JP Morgan Releases its Family Office Report, Alts Reshape the Future of Wealth Management and the Puig Family Wealth Grows in this Week's Edition...
Take a Lap Around the Industry
AMD & Super Micro Face Stock Decline as AI Earnings Expectations Go Unmet (Yahoo)
US Job Vacancies Decline to Lowest in Three Years Amid Labor Market Slowdown (Bloomberg)
NYCB Shares Surge as Company Posts Calmer Results Amid CEO-Led Overhaul (Bloomberg)
Surge in Oil Stockpiles and Weak Demand Push U.S. Crude Below $80 (CNBC)
Balancing Control and Collaboration: The Role of Family Offices in Modern Wealth Strategies
The 2024 Global Family Office Report from J.P. Morgan Private Bank highlights the growing importance of family offices in the dynamic world of wealth management. The survey reveals a sophisticated approach to investment, with nearly 80% of family offices collaborating with external advisors and an average of 45% of their portfolios dedicated to alternative assets, aiming for an 11% return. This reflects a broader trend towards diversification and higher yield strategies. Control over these investment decisions remains firmly in the hands of family members, with almost 90% involved directly, and about half indicating that the principal family member takes the lead—this figure rises to 56% in the U.S., compared to 26% internationally. These offices are not just financial entities but are integral to fostering family cohesion and ensuring generational success. Approximately 70% of family offices prioritize succession planning and preparing future generations, with nearly two-thirds establishing some form of governance structure. Despite their wealth and capabilities, many family offices encounter obstacles in crucial areas such as cybersecurity, with 40% acknowledging it as a significant service gap. Additionally, challenges in family governance and succession planning (31%) and family wealth education (31%) are also prevalent, highlighting the need for strategic solutions in these key areas. This is particularly concerning given that 24% have experienced a cybersecurity incident or financial fraud. Despite these challenges, family offices are significant investments in themselves, with large, established ones spending over $6M annually on operations, and nearly a quarter exceeding $10M.
"We find that many single family offices are looking to outsource trading and execution needs to trusted, external advisors who have the trading capabilities, idea generation and research to act as a seamless extension of their family office."
Monica DiCenso, J.P. Morgan Private Bank
Private Funding Pulse Check
Securing $15M in Series A funding, Backflip, a proptech meets fintech company that empowers real estate entrepreneurs, has received backing from Dallas, TX-based Crow Holdings
Ranjan Pai's firm, MEMG Family Office, recently took part in a Venture funding round, investing $216M in PharmEasy, an Indian healthcare provider helping patients connect with pharmacy stores and diagnostic centers
Blaize, a platform providing full-stack hardware architecture and no-code software, has successfully closed a $106M Venture funding round, with participation by Rizvi Traverse Management
A full-service wine and spirits auction marketplace, Unicorn Auctions LLC, has attracted a $5.8M Seed investment from Middleton Partners
Strategic Wealth Partners, managing $860M, will move from Lincoln Financial to LPL Financial ahead of Osaic's acquisition of Lincoln's wealth management
Advisor Ryan Rayburn, leader of Strategic Wealth Partners, sought a new broker/dealer following Osaic's acquisition announcement
Attracted by LPL's technological investments, Rayburn aims to enhance service delivery and attract younger advisors
Osaic's acquisition of Lincoln National’s $108B wealth business, worth $700M, is set to close in the first half of this year, fully integrating by Q2 2025 (WealthManagement)
How Alternative Investments Are Reshaping Wealth Management
As market volatility persists, private wealth increasingly favors alternative investments, driven by growing individual wealth and the expanding accessibility of alternative markets. Nearly 80% of North American family offices now prioritize these investments, with a notable rise in allocations to private credit, reflecting broader access and interest. This shift is also spurred by the desire for higher returns and better portfolio diversification, making alternatives a critical component of modern investment strategies. Moreover, the evolution of investment vehicles has enhanced liquidity and transparency, making these options more appealing to individual investors. As private credit and real assets like timberland gain traction for their potential to hedge inflation and offer uncorrelated returns, the role of alternatives in wealth management continues to evolve, highlighting their importance in risk management and asset growth strategies.
"However, as wealth across segments of individual investors increases, demand for alternatives is also growing more broadly. Mass affluent wealth is expected to grow 40% between 2020 and 2025, according to EY's report on understanding the future of advice. Forecasts are for this growth to represent the biggest disruption to wealth management in decades as the gap between retail and high-net-worth is filled by an emerging mass affluent segment, many of whom are interested in more sophisticated advice and products, including alternatives."
Michelle Fuller, John Hancock Investment Management
Puig Dynasty's $12B Fortune Set to Grow with Historic IPO
The Puig family, owners of the Spanish perfume and cosmetics giant Puig Brands SA, are marking a significant milestone with the initial public offering (IPO) of their company, poised to be Europe's largest listing this year. With a rich history dating back to 1914, the Puig dynasty has evolved from early setbacks to controlling a formidable business empire. As the IPO approaches, the family’s fortune is estimated at about $12B, positioning them as major beneficiaries of this financial event. The Puigs are also divesting over $1B worth of shares, signaling a strategic shift as they prepare to step back from direct company management, with plans to diversify their wealth into real estate and venture capital. This move is part of a broader trend, potentially revitalizing European IPO markets, and underscores the ongoing transformation within one of Spain’s most storied business families.
"Beyond affording the Puigs the opportunity to cash out, the listing is fueling hopes of a rebound in European IPOs, even though a full recovery isn’t expected until next year. Companies have raised about $8.6 billion through listings this year, more than double the amount in the same period of 2023."
Benjamin Stupples & Clara Hernanz Lizarraga, Bloomberg
PremjiInvest Amplifies AI Focus to Propel $10B Fund
PremjiInvest, the prominent family office managing over $10B for tech magnate Azim Premji, is intensifying its investment in artificial intelligence (AI), enhancing its proprietary AI tools for deeper market penetration. TK Kurien, managing partner and chief investment officer, highlighted the strategic deployment of AI in both private equity and public market investments. Since embracing AI three years ago, the firm has developed models that scrutinize global companies across numerous parameters, aiding in the identification of promising investment opportunities. PremjiInvest is not just expanding its AI capabilities but is also broadening access, planning to allow open-source developers to use some of its AI tools. This move reflects a broader trend among investment giants like BlackRock Inc. and SoftBank Group Corp, who are leveraging AI for real-time data analysis and market insights. PremjiInvest's approach includes investing in sectors such as technology, financial services, consumer goods, and healthcare, both in India and the U.S.
"Kurien is planning to allow open-source developers to access some of its AI tools. The fund’s engineers are also developing platforms to help India’s overburdened courts resolve cases faster and to also aid governments’ efforts to offer services more effectively"
FINTRX delivers an industry-leading suite of private wealth data and research solutions to the alternative investment space and private capital markets. Engineered to help clients identify and access family office and RIA capital intuitively, the FINTRX platform ensures accurate and updated data and research on 850,000+ private wealth records globally. To subscribe to our newsletter and see previous versions click below.
