A report by the global accountancy and consultancy firm exposes the sheer size and growth of family offices in the US and other parts of the world, and the forces shaping them.

An “immense amount” of global wealth creation is fueling a “meteoric rise” in family offices around the world, which are expected to rise 75 per cent over a 10-year period, according to Dr Rebecca Gooch, global head of insights for Deloitte Private.

Deloitte estimates that there are 8,020 single family offices in the world today, up from 6,130 in 2019, a nearly one-third increase, according to the just-released edition of its Family Office Insights Series. This number is projected to grow by 13 per cent to 9,030 family offices next year and by a third, to 10,720 family offices, by 2030. 

North America has the most single family offices with an estimated 3,180, a number that Deloitte’s 2024 Defining the Family Office Landscape report expects to increase by 32 per cent by 2030. However, the Asia-Pacific region is expected to grow faster by 2030, increasing 40 per cent to an estimated 3,200 offices.

The family office arena in Europe is also expected to experience considerable growth, but at a somewhat slower pace as a result of its maturity and relatively weaker economic climate. There are an estimated 2,020 single family offices in Europe, a number Deloitte expects to increase to 2,650 by 2030.

Emerging trends
“Families’ finances are becoming more sophisticated and more global,” Gooch said. “Family offices will have an expanded international footprint, more professional management, greater portfolio diversity and expanded service offerings.”

Global expansion and mobility are key emerging trends, according to the Deloitte report. 

“As a family’s business, investments and affairs become more globalized, so do the requirements of their family office,” the report states. “The need for personnel to sit in a stationary office is diminishing as professionals can work remotely, allowing family offices to tap the best available talent from around the world.”

Family offices can also be expected to open multiple branches globally, according to the report, accessing “promising  investments and talent pools that exist elsewhere, and mitigate risk though operational redundancy and diversification.”

Outsource or in-house?
As family offices proliferate and race to scale up, the decision of whether or not to outsource work involving areas such as legal, estate and tax planning has emerged as a major issue.

Indeed, because the needs of wealthy families have moved “way beyond” asset management and have become increasingly complex, family offices are under “a lot of pressure” to decide how much work to outsource and how much to keep in-house, said Erik Christoffersen, managing director at AlTi Tiedemann Global, a multi-family office which provides third-party services to single-family offices.

SFOs see outsourcing as an effective way to get specialized expertise, and usually make decisions based on cost for the potential savings that arise from freeing up internal resources, according to a report on Family Office Operational Excellence, released in conjunction with Campden Wealth earlier this year.

Evaluating vendors
The quality of the outsourcing partner, the report maintains, should also be an equally important consideration.

SFOs need to ask if using a third party vendor has other advantages, apart from costs, such as better talent, new technology, better solutions. Another factor: will their engagement with an outsourcing partner be more effective than an in-house solution? In the end, the report states, a family office needs to assess the operational effectiveness of the outsourcing partner versus doing the work in-house.

Family offices that do outsource are better served by a “strategic partnership” approach with vendors emphasizing a long-term relationship and coordination rather than a short-term “vendor management approach” focusing on problems as they arise, Christoffersen argued.

Tech considerations
Both the Deloitte and Tiedemann reports stressed the importance of emerging technology for the future success of family offices.

The latest digital applications allow family offices to access new investments, the Deloitte report stated, as well as being able to “track and manage risks across their investment portfolios and improve the speed and quality of reporting and investment analysis.”

However, upgrading technology was constrained by cost, staff training and time spent by management, around 30 per cent of family offices surveyed by Campden reported.

Family offices need to take a disciplined effort to “stand back, identify the desired outcomes and then design the processes necessary to achieve key operational benefits at the right scale and quality,” the report stated. Otherwise, the report warned, even systems that are currently working well will be rendered “suboptimal” by more advanced technology.

By investing time and effort upfront together with a good plan, the report added, family offices can “avoid the mistake of making a quick decision that results in only incremental improvements which ends up under-utilizing new technology.”