Top Trends in Family Offices: Insights from Deloitte Private’s Global Edition Study
Family offices around the world are projecting growth despite challenging economic conditions, recession fears, and geopolitical tensions, according to the latest report from Deloitte Private. The report, titled The Top 10 Family Office Trends of 2024, highlights key takeaways from a survey of 354 single family offices with an average assets under management (AUM) of US$2.0 billion.
One of the key trends identified in the report is the shift in investment preferences among family offices. Private equity has surpassed public equity as the number one asset class family offices are investing in. Last year, private equity accounted for 30% of the average family office portfolio, up from 22% in 2021, while public equities accounted for 25% of portfolios in 2023, down from 34% in 2021.
Additionally, family offices are prioritizing risk management and expecting growth, with 70% of family offices expecting to see their AUM rise in 2024. Despite concerns about recession fears, geopolitics, and inflation, family offices are focused on managing investment risk as their number one strategic priority for the year.
In terms of sustainable investing, the report highlights a shift in focus among European family offices towards sustainable investments, while North American family offices are scaling back. However, globally, family offices are expected to increase their portfolio share dedicated to sustainability from 17% to 29% over the next five years.
As family offices expand, they are looking to evolve their business through hiring and outsourcing. Four in 10 family offices are looking to hire additional staff this year, with a focus on financial services, accounting, and consulting firms for recruitment. Additionally, family offices are increasingly relying on third parties to improve service levels and support their initiatives.
Lastly, succession planning is a major priority for wealthy families, with 41% undergoing generational succession within the next 10 years. However, many family offices lack succession plans for both family leadership and leadership teams, with 30% expressing a lack of confidence in the next generation’s preparedness for succession. As a result, family offices are focusing on mentoring and training programs for the next generation.
Overall, the report provides valuable insights for family offices to navigate the current landscape and plan for long-term success in the face of ongoing economic challenges and geopolitical conflicts. With a focus on investment strategies, risk management, sustainable investing, hiring, and succession planning, family offices are positioning themselves for growth and resilience in the years to come.
