If you provide services to family offices, you need to know what is outsourced and what is done in-house

Here's a summary, including a breakdown by AUM: 1. Financial Asset Management

$50M to $500M AUM

The wealthiest families in the world hold secrets that are passed down through the generations

Educational secrets that even the most exclusive schools don’t teach

Wealthy families rarely rely on schools to teach kids about finance

Family offices curate exclusive financial education programs. Programs delivered through private agencies, Ivy League universities and specialist organizations

12 lessons on financial education from Family Offices:

(and tips for any family)

🧵 Lesson 1: be open

Successful UHNW multi-generational families talk about money. They are not coy

It’s part of everyday life to talk about business, wealth and money. Business-talk at the dinner table is encouraged

Wealth brings opportunities and problems. But if wealth is a taboo subject, opportunities will be missed and problems exacerbated

A lot of people think they are helping their kids by shielding them from financial matters. But like any topic, to master it, you need to be consistently exposed to it

UBS interviewed 82 billionaires

Here's what they said about:

• the regions they're investing in
• their asset allocation shifts

1. where billionaires are investing

80% of billionaires see North America as the best investment opportunity over the next 12 months, up 30% from 2023

68% maintain confidence in North America over the next five years

Asia-Pacific (excl. China): 25% short-term optimism, rising to 45% over five years

China: 11% short-term optimism, increasing to 31% over five years

Western Europe: 18% short-term optimism, climbing to 29% over five years

Regions like Middle East, Latin America, Eastern Europe, and Africa are seen as having limited short- and medium-term opportunities

North America Dominance: driven by technological innovation (generative AI, GLP-1 drugs) and energy security, billionaires favor North America for both short- and long-term returns

Shifting Views on APAC and China: short-term confidence in Asia-Pacific and China is muted, but expectations grow over five years

Western Europe’s Moderate Rise: investment sentiment strengthens moderately for Western Europe over the medium term 2. what billionaires plan to invest in

Billionaires' asset allocation shifts:

43% plan to increase exposure to real estate

42% plan to increase exposure to developed market equities

40% intend to increase gold/precious metals exposure

31% plan to increase cash holdings

Interest rate easing:

Views on asset classes are changing as interest rates in the US and Europe may start easing, potentially boosting economic growth

Alternative investments: 38% plan to increase direct private equity holdings

28% plan to increase private equity funds/funds of funds, while 34% plan to decrease

26% intend to increase infrastructure investments

35% plan to increase private debt

Hedge funds are less favored: 27% plan to decrease, while 23% aim to increase

Art and antiques: 32% plan to increase exposure to art and antiques, a significant rise from 11% the previous year

what is a family office: A single-family office (SFO) is a private wealth management firm supporting a single affluent family

It manages investments, tax planning, legal support & other financial matters

Core roles:

1. Protecting wealth
2. Growing wealth
3. Financial Planning
4. Succession Planning
5. Administration
6. Charity and philanthropy
7. Governance

Deloitte Private released a major family office report this week

8 key takeaways
Some truly mind-blowing numbers ↓↓ 1. Family office expansion explodes

• 8,030 single family offices globally today, up from 6,130 in 2019 (31% increase)
• Projected growth: 12% to 9,030 family offices next year
• Expected increase of 33% to 10,720 family offices by 2030
• This represents a 75% increase over a 10-year period

Family Office pay (non-execs), a thread: Portfolio Managers

Focus on growing and preserving the family's wealth through diversified investments in equities, real estate, private equity, and hedge funds

Salary Range: (total compensation by AUM, 25th percentile - 75th percentile, US)

Less than $500 million: $185,000 - $279,375
$500mn - $999 million: $201,250 - $373,750
$1bn - $2.49 billion: $266,251 - $514,000
$2.5 billion+: $324,608 - $643,716

Background: investment management, financial analysis, or related fields. They may come from investment banks, asset management firms, or other family offices

Executive pay at Family Offices, a thread: Chief Executive Officer

Directs the overall operations of the family office, setting strategic objectives, and ensuring alignment with the family's goals. Typically, the higher the AUM, the more likely the CEO will be a non-family member

Salary Range: (total compensation by AUM, 25th percentile - 75th percentile, US)

Less than $500 million: $456,250 - $925,000
$500mn - $999 million: $388,000 - $794,000
$1bn - $2.49 billion: $735,085 - $1,315,000
$2.5 billion+: $1,052,679 - $2,475,000

Background: CEOs often come from executive leadership roles in corporations, private banks, investment firms, or other family offices. They should bring experience in strategic planning and operations management

