The growth in family offices
The Financial Times recently reported on the potential in the family office sector. An increasingly mobile and interconnected group of ultra-high net worth families is emerging as a prime target for wealth managers. These global families, with members and assets spanning multiple countries, require specialized cross-border services to meet their unique needs.
Many industry experts point to the offspring of well-known business dynasties – like the Mars, Tatas, and Kochs – as emblematic of this new breed of cosmopolitan billionaire clan. As they diversify their portfolios and business interests internationally, they are seeking out financial advisers who can provide institutional-grade offerings across different markets.
According to a recent Citi Private Bank survey, over half of family office clients have members with multiple citizenships or residencies. Additionally, 55% hold assets in several countries. This demonstrates the complex, multi-jurisdictional requirements of servicing today’s wealthy families.
The opportunity is immense, with trillions expected to transfer between generations over the next decades. However, few families have succession plans in place. HSBC Global Private Banking found almost two-thirds of ultra-high net worth people have yet to consult relatives about inheritance matters. This highlights the vital advisory role banks can play.
To capture this growth, wealth managers are refocusing their business models. BNP Paribas Wealth Management, for example, now handles 40% of its $410 billion assets on behalf of family offices and entrepreneurs. The bank is promising “personalized offers and services” by connecting clients with specialists from across BNP’s corporate divisions.
The reason? Today’s billionaire families exhibit a growing preference for alternative, private market assets, wanting to mirror their own positions in the “real economy.” Up to 90% have some exposure to private equity, hedge funds or direct investments in unlisted companies. As opposed to solely stocks and bonds, they are searching for co-investment possibilities alongside their operating businesses.
In response, banks are establishing “networking groups” to introduce compatible families for cross-border ventures. Northern Trust is actively pairing its Australian mining clients with counterparts in the US looking for metals and materials deals, for instance.
To support far-flung clans, wealth managers highlight the need for on-the-ground assistance in each location a family maintains a presence – from London to Singapore. Teams able to coordinate global flows of assets, information and opportunities are in high demand.
Yet boutique investment firms argue the major banks overstate their capabilities in this arena. They suggest ultra-high net worth families prefer personalized services from smaller, more tailored entities across a wider selection of providers.
Indeed, many consultants advise splitting assets between institutions to capitalize on specific regional and sector strengths. Even for banks attempting to position themselves as one-stop shops, the reality is wealthy patrons spread their money around.
While financial giants scramble to accommodate multi-billion-dollar families, experts suggest a gap still exists for a dedicated “specialist private bank.” This would focus squarely on securitizing assets and arranging customized lending, while avoiding pushing in-house products.
As regulation and margin pressures force ongoing consolidation, such boutique wealth managers may fill a lucrative niche. An increasingly fragmented market, with fewer true “universal” firms, seems inevitable. This spells opportunity for smaller, hyper-focused outfits aiming at the high end. The coming decades will see vast sums shift between the world’s wealthiest dynasties.
As globally-minded billionaire families take the mantle from aging patriarchs, they are searching for financial partners able to match their international footprint and alternative investment preferences. Savvy wealth managers who tailor bespoke offerings stand to profit enormously from this imminent transfer of power and capital.
SS&C Advent supports hundreds of family offices across the globe. Find out how our solutions help family offices, enabling them to face these challenges, and strengthen their business.
 Yuri Bender, FT Wealth Management, 7 November 2023, “Wealth managers scramble to better serve global families”: https://www.pwmnet.com/wealth-managers-scramble-to-better-serve-global-families
 Citi Private Bank Global Family Office Report 2023: https://www.privatebank.citibank.com/insights/the-family-office-survey
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