Finance

A bumper year for family offices

The link between the number of billionaires and the number of family offices is a strong one. So, the fact that Forbes has just announced the number of billionaires has increased by 233 to 2,043 in the space of year means it’s pretty safe to say the number of single-family offices has also risen. Although not necessarily by the same amount.

Of course, you don’t need to be a billionaire to set up a family office, but obviously, that type of money makes the setting up of one just that much more affordable. Of those 233 new names on the Forbes list, 195 were newcomers, the other 38 have appeared on the list before but dropped off only to reappear again this year. And it’s the newcomers that might be most looking to set up a family office, particularly if they’re based in North America or Europe. It’s in these regions where the concept of setting up a single-office is most accepted.

Does that mean newly minted billionaires like Snapchat’s Evan Spiegel or Stripe’s John and Patrick Collison are setting up family offices? Probably, if they haven’t already. Alternatively, they might pool their money with other tech billionaires in a closed multi-family office structure like Mark Zuckerberg and Sheryl Sandberg did with ICONIQ Capital.

It’s also probably OK to assume that as the number and wealth of billionaires rise, so does the wealth of multi-millionaires, like those with net assets of at least $200 million-plus. $200 million is around the cut off point for setting up a viable family office structure. Of course, families with less money might set up a successful family office, but most will have at least $200 million before thinking about establishing one. A few years ago, the research group WealthX reckons there were about 31,000 individuals worth $200 million-plus. Like the number of billionaires, that number has probably gone up since.

Of course, as their numbers increase, the other thing to bear in mind is the rise in the assets of the ones already around. If Forbes is saying billionaires’ wealth rose by 18% in the last year to $7.67 trillion, at least some of this money is going to end up in the coffers of family offices. That means more demand for funds, private investment deals, real estate, and all the other things family offices invest in.

The good times continue to roll for family offices.

 

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