Single family office numbers have increased worldwide by 38 per cent since 2017 according to family membership and research organisation Campden Wealth.
There are now an estimated 7,300 single family offices worldwide, the firm says, with the largest proportion based in North America (42 per cent or 3,100 offices), followed by Europe (32 per cent or 2,300 offices), Asia Pacific (18 per cent or 1,300 offices), and the Emerging Markets of South America, Africa, and the Middle East (8 per cent or 600 offices).
The firm reports that strongest growth has come out of the Emerging Markets (+50 per cent), followed by Asia Pacific (+44 per cent), North America (+41 per cent), and Europe (+28 per cent).
The total estimated AUM of these family offices stands at USD5.9 trillion, while the wealth of the families behind them totals USD9.4 trillion.
Dr Rebecca Gooch, Director of Research, Campden Wealth says: “It is remarkable how rapidly the family office space has grown. We estimate that there are now 7,300 single family offices worldwide, with 42 per cent housed in North America, 32 per cent in Europe, 18 per cent in Asia Pacific, and 8 per cent in the Emerging Markets of South America, Africa, and the Middle East.
“This number has jumped a significant 38 per cent in the last two years, with the greatest rise over this period coming from the Emerging Markets, followed by Asia Pacific, North America, and Europe.
“It is becoming a growing trend within the ultra-high net worth community to have a family office. Whilst wealth holders often initially set up a family office to further professionalize their wealth management practices, these offices often evolve to offer a host of other services that are beneficial to families.
“From making investments and managing assets, to preparing the next generation for succession, and organising philanthropic initiatives, family counselling, concierge services, and trust and estate planning, family offices are as unique and complex as the families themselves.”
Asia Pacific and the Emerging Markets are experiencing the greatest growth
The proportional rise in family offices is greatest in the Emerging Markets and Asia Pacific, which have seen growth rates of 50 per cent and 44 per cent, respectively, over the last two years. In absolute terms, the number of family offices in the Emerging Markets has risen from 400 to 600, while those in Asia Pacific have increased from 900 to 1,300.
This increase is spurred by a number of factors, including those outlined by Dr Rebecca Gooch: “Asia Pacific and the Middle East, in particular, have experienced a surge of growth in business which is leading to a rise in the ultra-high net worth population. This is coupled by an increase in the sophistication of family office hubs like Hong Kong, Singapore, Dubai and Mumbai, which are successfully attracting wealth holders by offering favourable financial incentives and access to top-end wealth management expertise, a plethora of investment opportunities, and training and educational courses.
“Globalisation is also impacting the family office landscape. In regions where the family office space is still nascent, families can seek out training and educational courses in, or hire staff from, more mature family office hubs, thereby advancing in sophistication more rapidly. In other words, they don’t need to reinvent the wheel, and this is speeding up the establishment of new family offices.”
North America continues to lead the family office arena, with a rise of 41 per cent
In North America, which houses more family offices than any other region (42 per cent), there has also been a notable 41 per cent jump in the number of single family offices. In absolute terms, an estimated 900 single family offices have been established in the last two years, resulting in the sector growing from approximately 2,200 to 3,100.
Dr Rebecca Gooch, Director of Research, Campden Wealth says: “The United States, which is renowned for innovation and entrepreneurialism, has been experiencing prolonged economic expansion and a technological boom. This is leading to an increase in ultra-high net worth individuals and a growing trend for wealth holders to establish family offices as a means to assume greater control over their investments, in addition to the ability to broaden and diversify their portfolios. Family offices are also favoured for their ability to reduce costs by providing services in-house, thereby cutting out the middle-men and women.
“There is also a growing trend for family offices to establish multiple branches. In fact, at present, one-third of family offices now have more than one branch, with a small portion having as many as five. In the US, for instance, it is becoming increasingly common to open up additional offices in Europe and Asia as a means to better access investment opportunities from across the globe.”