Family offices can consist of between a handful and hundreds of people working to look after families and their investments.
Describing them as “more mysterious” than hedge funds and private equity houses, research author Luna Glucksberg said that the number of family offices in the UK has more than doubled to around 1,000 since 2008.
Collectively, they manage more than $1trn (£819.7bn, €941bn) in assets.
Glucksberg said that existing literature suggests that family offices are important, but that little is known about them.
Teams of professionals
The team responsible for managing and protecting this wealth includes economists, lawyers, various advisers specialising in family business, and even psychologists.
Unlike with private banks, family office employees can manage every aspect of elite families’ lives, from the professional to the personal.
“The rise of elite dynasties, economic inequality, and the vast concentrations of global wealth in recent times means that the role of the family office in our society demands scrutiny,” said Glucksberg.
Creating dynasties
In order to be eligible, a family needs to be worth at least $100m for a multi-family office and at least $250m for a single family office.
Worldwide, the number of single family offices, dedicated to managing the wealth of just one family, is estimated to have risen by up to 40% to between 10,000 and 11,000 since 2008, with combined investable assets of up to several trillion dollars.
Subject to far less scrutiny than private banks and hedge funds, family offices in the UK are unlikely to require registration with the Financial Conduct Authority, newspaper The Guardian reported in 2016.
Glucksberg said: “Family offices have a clear advantage over private bankers because they work for the family, and not a bank.”
She added: “As wealth is passed down, whether it is retained, dispersed, concentrated or squandered, there will be fees paid to the advises, and even as small percentage points the earnings made will be enough to make intermediaries very wealthy indeed.”
