On a typical workday, Thierry Brunel might oversee the preparation of a prenuptial agreement and discuss financial best practices with a client’s grandchild before lunch, saving the afternoon to vet potential private equity fund investments for his 20 ultrahigh-net-worth client families.
Such is life working as a chief investment strategist at a family office, the folksy-sounding term that describes firms that manage the wealth of the world’s richest households. These companies are one-stop shops offering billion-dollar dynasties anything and everything they could need: tailored advice for charitable giving, investments, succession planning, tax planning, and settling intra-family financial and business disputes. Often, they also help manage multiple luxury homes, private aircraft, and yachts. Billionaires like Bernard Arnault, Jeff Bezos, Sergey Brin, Bill Gates, Elon Musk, Peter Thiel, Eric Schmidt, Laurene Powell Jobs, the Pritzker family, and the Phipps family all have a family office.
“The only way that I would describe it is essentially financial planning on steroids,” says Brunel, who works at Matter Family Office with offices in St. Louis, Denver, and Dallas. “It is a pretty all-encompassing service line.”
While family offices have existed for around 200 years—one of the first was established by the family of J.P. Morgan in 1838—they have grown substantially in recent years as the number of ultrawealthy families around the globe and the amount of wealth they hold have exploded. Though the exact number is difficult to quantify, there are now over 8,000 single-family offices worldwide, 68% of which were established this millennium, managing more than $3 trillion in assets. And the total number is expected to grow even more dramatically, increasing by 75% by 2030. In the same time frame, the total wealth of families behind these private companies is expected to grow to $9.5 trillion.
As such, family offices have become an economic force, remaking how the wealth management industry operates and transforming the likes of venture capital and private equity as they compete for individual families' investment dollars. And their influence in the investment community is expected to only grow in the coming years.
Meeting new wealth management needs
There's no one-size-fits-all version of a family office. Each is structured around the needs of the clients, including who they hire and what services they perform. Though plenty of billionaires operate single-family offices, many high-net-worth households band together in multifamily offices—like Matter—to keep fees low and, if they are on the lower end of the high-net-worth spectrum, get the scale to access better investments. (One of the most famous is Iconiq Capital, which manages the wealth of Silicon Valley luminaries Reid Hoffman, Sean Parker, Sheryl Sandberg, and Mark Zuckerberg, among others.) While they have long been the purview of well-established dynastic families, even younger, smaller families are interested in establishing a family office today.
Investment advice and tax planning are some of the cornerstone services typically offered, but a major function of any family office is legacy planning. Many are focused not just on wealth building, but on wealth preservation. To that end, they go to great lengths to prepare the next generation to inherit their family's wealth. That can include teaching them the fundamentals on topics like investing and estate planning, using a wide range of forums—from family meetings to workshops to retreats—while also strengthening relationships between family members, who may not get along or even know each other.
Bruce K. Lee, founder and CEO of Keebeck Wealth Management, a multifamily office, credits the explosion in growth and interest to major changes across financial sectors and institutions that resulted from the 2009 financial crisis.
Watching established companies like Lehman Brothers implode caused many wealthy families to seek out alternatives focused exclusively on their personal best interests.
“We’re not a bank, we're not an insurance company,” says Daniel Gourvitch, president of Mercer Advisors, which provides services to over 30,000 families. “We operate entirely in the best interest of our clients.”
And while Wall Street held much of the financial knowledge from the 1980s to the early 2000s—making it a necessity for investors to work through the big banks—that is no longer the case. Now anyone can access information on investments and trends on their smartphone. Family offices also give clients more control and more privacy over their investments.
“With the advent of technology and social media and so on and so forth, people’s exposure to ideas are no longer closed architecture. They’re very open,” says Lee. “People have more of this information, and they’re asking broader questions.”
More families with more money want more and better investment opportunities. And they are betting that they can do it better on their own.
How family offices invest
Family offices have the ability to get their clients in on private deals that are not within reach of most retail investors. Private investments and alternatives typically make up a substantial portion of a client's portfolio—a 2024 report from J.P. Morgan Private Bank puts it at 45% of assets—whether that be in hedge funds, private credit, private equity, real estate, or venture capital. They are chasing returns they can't get in the public markets (the average target return is around 11%, according to J.P. Morgan).
