Why more billionaires are building family offices
Built on Chapter 19 of The Single Family Office by Richard C. Wilson. Full chapter text: FamilyOffices.com.
The number of billionaires has grown a great deal over the past few decades, and so has the number of families with very large fortunes. Yet the family office industry is still young. Many very wealthy people have never heard the term. That gap between growing wealth and limited awareness is one of the biggest trends I track.
An industry still finding its feet
The term family office has only been in wide use for a couple of decades. I was reminded of this during a television interview. The guest before me was a successful wealth advisor who worked just outside New York City. He had never heard the phrase. If someone in finance near Manhattan had not, think how many wealthy families elsewhere in the world have not either.
When I started in this space, some people said family offices were not an industry at all. Today new single family offices open all the time. Yet many families, even at the billionaire level, still do not have one.
What is driving the growth
I see a few forces pushing more wealthy families to set up their own offices.
Education. One founder I met learned about family offices from reading, and from news that well-known hedge fund managers had turned their funds into family offices. As major business publications cover the topic, more families learn the model exists.
Global wealth. The U.S. still has the most billionaires, but wealth is spreading quickly. I expect the family office industry in Asia alone to grow very large.
Direct investing. Many families built their fortunes in operating businesses. They want to keep investing in businesses they understand, which pushes them toward having their own team.
How the industry is changing
As any industry matures, it splits into types. We already talk about single family offices, multi-family offices, and lean virtual offices. More types will follow.
I also expect more family offices to step out of the shadows. Only a small share of single family offices had websites, business cards, and professional teams that actively sought deal flow. Families that value strong deals will see the benefit of being findable.
Regional networks are growing as well. Family office groups now exist in many countries. More groups mean more shared learning for wealthy families.
Talent and regulation
Many people who could do the work do not know how to find these roles, which makes hiring slow. I expect better ways to connect families and professionals over time.
More offices and more money also mean more scrutiny. A tiny share of any industry gets into trouble, and those stories draw headlines. Lawmakers have already looked closely at family offices, and that attention shows more oversight could come. People with compliance experience across several family offices will be in demand.
Lessons from a founder abroad
A family office founder in Australia I interviewed built wealth through property trusts. He chose to build expertise in house instead of handing money to a manager's black box. He wanted his family to learn how results were achieved, not just collect them.
He said the top priorities he saw among new family offices were security, keeping the family business going, legacy, family unity, and charity. He was willing to spend a modest share of net assets each year to run a small office, judged against the alternatives. He also noted that most families he knew, unless very large, preferred to buy operating businesses in their own country.
What this means for wealthy families
If your family has reached the level where an office makes sense, you are still early. Families that set up thoughtfully now will have years of practice before the industry becomes crowded.
What to take from this
- Expect the family office model to keep spreading as wealth grows worldwide.
- Learn from regional networks and peer families.
- Plan for more regulation and build compliance habits early.
- Be more visible if good deal flow matters to you.
This page is general information, not legal or regulatory advice. Speak with qualified counsel about how current rules apply to your family office.
Questions and answers
Why are more billionaires setting up family offices? Growing global wealth, better education about the model, and interest in direct investing.
Is the family office industry mature? Not yet. In my view it is still early, with many wealthy families yet to set one up.
Where is family office growth fastest? I expect Asia to become a very large market over time.
Will family offices face more regulation? More growth tends to bring more attention, so families should be ready for it.