5 Family Office Investment Trends

Family offices have played a pivotal role in the alternative investment industry for quite some time though in the last decade especially, we have seen these groups reaching new heights. As family offices continue to broaden, so do their investment patterns and overall prominence in the private capital markets. To keep you informed on the alternative wealth space, FINTRX has compiled a list of developing trends that are expected to make a lasting impact on family offices in the years to come.

The family office landscape is in the midst of a profound transformation brought upon by a new generation of investors whose attitudes and expectations have been shaped by modern advances and volatile markets. First emerging in the United States, family office growth has accelerated worldwide - with an estimated 10,000+ family offices in existence today. Largely attributed to advanced technical solutions and global market disruptions, it is easy to see why this transformation arose initially. Those in the family office arena are being challenged to reassess and strengthen their governance structures using identified objectives set forth by the family itself. This shift brought new trends to the alternative wealth landscape, thus generating a multitude of new challenges and fruitful opportunities. 

Below, we have identified five trends developing within the family office landscape.

1. Continuous Operational Improvement

In recent years, family offices have reached a new level of agility and sophistication, making them a viable option for protecting and preserving vast amounts of family wealth. Changing demographics, technological shifts, and volatility in our current market environment have all impacted how family offices invest and manage wealth. Because family offices often span across several generations, younger generations are bringing a new attitude to their investment approaches, as they are increasingly realizing traditional investment choices are no longer suitable to fit their needs. In search of predictable rates of return, family offices have focused on non-traditional asset classes, such as private equity and real estate.

2. Greater Coherence to Family Values

Within the modern family office structure, the values on which the family is based play an integral role in how wealth is dispersed. Wealthy families have taken a more hands-on approach to asset management, often overseeing most, if not all actions are taken. Because these highly tailored groups typically reflect the characteristics and goals of the family (or families) it serves, there are greater opportunities to preserve family legacies. 

3. Increased Diversity Regarding Investment Allocations

Family offices have always been opportunistic by nature, but now this is being taken to a whole new level. As family offices continue to increase transparency, it has become clear that these groups are highly interested in alternative investments - an advantage for hedge fund managers and venture capitalists. This has led to a greater emphasis on diversifying investment allocations into emerging markets - such as blockchain or cannabis.

4. More Direct Deals

As family offices continue to emerge into viable wealth solutions, their growing trend of making direct investments shows no sign of slowing down. Family offices turn to direct investments to take advantage of the many benefits offered, such as having greater control over their investments or bypassing layers of fees charged by intermediaries. At FINTRX, we continue to see increased exposure to direct deals amongst family offices and their alternative portfolios.

With an increased number of first-generation family offices entering the space, they are often less removed from the entrepreneurial experience. This direct exposure to creating and growing successful businesses has since led to the family office space being more adept in making smart investments. Because of this increased sophistication, many have been able to adopt in-house, the services (and advantages) of traditional private equity funds. The deep-rooted domain knowledge of these entities leads to higher-quality investments and increased deal flow.  

5. Technological Advances Leads to Increased Family Office Transparency

Advanced technological shifts have drastically contributed to the evolution of family offices, ultimately transforming how we view and interact with them. Family offices are early adopters of innovative technology, leveraging complex tools such as Artificial Intelligence (AI) to enhance engagement and transparency. This is good news for those looking to raise capital, as it provides more opportunities to find and engage with investors on a humanized level. Fortunately, data solutions such as FINTRX make it possible for users to discover unique similarities that drive stronger results.

Designed with AI to humanize your outreach, FINTRX Affinity delivers custom conversation starters, actionable insight on your best path to connect, and valuable intel on shared commonalities across 11,800+ family office decision-makers worldwide. 

          - Evaluate the subtle nuances between each family office to find the most suitable fit. 
          - Find and Use shared commonalities to drive effective family office 
          - Discover unique similarities that drive stronger conversation starters

Learn More about FINTRX Affinity

As many asset-raising professionals continue to engage with these private entities, it is important to recognize how these changing conditions affect your outreach efforts. With this in mind, we have developed literature around Targeting Family Offices: A Consultative Prospecting Methodology. 

For an in-depth exploration of the FINTRX family office platform, request a demo below.

For more practical family office insight and best practices, visit our 'Resource Library' below.