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CRE Insights Blog

State of the Family Office Industry (Lichtenstein)

Hello, this is Richard Wilson coming to you from the Family Offices Group, and I’m actually here in Liechtenstein today for a Family Office conference. I’m speaking there tomorrow, and what I wanted to focus this video on is the state of the family office industry. You might have been to our website already, familyofficesgroup.com. There we share thousands of articles videos, audio interviews, training resources, etc., to try to give you a 10,000 foot view of what’s going on in the industry, but other ways you can learn about it is by paying $1000 or $2000 dollars [inaudible 00:00:35] or you can learn about the industry by reading every book on the topic and networking a lot.

I just wanted to make this video kind of an overview of what’s going on in the industry with the recent recession, debt crisis, some recovery, and if you’re looking to work in the space or grow your family office business or go after family office investors, I hope some of these points will help you get a great understanding of what’s really going on in family offices, because we spend a lot of our time everyday tracking that, speaking with family offices, and working with them in different ways.

The first thing I wanted to talk about is the asset level to work with or have your own single family office or work with a multi-family office. Nowadays, I see some successful single family offices operating with only $30 or $50 million under management. That said, most single family offices do have $100 million or $200 million plus. The reality is that technology has allowed very small family offices to operate with one expert generalist in charge and lots of things outsourced or based on technology, but at the same time, compliance and regulation are increasing, so some single family offices feel the pressure to convert into a multi-family office to keep their same level of services without really raising their costs year after year after year as compliance becomes more tricky. There’s kind of this dichotomy between that technology allowing smaller single family offices to operate, but compliance makes it more expensive if you really want a full-blown family office solution.

On the multi-family office side, we’ve seen requirements for joining a multi-family office drop from generally $30 to $50 million down to $15 and $20 million. $20 million seems to be the real entry level for the amount of assets you need to work with a multi-family office. That’s held mostly steady I the recent economy, but it’s gone down a little bit. Another thing is that family offices, they really understand how the industry is operating right now. They’re really omnipresent, yet also secretive. In one way, the direct patriarch and matriarch or the actual family being served by a family office is oftentimes protected by multiple gatekeepers. They’re very secretive, maybe they don’t want their name in the press.

Some family offices don’t even have a public website, but at the same time they’re omnipresent in that their money really touches every part of our society. They own franchise businesses, they own apartment buildings that you might rent a room from. They own real estate, they might develop that and sell condo buildings or even housing developments. Lots of angel investors and venture capital firms are backed by family offices, or someone who made a lot of wealth and also works with the family office, and obviously family offices are big investors in the things such as ETFs, [inaudible 00:03:21], hedge funds, private equity funds, so really family offices have their fingers in every part of our society.

About the author

Richard Wilson