The post-pandemic wealth boom has sparked an explosion in family offices, making a latest gold rush amongst Wall Street firms, private equity funds and investment advisors to administer the fortunes of the world’s richest families. Family offices now manage greater than $6 trillion in wealth, in response to some estimates, surpassing the estimated $4 trillion managed by hedge funds. They’ve quickly turn into a strong force in financial markets, mergers and acquisitions, crypto, and real estate, rivaling many sovereign wealth funds, endowments and massive corporates. As global wealth continues to grow, especially in Asia, experts say family offices will gain a good larger role on the investment stage. “The dimensions of wealth is gigantic,” said Andrew Cohen, executive chairman at J.P. Morgan Private Bank. The wealth of the world’s billionaires grew by an estimated $5 trillion to almost $14 trillion between the market lows of March 2020 and spring 2022, in response to Forbes. While the recent losses within the stock market, crypto and other asset classes have trimmed a few of those gains, the rich (especially within the U.S.) are still sitting on mountains of capital generated from fiscal and monetary stimulus. Within the U.S., the highest 1% of Americans alone added $11 trillion to their wealth since early 2020, with the full reaching $45 trillion in the primary quarter, in response to the Federal Reserve. Family offices typically cater to investors with $100 million or more in net value, although a growing number manage billions and even tens of billions in assets. By nature, they’re secretive and most aren’t required by national financial regulators to reveal their positions or assets. Campden Research estimates there have been greater than 7,000 family offices worldwide in 2019 managing nearly $6 trillion, and industry experts say the number has likely only grown since then. Accounting consultancy EY estimates that greater than 10,000 family offices globally manage the wealth of a single family, with at the least half having began this century. Families want more control Together with growing wealth, the move to family offices can also be being driven by a shift in how the richest families manage their fortunes. They need more control and fewer reliance on traditional wealth management firms and high fees, middling performance and product pushing. With more wealth passing to the following generation, younger investors also want more involvement and “values-driven” investing. And today’s global wealthy, lots of whom built multinational corporations that they sold, demand an equally broad approach to their personal investing. Many billionaire hedge fund managers, in search of lighter regulation or freedom from benchmarks and out of doors investor demands, are also converting to family offices. John Paulson and Leon Cooperman , as an illustration, each converted to family offices in recent times. “Possibly 35 years ago, the goal was financial security and preserving wealth. That is not the case today. Now it’s about finding opportunities.” Founder, Family Office Exchange Sara Hamilton “The world of investing has turn into more complex, so more families are reacting to that sophistication,” Cohen said. “And we’re at this transformative time with multigenerational wealth getting passed through.” Family offices have been around for hundreds of years in fact, most notably managing the fortunes of John D. Rockefeller and J.P. Morgan. Most still handle the “concierge” duties of a wealthy family, from arranging travel and managing the jet and automotive fleet, to paying bills and managing properties. Additionally they typically handle taxes, estate planning and succession issues for the following generation. Yet today’s larger family offices operate more like full-service global investment firms. They trade equities, fixed income, currencies, crypto and commodities. They buy residential and business real estate and land around the globe. They put money into private equity and enterprise capital funds, and increasingly make their very own acquisitions and startup deals. The expansion has turned family offices right into a hot growth sector for Wall Street banks and wealth management firms. Goldman Sachs , JPMorgan , Bank of America , Citigroup , Credit Suisse , UBS and Deutsche Bank are all staffing up their family office businesses and expanding offerings. Their goal is to win more family office business by granting access to the identical services and expertise as other institutional clients — from trading and credit to personal equity, due diligence, technology and hedging. “You possibly can have a family that is within the shipping business with 100 ships,” Cohen of J.P. Morgan said. “They may need financing, currency and commodity hedging. Or you would possibly have a family that sold a pharmaceutical business and desires to duplicate those returns and is on the lookout for growth opportunities. So you may have multiple asset classes across multiple geographies across multiple generations.” The Morgan Stanley Family Office unit, which can also be expanding, began