Why HNWIs Set Up Family Offices?

Why HNWIs Set Up Family Offices?

Credit Suisse estimates that globally exist between 6,500 and 10,500 family offices. However, a recent estimate by the U.S. consultants Capgemini shows that number is closer to 7000. Among those, the U.S. numbers prevail and account for 3,000 single-family offices. Their total assets under management are between $1 trillion and $1.2 trillion. There are also about 150 multi-family offices with AUM between $400 billion to $450 billion.

The top 10 family offices are primarily of North American origin, with only two exceptions: Dubai Holding is from the Middle East and the Grosvenor Estate, with its USD 25 billion under management, enjoys the comforts of the United Kingdom.

What lures HNWIs to set up this kind of structure? The family office answers a multitude of modern world challenges. The main reason for such a set-up is effectiveness since family offices generate better returns (typically in the region between 5 and 15%).

Advantages of Family Office structure

  • Discreet management and control of operations
  • Management agility and fast decision making
  • Fast access to specialist knowledge
  • Access to lucrative private offers
  • Lesser fees for banking or funds management
  • Better succession planning
  • Management of philanthropic activity

The popularity of the family office structure among UHNWIs is also explained by access to private funds offering. That includes hand-picked private equity, private debt, infrastructure investment and real estate, along with re-investment opportunities. In addition, a well-connected family office brings the advantage of high-profile relationships to the table of a decision-maker.

Family office also unlocks new opportunities on public markets, like access to exclusive pre-IPO offers and assistance with portfolio construction. That includes asset allocation plan development, manager selection, vehicle structures, and in-house portfolio management.

Oracle Capital Advisors has been serving international high net worth families, individuals, and institutions with unique and exclusive private banking approaches for many years. To do so, we have assembled a team of first-rate specialists and a network of dedicated service providers, allowing us to take care of all your needs in house.

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