Understanding the Role of Family Offices for Ultra-High-Net-Worth Individuals

Ultra-high-net-worth (UHNW) individuals are defined as having net investable assets of $30 million or greater. The number of UHNW individuals is expected to rise from 157,000 in 2004 to over 528,000 by 2027, controlling 11.1% of global wealth. Family offices, private organizations that manage a wealthy family's affairs, are becoming more popular as the wealth of UHNW individuals grows. The financial minimum for a family office ranges from $60 million to $200 million of net investable assets.

The number of ultra-high-net-worth (UHNW) individuals, defined as those with net investable assets of $30 million or greater, is projected to rise significantly. According to AlTi Global's 2025 Family Office Operational Excellence Report [2], the UHNW population is expected to increase from 157,000 in 2004 to over 528,000 by 2027, controlling 11.1% of global wealth.

As the wealth of UHNW individuals grows, so does the demand for family offices. These private organizations specialize in managing a wealthy family's affairs, with financial planning and investments being the primary focus. They also offer ancillary services such as bill payments, staff administration, property management, travel planning, real estate deals, legal matters, and personal security [1].

The decision to establish a family office depends on various factors, including asset levels, financial position, and lifestyle. While a UHNW individual with a single operating company and limited cash flow may not need a family office, a less-wealthy individual facing a large liquidity event could greatly benefit from one [1].

Family offices generally fall into two categories: single-family offices (SFOs) and multi-family offices (MFOs). SFOs offer greater control, privacy, and customization but come at a higher cost and may have increased succession planning complications. MFOs, on the other hand, provide cost efficiency, enhanced network effects, and simplified operations but may have less privacy and fewer customized services [1].

The growth of family offices reflects the increasing complexity of managing substantial wealth. As the number of UHNW individuals continues to rise, family offices will likely play an increasingly vital role in preserving and growing wealth across generations [1].

References:
[1] https://www.kiplinger.com/retirement/is-a-family-office-right-for-you-the-multimillion-dollar-question
[2] https://www.hubbis.com/news/new-family-office-research-reveals-that-cross-border-wealth-is-on-the-rise-and-defining-purpose-unlocks-next-gen-engagement