While accessing these investments would have required an institutional middleman as recently as a decade or so ago, savvy families can now do it on their own. They take on greater risk with these illiquid investments, ideally, to achieve greater potential long-term returns. And because many family offices are operating over time horizons of 50 to even 100 years, they have a much longer timeline to wait for riskier investments to pay off.
That's made them critical sources of capital for private equity and venture capital: Nearly a third of startup capital worldwide in 2022 came from family offices, according to a 2023 PwC report. In the past year, buzzy startups like Perplexity AI have received direct investments from the likes of Bezos Expeditions, the single-family office of Amazon billionaire Jeff Bezos.
"These families, many of them have institutionalized and become their own full-throated funds or investment vehicles," Marc Shuster, a partner at Florida law firm Berger Singerman, previously told Fortune.
That's left VC firms, private equity interests, and private companies all clamoring for a piece of the family office pie. In fact, many private equity firms are building dedicated wealth teams to service family offices, says Myles Milston, cofounder and CEO of Globacap, a private market investing platform. And companies like Citi Private Bank, Goldman Sachs, J.P. Morgan Private Bank, Morgan Stanley, UBS, and other institutional players are launching new family office teams to get in on the windfall.
“When you go to the very large private equity firms—the Blackstones and the KKRs—if they’re raising a new $6 billion fund, then they might take four or five of that from large pension funds, as they traditionally do, but [they can] raise 1 or even 2 billion from this longer tail of family offices,” says Milston. “It wasn't really possible, certainly not two decades ago, and arguably not even a decade ago.”
It's imperative, then, for family offices to hire advisors with the right access and connections to find these deals. But the value of a multifamily office, says Brunel, is that each family also has their own connections, which can benefit all of the others.
“I have my professional network, and then there are the partners of the firm, where they have their networks,” he says. “But then our clients have very extensive networks. There have been certain instances in which a client has had a connection to a fund and we’ve done extensive diligence, and realized this is a great fund, let’s make this available to all of our clients. It is definitely a very integrated web of sourcing.”
Industry experts expect that as the number of family offices and assets under management grow in the years to come, they will become increasingly institutionalized and professionally managed, and offer even more services. Already, more than a quarter of family offices feature multiple branches in the U.S. and abroad, and manage more assets than some of the nation's largest endowment funds.
For all the expertise, families pay a not-insignificant price: The average established office costs more than $6 million a year to operate, according to J.P. Morgan, and nearly 25% of them cost more than $10 million. The average office employs 11 people, though half of them report employing five or fewer. That could include assistants, investment managers, lawyers, and accountants, though it varies by office. Smaller organizations are more likely to outsource some of the roles to save money.
"The competition for these types of resources is usually private equity and asset management firms, and the levels of compensation will likely need to align with industry standards," reads JPM's report.
The next generation of family offices
Another driver of family office growth is the so-called Great Wealth Transfer, which could see $124 trillion passed from one generation to the next by 2048, according to a December 2024 report from Cerulli Associates. Despite being around 2% of households, high-net-worth and ultrahigh-net-worth families will direct $62 trillion of that, or more than half.
While many family offices work with the founder's goals and preferences in mind, the Great Wealth Transfer highlights why they need to remain agile, writes Morgan Stanley Wealth Management in a recent report. Younger family members tend to be interested in different investment opportunities and may approach philanthropy differently than the older generations advisors are currently working with.
"I think it's incumbent upon the parents who have this money to teach their children how money is used, but knowing very, very well that the way [the children] are going to invest is completely different," says Keebeck's Lee.
Lee adds that there are some potential pitfalls with establishing a family office. For one, does the family have enough assets for it to make sense? Many financial experts put the threshold at around $100 million, while Lee estimates the figure to be at least $500 million for a single-family office. The global average total net worth of families with a family offices is $1.4 billion, according to J.P. Morgan, though the offices don't often manage the entirety of the assets.
And then there's the question of hiring the right people to operate it. Given the giant pots of money they hold, it is inevitable that scammers and other bad actors will try to weasel their way into family offices. Families need to trust that their representatives are doing the appropriate due diligence for every potential investment.
"Human beings have a desire for somebody to know us personally, and a family office structure allows that," says Brunel. "When you're dealing with things like money and family, and vision and purpose, having somebody that you know, who knows all of the different dimensions of your family, I think there's a huge value to that."
