industry growing so rapidly?

by Richard C. Wilson & Family Offices Group Association Team

Question: Why is the family office industry growing so rapidly?

Answer: The family office industry has grown impressively in recent years, leading many to wonder what is driving that growth.  I have identified what I see as the four main drivers of family office industry growth:

1) Rise of the Ultra-wealthy: The daily rise in the total number of ultra-high net worth professionals around the world is growing the demand for family office services. New wealth has been created daily in every country since the beginning of time, but today business owners in economies such as Singapore, Indonesia, South Africa, Czech Republic, Argentina, and India are thriving as never before and wealth is being created at a faster rate than ever before.

2) Wealth Management Firms Upgrading: The second driver of wealth that I have identified is that wealth management firms are wanting to serve the clients better and naturally collect more fees. In order to achieve these two goals, they are trying to provide more holistic financial wealth management solutions and many are raising their fees and the minimum assets a client must have before they will accept them as a client.

3) Multi-Family Offices Downgrading: Another source of growth in the space is found on the other end of the spectrum in traditionally very closed-door multi-family offices. Many multi-family offices require $30-$100M+ to join their firm, but due to the combination of economic volatility and perhaps rising costs many have lowered their new client minimums to just $10M-$20M.

4) Banking & Trust Executives Taking Off Handcuffs: I probably won’t make many large investment banking or trust company friends with this growth driver description. I have found, in my experience, that most banks and trust companies of large size have internal cash management products, fund managers, long-only fund solutions, and services which provide limited options to clients which are somewhat self-serving.

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