Headwinds Pushing on Global Family Offices

(Picture Shutterstock)

(Picture Shutterstock)

Three findings are influencing family offices globally, and will continue to play an inportant role. These are the latest findings in Campden Wealth's Research, in partnership with UBS. How does Asia fare?

The Global Family Office Report 2016 surveyed principals and executives in over 242 family offices, with an average size of USD 759 million assets under management.

The report unearthed three distinct findings around regional differences, generational change and investment trends.

U.S. Family Offices Remain Bullish

The report claims that investment results were weak and provided the lowest income in the last three years. The biggest negative impact resulting from the liquid money market instruments. Due to the difficult market environment focused increasingly on the family offices illiquid investments such as private equity and real estate.

Families showed an increasingly strong tendency to buy property and to make direct investments, which allow them to exercise a control function. This strategy will only work well the report says if adequate resources and expertise are available.

Massive Generational Changes Coming

The willingness to take risks showed up clearly in the different regions. Family offices in the U.S. are the most optimistic and invest heavily in «Growth allocations». Participants from emerging markets are less tense than 2015 and have reduced their preservation allocations drastically.

Asia is broadly neutral compared to last year. Europe is remarkably negatively oriented. The deep risk appetite is therefore reflected in an increase of "Preservation" allocations and a reduction in the "Growth" allocations.

With regard to succession plans, according to the report expect 43 percent of family offices expect a generational change within the next decade. Experience shows that should not be underestimated as risks resulting from such a transition. Such changes are the main reason why the beneficial owners need to make structural changes in the management team of their family offices.

 

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