FAMILY OFFICES

“You will occasionally come across people who are exceptionally talented ... you can sense that their brain processor is just going faster. If you can collaborate with them, something great is going to happen, and your life will be very interesting.”

Eric Schmidt, Former CEO of Google

Global Family Offices

Since you visiting our site, chances are that you are interested in learning more about family offices. Here is a quick overview to save you time researching the topic of family offices on Google and Chat GPT-4:

According to the Preqin Global Alternatives Report, there are well over 20,000 single and multi-family offices and Ultra High Net Worths (UHNWI) worldwide managing over $25 trillion of assets, far exceeding the global AUM of private equity ($11.12 tn), venture capital ($1.68tn), and hedge funds ($4.0 tn). 

By way of background, the first family offices trace their lineage to the major Roman domus (head of the house). The modern concept of the family office developed in the 19th century. However, family and multi-family offices have no real definition and can be run and managed in many ways.

The first modern family offices were born around the mid-19th century, with the birth of private banks and trust companies that were created to help the entrepreneurs of the Industrial Revolution manage their wealth. In 1838, J.P. Morgan founded the House of Morgan to manage family assets. In 1882, the Rockefellers founded their own family office, which is still in existence and provides services to other families. The mandate then - as it is today - is to protect and grow a family's investments - their companies, businesses, funds, foundations, and philanthropic activities - and assets for current and subsequent generations.  

Generally, a family office is a private firm or limited partnership that manages the investments and trusts for a single-family office, a multi-family office, or a sovereign family. There are several types of family offices in the broadest sense: (1) a single family office, sometimes referred to as an SFO; (2) a multi-family office, or MFO; and (3) sovereign royal family offices. You may hear that an ultra-high net worth individual (UHNW) or (UHNWI) has a family office.

There is an explosion of family offices being formed today, particularly in emerging, standalone, and frontier markets. Global family offices are motivated by a myriad of factors for setting up a family office: reducing family conflicts, preserving family wealth, increasing inter-generational wealth transfer, consolidation of assets, dealing with an exit or trade sale of the core business, handling a liquidity influx or family dispute, increasing wealth management efficiency, reducing vendors and professional advisors, increasing control over their investments, reducing complexity, and even bringing professional in-house to increase expertise and reduce costs.

Regarding governance, family offices have fewer committees than typical L.P. investors, and they provide frequent and detailed information to family stakeholders. Multi-family offices have a higher percentage of the board of directors and investment and audit committees than single-family offices. A family office may continue to manage its core operating businesses, funds, and foundations. In contrast, other families have had a "liquidity event" and are now focused only on managing investment assets. No family office is similar to another; they are all unique in their particular way.  

Family Office Example 

To appreciate a family office's power and entrepreneurial spirit, consider Steve Jobs, the American founder of Apple Computer and Pixar, who created a "first generation family office." When Steve Jobs died in 2011 due to complications from a relapse of his previously treated islet-cell neuroendocrine pancreatic cancer, his wife, Laurene Powell Jobs, inherited approximately $21.3 billion from the Stephen P. Jobs Trust to become one of the wealthiest women in the world.  

Family Office Locations

According to Chat GPT-4 (everyone’s go-to source of data today), countries of origin of global family offices, in order of ranking, is as follows:

  1. United States 

  2. China 

  3. India 

  4. Germany 

  5. Russia 

  6. United Kingdom 

  7. Switzerland 

  8. Hong Kong

  9. France 

  10. Brazil 

  11. Canada 

  12. Italy 

  13. South Korea 

  14. Australia 

  15. Japan 

  16. Singapore 

  17. Israel 

  18. Sweden 

  19. UAE 

  20. Spain

Sectors of the Economy

Generally, family office founders have made their wealth in a variety of sectors of the economy. Here are some of the sectors that have produced the most billionaires, based on the Forbes billionaire list:

  1. Technology: Many of the world's wealthiest people have created wealth technology, particularly in software, internet services, and e-commerce. Examples include Jeff Bezos of Amazon, Bill Gates of Microsoft, and Mark Zuckerberg of Facebook.

  2. Finance: The finance sector has also produced many billionaires, particularly in hedge funds, private equity, and investment banking. Examples include Warren Buffett of Berkshire Hathaway, Michael Bloomberg of Bloomberg LP, and Ray Dalio of Bridgewater Associates.

  3. Real estate is another sector that has created many billionaires, particularly through property development and management. Examples include Wang Jianlin of Dalian Wanda Group and Lee Shau Kee of Henderson Land Development.

  4. Retail and consumer goods: The retail and consumer goods sectors have produced many billionaires, particularly by creating successful brands and businesses. Examples include Bernard Arnault of LVMH, Amancio Ortega of Inditex (Zara), and Alice Walton of Walmart.

