The number of family offices has more than tripled over the last four years, a new report has found.
The total number of firms worldwide grew from 1,285 in 2019 to 4,592 in 2023, according to Fundraising from Family Offices: A guide to raising capital by London-based investment data company Preqin. Single-family offices account for 59 per cent of the total.
North America remains the region with the greatest proportion of family offices (37 per cent) and the majority of assets under management (54 per cent). It is followed by Europe, which accounts for 32 per cent of firms and 30 per cent of AuM; and Asia, which is home to 15 per cent of offices and 8 per cent of AuM. The remaining regions are grouped as ‘rest of the world’ for the purpose of the research.
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‘There is the potential for greater growth in both the number of family offices and their capital across the world, but particularly in some of the emerging markets,’ the report authors note.
‘While the number of family offices grew year on year to 2023 by 20 per cent in North America, 17 per cent in Europe and 22 per cent in Asia, the figure for "Rest of world" surged 31 per cent. Although managers may tend to look towards developed markets for family office capital, the upward trend in emerging markets is noteworthy.’
Europe leads the way in the 'great wealth transfer'
As well as the power of these emerging geographic regions, the report notes the influence of the ‘great wealth transfer’, which is expected to make millennials the richest generation in history.
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As founding family members age, many offices are required to adapt their investment strategies from wealth creation to wealth retention as wealth is passed down. ‘The main concern for many is therefore capital preservation, ahead of maximising ROI,’ the report notes.
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This trend is most notable in Europe, where just 24 per cent of family offices are run by the original wealth creator. This compares to 53 per cent in the Americas and 59 per cent in APAC.
The report adds: ‘This can therefore make European family offices more risk-averse, as preservation becomes the driving consideration.’
The report examines the impact of geographic and generational trends on the growth of the industry, and how this might be utilised by GPs looking to extend their capital-raising endeavours to more holders of private wealth.
