From asset allocation trends to succession planning challenges, a new report from J.P. Morgan Private Bank provides a wealth of data on the current state of family offices, looking at how family offices are investing, how much they spend on operating costs and how they are preparing the rising generations.
The 2024 Global Family Office Report, which surveyed 190 global single family offices, found that family offices are favoring alternative investments, with an average portfolio allocation of 45%. Family office portfolios target an 11% return.
“Family offices are very heavily allocated toward alternatives, and given their target rates of return, that’s not surprising,” says Elisa Shevlin Rizzo, head of family office advisory for J.P. Morgan Private Bank, U.S. “They’ve got that patient capital, and they’re willing to wait for those returns to occur.”
The survey also looked at operating costs: The annual cost to run a family office averages $3.2 million.
The survey identified areas in which family offices believe they could improve, including cybersecurity, family governance and succession planning.
Nearly one-quarter of family offices had experienced a cybersecurity breach, but cybersecurity measures are lacking for many.
“Only 37% require employees and family members to undergo any kind of cybersecurity training. You can have great technology, but there’s also the human side of it,” Rizzo says. “There’s always still the potential for human error, and cybersecurity education and training is another important line of defense.”
Survey respondents are also concerned about the future of the family office: preparing the next generation to inherit wealth.
“Nearly 70% indicated that succession planning and preparing the next generation was a key objective — and then almost 30% said they had no structured approach to preparing the rising generation,” Rizzo says.
More reading on the report:
- Family offices are looking beyond the stock market for higher returns, new report finds (CNBC)
- Family Offices Diversify Holdings; Cyber Attacks A Worry (WealthBriefing)
- Succession planning troubles family offices: J.P. Morgan (Financial Standard)
Institutions shift portfolios towards private credit (Alternative Credit Investor)