Scott Galloway on taxes - “Every organization, every corporation does this to the hilt - and so should you”

He highlights 2 legal tactics used by the rich to minimize taxes: Tactic 1: Leveraging Investments Without Selling

Strategy: Wealthy individuals buy stocks and never sell them, instead borrowing against them

Example: Owning $100 in Amazon stock that has appreciated by 50%

Instead of selling the stock and realizing a $50 capital gain (which would be taxed), they borrow against the stock's value

This allows continued growth of the stock while avoiding capital gains tax

Interest on the borrowed amount is minimal compared to the tax burden of selling the stock

Invest, borrow against the investments, and eventually pass them into a trust to avoid taxes when the owner dies

Avoids immediate tax liabilities and enables continued asset growth, making it a highly effective wealth management tactic

European family office compensation: UK - family office salaries (£)

Family offices are not built the same

From conservative allocators to bold venture capitalists

7 investment blueprints: 1/ 🪄 The Legacy Steward:

Endowment Portfolio Archetype

- 3rd, 4th gen+, $3B-$5B+ AUM
- Pursues endowment-like structure
- Prioritizes max diversification & asset retention
- Protecting wealth major focus

Real-life example: Cargill & MacMillan Family Office

Just released:
the latest comp packages at family offices

Are you wildly overpaid or chronically underpaid CEO/President

How family offices around the world incentivize their people

A look around the world

the leaders
the laggards
the surprises

→ USA
→ UK
→ Europe
→ Asia
→ Middle-East USA:

> leading the world in long-term incentive plans
> strong on co-investing opportunities
> carried interest a feature of the US sector

Where are family offices located:

→ the one city dominating European family offices

→ the Asian locations playing catch-up with Singapore

→ the Middle East country with 76% of the region's family offices

→ the powerhouse US state for family offices and its rising star

👇 Europe:

The UK is dominating the family office scene with 62% of European family offices reporting the UK as their primary location

85% of UK family offices are based in London
15% are mostly spread across Jersey, the Isle of Man, Berkshire, Buckinghamshire, Cambridge

How to close more deals with:

- family offices
- PE
- VC

Implement a proactive due diligence strategy

The steps you should take: ⏬ 1/ 🚨 Disclose potential conflicts and risks:

Be upfront about any issues or risks that may impact the deal

Any skeletons in the closet will be discovered during DD, so it's better to be open and transparent from the outset: It establishes trust and ultimately saves time

Family offices - latest hiring and comp data:

→ How many family offices are hiring
→ What areas are family offices hiring for
→ Staff turnover
→ The recruiting challenges
→ Compensation plans
→ Planned bonuses

Survey results 👇 53% of FOs are planning to hire in 2023

The areas FOs are hiring:

Never bet against America 🇺🇸

Family offices across the globe agree

Family office investment destinations by numbers:

How to set up a family office

The practical steps: 1/ Evaluate Resources

Is there enough money?

An honest assessment of the family's financial assets and wealth should determine if resources are sufficient to support a family office

If you have less than $100 million AUM, keep reading...

Some say a mere $100 million is not enough to establish a family office, but this is not always true

The circumstances where a family office could still make sense: > You have a particular set of skills

Family offices can be expensive with typical annual costs running to 0.5%-1% of AUM

But if you and your SFO team have specific skills to consistently generate outsized returns in a particular field, the costs can be justified

Let's get back to basics:

what is a family office
how much do you need to form a family office A single-family office (SFO) is a private wealth management firm supporting a single affluent family

It manages investments, tax planning, legal support & other financial matters

Core roles:

1/ Protecting wealth
2/ Financial Planning
3/ Succession Planning
4/ Administration

This is getting serious.. 10k followers 🙏

Twitter is wild
I love you all
Still need a sarcasm font

To celebrate, three recent threads 👇

- family office asset allocation
- family office resources
- what family offices do, day to day

What do you want more of? Family office asset allocation:

https://twitter.com/MrFamilyOffice/status/1657359105902690308?s=20

Let's get down to brass tacks...

the $ comp at family offices:

• CEO
• CFO
• CIO
• COO
• Legal Counsel
• Portfolio Managers
• Investment Analysts
• Controller
• FD
• Tax Director
• Accounting Director
• Head of Security
• CTO
• Family Liaison
• EA

👇 Chief Executive Officer - Non-Family Member

• Total cash compensation (base + bonus)
• Total direct compensation (base + bonus + long-term incentive)