From the Wall Street Journal, December 26:
Wealthy families are launching offices to manage their money at a record clip and are getting a seat at the table in significant deals
Family offices are the new power players on Wall Street.
A growing number of wealthy Americans are launching family offices, firms that do everything from investing money for the superrich to managing their personal affairs. They are huge and secretive, and their influence on Wall Street and Main Street is only growing.
Families with these offices recently oversaw about $5.5 trillion in wealth, a 67% jump from five years ago, according to Deloitte. The firm expects that figure to rise to $6.9 trillion this year and top $9 trillion by 2030. It estimates that in coming years, these offices will manage more money than hedge-fund firms.
Banks and other firms are hungry to cater to family offices’ every need, while entrepreneurs and investment managers are clamoring to land a slice of these families’ immense wealth.
“It’s not just growing, it’s exploding,” said Hendrik Jordaan, a partner at Nelson Mullins who works exclusively with family offices. “I really think about the family office world being the next private equity.”
Launching a family office is in vogue. While the biggest ones have long managed billions of dollars on behalf of titans such as Jeff Bezos, Michael Dell and Bill Gates, many families with hundreds or tens of millions of dollars in wealth are launching them, too, or turning to so-called multifamily offices to manage their fortunes. There are more than 8,000 single-family offices globally today, up roughly a third from 6,130 in 2019, according to Deloitte. The firm expects that figure to top 10,000 by 2030.
“It’s kind of become the word for ultrahigh-net-worth families. Do you or don’t you have a family office?” said Justin Flach, managing director of wealth strategy for Ascent Private Capital Management at U.S. Bank, who typically works with families with net worths topping $75 million.
“There’s some status assigned to that. You’re at a cocktail party talking about it,” Flach said.
How the superrich deploy their firepower has vast implications for the fortunes of businesses in almost every U.S. industry, global philanthropy and the broader economy. As this money trickles through the economy, it stands to transform the fate of businesses tied to everything from artificial intelligence and data centers to dental offices and medical spas.
Given the sums they can invest, big family offices can sometimes compete against large institutional investors on deals, putting them up against behemoths such as Apollo Global Management and Blackstone.
Family offices can find their way into public-company merger deals, too. The offices of late Pequot Capital founder Arthur Samberg and Addison Fischer are among the backers of fusion-energy company TAE Technologies, which struck a deal this month valued at $6 billion to merge with Trump Media and Technology Group.
Unlike public pension-fund managers, who answer to local teachers and firefighters, or hedge-fund firms, which regularly provide financials to investors, family-office leaders don’t answer to anyone but themselves. That gives them vast latitude to hold investments for decades and ride out periods of stomach-churning volatility, or make large and concentrated wagers. Traders and advisers say that family offices often have little interest in hedging their bets through tools such as derivatives....
....MUCH MORE
Among dozens and dozens of posts on the subject:
Competitive Intelligence Macquarie Style: First Establish a Fake Family Office...
Family Office/Outside Managers Not Quite Cutting It? Maybe What You Need Is A Family Bank
"Are You Fit to Be a Family Office CEO? Work on These Must-Have Qualities"
The most important character trait expected of a family office leader is discretion. And it is only mentioned in passing in this article, which focuses on nuts-and-bolts issues.
You also have to have the mindset of a principal while simultaneously psychologically embracing of the humility to subservient yourself to the needs of the family, including, if need be, running a concierge service....
...Our package: complete Family Office services including concierge and butler, art appraisal, succession and estate counseling and life-coaching.
Or, for the truly discriminating, ask about our Luxe programme with unbiased private equity ROI analysis.
(includes party planning option)
News Your Dynasty Can Use: How The Habsburgs Stayed So Powerful For So Long
Tips on playing the long game....
Should you be contemplating establishing a dynasty, you have come to the right place.
You are going to want a seat of power and Construction Physics has a primer on "How To Design A House To Last 1000 Years."
Finally, how to pay for it all without risking everything on that dissolute great-grandchild that is sure to pop up:
Anti-Piketty: Merrill Lynch's Tips on Creating a Financial Dynasty
The progenitor of the House of Habsburg may have been Guntram the Rich, a count in the Breisgau who lived in the 10th century....
Oh Crap, I Almost Forgot Karl, The Last of the HabsburgsAnd finally:
Why Real Estate Ownership Is Required For Intergenerational Wealth
We've looked at the importance of housing as a cornerstone of intergenerational wealth a few times, and not just for piles like this:
That's the courtyard of Arundel Castle, it's been in the fam (Fitzalans; Howards; Fitzalan-Howards) since the mid-1200's (with a few reversions to the Crown). More after the jump....
