The wealth of ultra-rich families is expected to grow to $9.5 trillion by 2030, according to estimates by consulting firm Deloitte. The move comes as family offices, which specialize in managing large fortunes, expand and become rivals to hedge funds.
That would represent a 73 percent jump from the current $5.5 trillion controlled by the ultra-wealthy, which is already represented by family offices, the report said. The number of investment firms for billionaires is expected to increase by a third over the same period, to 10,720.
With wealth inequality concentrating more money in the hands of the very rich, and the increasing ease of opening a family office, the industry is catching up with hedge funds in size and, in some cases, recruiting investment professionals of the same caliber.
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Big firms are taking on new roles in the market, including that of activist investors, taking down corporate managers and pushing for change.
Looser regulations on wealth managers and the potential for their investment behavior to have disproportionate impacts were on display in the 2021 implosion of Bill Hwang’s family office, Archegos Capital Management. In July, a jury found Hwang guilty of criminal charges stemming from the collapse.
The family offices surveyed in the Deloitte report had, on average, just 15 employees, managing $2 billion in assets. Only a third were run by someone outside the family.
“It can definitely be risky to manage that much wealth,” said Rebecca Gooch, global head of insights at Deloitte Private, which serves privately held companies. “Family offices really need to be careful about who they bring on board.”
