The number of family offices globally will continue to balloon by 2030, a new report from Deloitte Private has predicted.
In 2019, there were just 6,130 family offices around the world, a figure expected to climb by 75 per cent to around 10,700 by 2030.
Deloitte’s Defining the Family Office Landscape, 2024 report found that the largest growth in family offices globally will take place in North America and the Asia-Pacific – two regions vying for investment opportunities and competing to attract investment-management talent.
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Around 40 per cent of family offices (4,190) will be in the US, while 3,200 are expected to be located in the Asia-Pacific region.
This growth means the total global wealth of families with a formal office structure is set to increase from around $5.5 trillion to $6.9 trillion in 2025, and $9.5 trillion by 2030.
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The period will be defined by a number of trends including the greater globalisation and growing professionalisation of the sector.
‘Family offices are focusing on becoming more sophisticated, they want to become more professionalised, and they want to increase their international footprint,’ explained Dr Rebecca Gooch, Deloitte Private’s head of global insights and the co-author of the report.
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Deloitte’s projections were created in partnership with data analytics firm WealthX, using existing data on the geography of single-family offices (SFOs) globally. In total, 354 family offices were surveyed. It is the largest such study into the global family office sector available on the market today, according to its authors.
Going global
The dominance of North America and APAC
The United States will continue to dominate as the international centre for SFOs, but the rate of growth will be fastest in the APAC region. The number of Asia-Pacific family outfits is expected to rise by 40 per cent by 2030, compared to 32 per cent in North America.
‘The pace at which the landscape in North America is expanding is slowing down given its relative maturity, while in Asia Pacific it is heating up given its more recent emergence in family offices,’ the report noted.
Gains are also expected in Europe, where there are currently around 2,000 SFOs, a figure expected to grow to 2,650 by 2030. ‘Europe is also expected to experience considerable growth, but at a somewhat slower pace than North America and Asia Pacific. This is likely a sign of its maturity and relatively weaker economic climate,’ the report explained.
Impact of the next generation
Currently, just under 30 per cent of the family outfits surveyed by Deloitte worldwide have more than one branch globally, though around 12 per cent of family offices have reported wanting to set up additional branches around the world.
The growth of additional family office branches in different regions is partly driven by the rise of the next generation, who hold different investment preferences and can have a more expansive world view.
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Adrian Batty, Deloitte Private’s global leader for family enterprises, explained: ‘It could even be as simple as some of the next-gen looking to travel and reside in different jurisdictions. We all know that many people study abroad, and so that often initiates a second branch.’
Naturally, the desire to diversify investment portfolios is also a factor in this geographic spread.
Batty added: ‘Sometimes, it’s an investment focus – where the opportunities are – and sometimes it’s a personal focus.’
Growth and competition drive professionalism
Global competition in the family office space, for talent and investment opportunities, is contributing to a desire for greater professionalisation among families, many of which have set up their own structures over the past decade and a half. Just under half of the firms in the report had been set up since 2010.
This trend is set to continue.
Gooch explained: ‘We believe that family offices will increasingly become more institutionalised and professionally managed. We believe their portfolios will experience greater diversification, both by asset class and geography. Family offices will transition to more independent structures, with fewer being embedded in a family’s core operating business.’
She added that the report focused only on the wealth held by families with formal office structures – rather than all UHNW families globally.
Next-gen seek external talent for family offices
The rise of the younger generations is expected to lead to a rise in the number of talented wealth managers and investment officers brought in to oversee family affairs. In future, principals are less likely to be family members and more likely to be external professionals, according to the report.
‘At present, 65 per cent of all family offices are currently led by a family member, with 35 per cent being led by a patriarch/matriarch and 26 per cent by a Next Gen,’ the report said.
‘Given families' desire to further professionalise, this balance is expected to shift after the current leader steps down, as family offices expect the proportion of non-family professionals who lead the family office to jump from roughly one-third to almost one-half post succession, from 35 per cent to 49 per cent.’
As external talent is brought into offices, many family outfits are also expected to become less reliant on external family office services providers. ‘They're not suggesting that they are going to try to completely in-source all of the functionality, but they've all got a different view on what they want as a core skill-set, versus one which they'll outsource,’ Batty explained. ‘More of the families want to control more of how their wealth is directed.’
