By invitation, 81 families, three-quarters with a net worth of at least $1 billion, answered our extensive and anonymous online survey. Supplemental interviews were conducted with 50 families and their family office executives. Participants included clients of J.P. Morgan and members of the World Economic Forum community.
This landmark survey, Inside the Single Family Office Today, uncovers how wealthy families are handling many of their most pressing issues and challenges. These include key objectives, investment styles and management of philanthropic activities, as well as encouraging the next generation, compensating executives, retaining trusted employees—and more.
What is focus. When polled about their top objectives, principals and family office executives agreed that managing the financial assets of the family is the key focus. This held true across regions and for family offices of all sizes.
How they invest. Four investment styles prevail among the families surveyed. However, most family offices use a combination. It is notable that a majority (65%) invest in direct private equity and real estate—reflecting the entrepreneurial spirit that many reported they hope to engender in the next generation.
Operational models. Family offices tend to organize themselves into one of three general operational models: Core, Established and Institutional.
The Core model represents a common starting point for a family office, and many families prefer to maintain this lean model. For short-term needs, they retain external professionals or subject matter experts.
Operational models tend to shift from Core to Established as the source of wealth moves away from the family’s operating business and as a family grows. In addition, roles within the family office tend to formalize, and the number of services increases.
Households and services. The more households under a family office’s umbrella, the more services the office is likely to provide. This is particularly true of legal services, family education and philanthropy.
The notable exception is “lifestyle and concierge services,” which tend to decrease as more households are served.
Global view and practical insights
J.P. Morgan has advised wealthy families across the globe for more than 200 years.
Says Andrew Cohen, Chief Executive Office of J.P. Morgan Private Bank, Asia: “We have seen many family offices in action and observed, first hand, how critical they are to helping families achieve their objectives.”
The survey provides a global view and practical insights that others should find helpful in establishing new single family offices or enhancing existing ones.
To learn more about the results of this survey or request a full copy of the report, please contact us and a J.P. Morgan representative will be in touch with you.
Source: The Single Family Investment Office Today, World Economic Forum, Switzerland, 2016.