What are the biggest challenges for family offices in 2024?
Family offices are facing a cocktail of challenges, but also plenty of opportunity in the years ahead, according to a new report from Deloitte.
Its research reveals the top 10 trends for family offices, gleaned from responses from 354 single family offices around the world with average AUM of US$2 billion working for families with an average $3.8 billion in total assets.
“Globally, family offices are tackling ongoing economic challenges and geopolitical conflict—all while mitigating risks both internally and externally,” said Wolfe Tone, Deloitte Private leader, Deloitte Global. “Beyond navigating ongoing talent and digital transformation challenges and shifting investments from public to private equity, leaders are also focused on creating robust succession planning strategies to properly equip the next generation and produce a resilient future.”
With most of the respondents expecting their AUM to rise in 2024, family offices are prioritizing risk management amid recession fears, geopolitics, and inflation which rank as this year’s top three market risks. Risk management was recently identified as a ‘dangerous’ weak spot in family offices by law firm Dentons.
Another key theme is the shift from public to private equity. Data shows that private equity accounted for 30% of the average family office portfolio in 2023, up from 22% in 2021, while public equities accounted for 25% of portfolios in 2023, down from 34% in 2021.
Private equity is the top asset class for family offices and is also their target for larger investments with 29% of family offices targeting an increase in private equity funds, 27% in direct private investments, and 25% in private debt/direct lending. Meanwhile, 29% are targeting a lower cash holding.
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