  5. Energy and natural resources: The energy and natural resources sectors have also created many billionaires, particularly through oil and gas exploration and production, mining, and renewable energy. Examples include Mukesh Ambani of Reliance Industries, Aliko Dangote of Dangote Group, and Elon Musk of Tesla.

It's worth noting that many family offices have diversified their wealth across multiple sectors and industries, and the sectors that produce the most billionaires can vary over time. 

Bloomberg reported that family offices have expanded this century "largely because of the surging fortunes for founders in tech and other industries." Brookings recently confirmed that billionaires and ultra-high net worths have, for the first time, "become part of the conservation on financing to solve large-scale problems. It is worth noting that the number of billionaires in a country does not necessarily reflect its wealth distribution or overall economic prosperity.

Regions of the World

Family offices are active worldwide across a the dizzying array of acronyms, including BRIC (Brazil, Russia, India and China), MINTs (Mexico, Indonesia, Nigeria, Turkey), CIVETS (Colombia, Indonesia, Vietnam, Egypt, Turkey, and South Africa), the Next 11 (Bangladesh, Egypt, Indonesia, Iran, Mexico, Nigeria, Pakistan, the Philippines, Turkey, South Korea, and Vietnam), EEMEA (Africa, Eastern Europe, The Middle East), SEMEA (Africa, Southern Europe, The Middle East), CEMEA (Africa, Central Europe, The Middle East), CEE (Central and Eastern Europe), MENA (North Africa and The Middle East), EUMENA (Europe, North Africa, The Middle East), EMEIA (Africa, Europe, India, the The Middle East), EMEACIS (Africa, The Commonwealth of Independent States, Europe and The Middle East, EMEAC (Africa, The Caribbean, Europe, and The Middle East, CIS (The Black Sea, The Caspian Sea, and The Commonwealth of Independent States), NACE (Central Europe and The North Atlantic), CEMA (Africa, Central Europe, Eastern Europe, The Middle East, SEMEA (Africa, Southern Europe, The Middle East); and EMEA (Europe, The Middle East and Africa regions primarily used by North American companies to refer to the three geographical regions and over 110 countries that form this area.

Virtual Family Offices

Pinpointing the exact number of family offices operating in the U.S. and worldwide is difficult since there's no universal definition of a family office. In another sign of growth, assets managed by family offices are "growing at a faster pace" than advisers catering to the more traditional high-net-worth market or those with $5 million or more in investable assets. One new Covid twist in the sector has been the emergence of the so-called "virtual" family office. While it has the ring of a robo-advisor, a virtual family office is more about doing a few key functions in-house and outsourcing the more complex functions to outside professionals with specific expertise.  

New investment trends are emerging in the family office space as the bull market moves into its record-setting 12th year, and mega-wealthy families look to engage the younger generations in the family business. Wealthy families are dialing back their exposure to hedge funds due to recent news focus, subpar performance in recent years, and high fees. They are still making sizable investments in traditional private-equity funds that invest in companies with the goal of cashing out with a profit in a five- to seven-year period. But family offices are increasingly striking out on their own and buying direct stakes in established operating companies, early-stage upstarts, and real estates, such as hotels, commercial buildings, and apartment buildings. Family officers also set up Family Trust Companies (FTCs) and private trusts in certain key U.S. states.

According to a recent McKinsey report, total Asian wealth management revenue reached $90 billion at the end of 2019. Pre-pandemic, the number was expected to increase by $70 billion by 2025. In a COVID-19 world, that 2025 number has been revised to increase by $25 billion in a "muted recovery" scenario. Meanwhile, total investor wealth levels should return to historical growth rates by 2023.

According to a Knight Frank report, there will be more than 168,000 ultra-high net worth individuals (UHNWIs) by 2025. The report noted that Indonesia, India, New Zealand, and China will see notable growth in their UHNWI population. According to Bloomberg, the super-wealthy in Asia increasingly look for more complex, global investments at a time when a record number of patriarchs cede control to the next generation. The driving factor behind the talent war in Asia is that the continent added almost 2,000 millionaires every day, according to Capgemini.  

Examples of Multi-Family Offices

By way of background, small examples of leading multi-family offices include:

Bessemer Trust, which reportedly manages more than $170 billion of assets, was founded by Henry Phipps, who was the founding partner and CFO of Carnegie Steel.

Stonehage Fleming was founded in 1976 in London to provide family office, trust, and company services for families from South Africa; Fleming Family & Partners (FF&P) history dates back to 1873.

Rockefeller Capital Management is owned by a trust representing the broader Rockefeller family, the firm's management and hedge fund Viking Global Investors.