bringing family offices on to a latest asset-tracking platform last yr and has added greater than $25 billion of assets thus far. “They’re considering more like institutions than families,” said Daniel DiBiasio, head of Morgan Stanley Family Office . “We have taken the view that these ‘instividuals’ are more deserving of a business-to-business relationship.” More family offices are also venturing out on their very own to purchase private corporations, take partial stakes and form startups. In keeping with a report from UBS surveying its family office clients, family offices have a few third of their portfolio in equities, 11% in fixed income and about 10% in money, which have remained fairly stable. Family office allocation to personal equity and direct investments jumped from 16% in 2019 to 21% in 2021, the biggest increase of any asset class, in response to the report. The rest is in real estate and other assets. Greater than half of the offices plan to extend their investments in private equity over the following five years — the biggest share for any investing segment. Buying and funding corporations directly means family offices at the moment are competing against enterprise capital and personal equity firms for deals. MSD Partners, the investment firm that grew out of Michael Dell’s family office, recently hired Goldman veteran Gregg Lemkau as CEO and last yr acquired a 50% stake in digital consulting firm West Monroe. The deal followed MSD Capital’s acquisition of Ring Container Technologies, a plastic container producer, in 2017. BDT Capital Partners, founded by famed banker Byron Trott, has deployed about $30 billion in 41 mainly family and founder led corporations — with many of the investment coming from business owners and family offices. Together with higher returns, direct investments reward family offices for his or her longer time horizons. Corporate founders who sold their businesses and launched a family office often need to stay lively within the industries they know best and use their expertise to assist launch latest success stories. “This latest wave of first-generation liquidity from founders is driven by the potential to do it repeatedly,” said Sara Hamilton, founding father of the Family Office Exchange . “They need to share their knowledge across industries and have real impact. Possibly 35 years ago, the goal was financial security and preserving wealth. That is not the case today. Now it’s about finding opportunities.” Countries are also competing for family office spoils. Singapore recently created a Family Office Development Team to steer and coordinate initiatives that may attract more family offices. Town-state has no capital gains tax and allows family offices to use for a tax exemption on their income. The Wealth Management Institute has launched the Global-Asia Family Office Circle in Singapore to draw more family offices. The variety of family offices in Singapore has greater than doubled since 2019, in response to the GFO Circle. Among the many recent additions: the family office of Nicky and Jonathan Oppenheimer, of the diamond dynasty, which recently announced an outpost in Singapore. Google co-founder Sergey Brin and British vacuum magnate James Dyson have also opened up family office branches in Singapore. The case for more oversight The rise of family offices, nevertheless, has also increased calls for more regulation. Because single-family offices only serve a single family, they do not have to register with the SEC as investment advisors. Even family offices that serve a couple of family often receive an exemption from the SEC to maintain their filings confidential. Last yr’s multibillion-dollar meltdown of Archegos Capital Management , run by former hedge fund manager Bill Hwang , sparked renewed calls for more disclosure and limits . Rep. Alexandria Ocasio-Cortez, D-N.Y., drafted a bill requiring family offices to register with the SEC as investment advisors unless they oversee lower than $750 million. “The Archegos explosion blew away any rationale for the exemption of family offices from regulation and transparency,” said Dennis Kelleher, CEO of the nonprofit advocacy group Higher Markets. Kelleher said Archegos disproved the 2 central arguments for exempting family offices — that they pose no systemic risk and that they do not harm on a regular basis investors, since they only invest for a single family. Kelleher said the incontrovertible fact that Archegos inflated its $1.5 billion portfolio to $35 billion, and caused massive losses in several publicly traded stocks, highlights the necessity for SEC regulation. Thus far, nevertheless, the family office lobby has successfully fought back against latest regulations. They contend that regulation would not have prevented the losses at Archegos, which misled its brokerage firms. Meantime, experts say that as financial markets turn into more volatile and stocks decline, family offices have the pliability, speed, balance sheets and patience to proceed to thrive even when there’s a recession. “We’re talking about investors with time horizons of 100 to 200 years,” Hamilton said.