Glenmede Trust Company was founded in 1956 by the Pew family as the Trustee and Administrator of The Pew Memorial Trust. The Pew family is the founding family of Sun Oil, founded by John Newton Pew (1848–1912). The Pew Charitable Trust is the United States's top 10 largest foundation, with assets of around $5 billion and annual grants of over $200 million.

Tiedemann Advisors, founded by the world-class Carl Tiedemann and Michael Tiedemann, his son; (6) Silvercrest Asset Management Group, who was at one time the 6th largest multi-family office in the world, managing more than $24 billion of assets.

Other multi-family offices include Pitcarin, Northern Trust, GenSpring Family Offices, WeFamily Office, and Wilmington Trust.

Examples of Single-Family Offices

Walton Enterprises ($160 billion of family assets). The Walton family is an American family whose collective fortune makes them one of the richest families in the United States of America and the richest non-royal family in the world. Most of their wealth derives from the heritage of Bud and Sam Walton, the co-founders of the world's largest retailer, Walmart. The three most prominent living members (Jim, Rob, and Alice) have consistently been in the top twenty of the Forbes 400 since 2001, as were John (†2005) and Helen Walton (†2007) before their deaths, according to various reports. There is, of course, a single-family office divided into Zoma Capital, led by Ben Walton and his wife, and Madrone Capital Partners, founded by Rob Walton.  

Bezos Expeditions ($107 billion and growing). Bezos Expeditions is an American investment firm based in Mercer Island, Washington, which serves as the family office for Jeff Bezos and his investments. The firm invests in early-stage ventures, late-stage ventures, and seed stages of companies in many different sectors;

MSD Capital (Michael Dell family office, reported AUM $31 billion). According to Pitchbook, "MSD Capital (MSD) is a single-family office based in New York, NY. Established in 1998, MSD was formed to manage the investments of Michael Dell and his family. It primarily focuses on publicly-traded securities, traditional private equity activities, real estate, and special opportunities. MSD Capital engages in a broad range of investment activities and has the flexibility to invest in a wide variety of asset classes. The executive management team manages the assets."

Bayshore Global Management, the family office of Sergey Brin, co-founder of Google, and Anne Wojcicki (wife). Bayshore Global Management manages more than $30 billion of family assets. According to Preqin, "Bayshore Capital is a research-focused investment advisory firm backed by a single-family office. The firm invests family capital alongside external clients, which include other high net worth individuals and families, single and multi-family offices, RIA's, and endowments and foundations in the U.S. and abroad."

Emerson Collective is the family office of Laurene Powell Jobs, wife of the late Steve Jobs, who co-founded Apple. The family office is a social change organization focusing on philanthropy, impact investing, and policy solutions to drive change in societies and communities. Emerson Collective manages more than $28 billion of family assets. Laurene Powell Jobs is the wife of the late Steve Jobs (1955 – 2011), co-founder of Apple (1976), one of the world's largest computer, phone, music, and software companies. She has a personal fortune of more than $28 billion (2020); 

Willett Advisors is the family office of Michael Bloomberg, co-founder of Bloomberg and former mayor of New York City. The family office manages personal and philanthropic assets. Willett Advisors manages more than $25 billion of family assets. Michael Bloomberg founded Bloomberg (1981), one of the world's largest financial information technology companies. He has a personal fortune of more than $60 billion (2020); 

Euclidean Capital is the family office of hedge fund billionaire Dr. James Simons. Euclidean Capital manages more than $21 billion of family assets. Dr. James Simons. founded Renaissance Technologies (1982), one of the world's largest hedge funds with over $130 billion in Assets under Management. He has a personal fortune of more than $23 billion (2020);

Vulcan Inc is the family office of the late Paul Allen (1953 – 2018), co-founder of Microsoft, and Jody Allen (sister). The family office manages the business, investments, and philanthropic activities. Vulcan Inc manages more than $16 billion of family assets. Paul Allen is the co-founder of Microsoft (1975), which is the largest personal computer software company in the world. His fortune (estate) is estimated at more than $75 billion (2020); and

KIRKBI is the family office of Kirk Kristiansen, the danish family which founded Lego. The family office is a private holding and investment company to build a sustainable future for the family ownership of the LEGO brand for future generations. KIRKBI manages more than $16 billion of family assets. Ole Kirk Kristiansen (1891 – 1958) is the founder of Lego (1932 & renamed Lego in 1934), one of the world's largest toy companies. Kjeld Kirk Kristiansen, the grandson of Ole Kirk Kristiansen, is the chairman of KIRKBI and 3rd generation owner of Lego, with a personal fortune of $6.7 billion. Thomas Kirk Kristiansen succeeded his father (Kjeld) at Lego and is the 4th generation owner of Lego, with a personal fortune of $6.7 billion. Note: The information about these multi and single-family offices was obtained only from publicly available information, and we do not guarantee or represent the accuracy of such information.