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Global Family Office Report 2014: Largest Family Office Research Study ever offers insight into Family Office Performance and Structures

UBS, in partnership with Campden Wealth Research, has today launched a report on family offices in Europe, North America, Asia-Pacific, and developing economies. The research surveyed principals and executives in 205 family offices with an average size of USD 890 million assets under management. In total, the family offices represented manage over USD 180 billion in private wealth.

“Spanning six continents and over 40 countries, the report provides very specific insight on a wide range of critical family office topics. The report highlights a high degree of common ground across family offices globally and will provide a sound basis for benchmarking and sharing best practice. This study is the definitive work on family offices to date and one from which family office principals, executives and service providers can glean actionable insight,” said Philip Higson, Vice Chairman, UBS Global Family Office Group.

“While performance lagged slightly among developing economy family offices, our research attributed this largely to holdings of developing-economy equities and fixed income, which last year were surpassed by the meteoric rise of developed-economy equities. Despite these differences, the research revealed significant similarities globally in family office investment management structures, manager selection and oversight as well as reporting requirements,” said Dominic Samuelson, Chief Executive Officer of Campden Wealth.

The key findings

Investments

  • Performance: The average family office investment portfolio returned an estimated 9% on the year, with slight deviation across regions, investment strategy and family office size (denoted by assets under management).
  • Asset allocations: The report found evidence of “the Great Rotation” – moving portfolio allocations out of fixed income and into equities – signature evidence of the overall shift toward growth strategies in family offices globally.
  • Co-investing: Four-fifths of family offices co-invested in 2013; office-to-office deal size averaged USD 119 million, while syndicated deal size averaged USD 76 million.

Structures

  • Costs: The average family office spent 86 basis points on operating costs, of which investment activities accounted for almost half. 
  • Relationships with service providers: Over half of investment-related expenditures – 21 basis points, on average – were allocated to external specialist firms. Family offices managing over USD 1 billion allocated 35 basis points toward outsourcing, compared to an average of 58 basis points for smaller offices. Family offices that outsourced investment management were the least likely to outperform against investment benchmarks.
  • Beneficiaries: Family offices reporting high levels of beneficiary involvement reported pursuing more aggressive, growth investment strategies, higher costs and lower performance against benchmarks.

Purpose

  • Origins: Intergenerational wealth management is by far the most important objective of family offices, followed by the consolidation of accounting and tax functions and, thirdly, family unity. These priorities hold regardless of the degree of divestment of family wealth, demonstrating a clear raison d’être for family offices globally, regardless of family complexity.
  • Accountability: Whereas family members rated investment-related services most important, across family offices globally the relative value of these services was smaller than the actual costs offices spent on these services. Managing investments cost more than families expect, while family professional services are cheaper than family members realised.
  • Philanthropy: One-third of family offices have endowments of at least USD 10 million, many focused on healthcare and education sectors. Giving in Asia-Pacific increased by 10% since last year, with 77% of family offices in the region reporting some form of philanthropic engagement, placing the region on par with developing economy giving and slightly behind North American rates. While Europe hosts offices with the largest philanthropic endowments, almost a third of offices in the region do not manage the family’s philanthropy, more than the rest of the regions combined.

For more information about the report, and to request a press copy, visit www.globalfamilyofficereport.com.

Notes to Editors

About the research: The Global Family Office Report 2014 is the result of proprietary research undertaken with family office principals, executives and beneficiaries in Europe, North America, Asia-Pacific, the Middle East, Latin America and Africa in the spring of 2014. Participants completed an extensive questionnaire and offered insight during in-depth interviews, typically lasting an hour, conducted by members of the Campden Wealth Research team. Participants were family office principals and executives managing the assets of families with private wealth exceeding USD 100 million. Offices managing assets of significant value on behalf of more than one family are included in the study and comprise 20% of the sample. The study excluded multi-family offices that operate as financial intermediaries for retail clients, which are categorically different from traditional family offices. In addition to presenting cross-sectional analysis, where appropriate, the report makes use of longitudinal data compiled from Campden Wealth’s extensive archives of Asian, European and North American family office studies.

Contacts

UBS

mediarelations@ubs.com

Campden

research@campdenwealth.com

UBS AG

 

About UBS

UBS draws on its 150-year heritage to serve private, institutional and corporate clients worldwide, as well as retail clients in Switzerland. Its business strategy is centered on its pre-eminent global wealth management businesses and its leading universal bank in Switzerland, complemented by its Global Asset Management business and its Investment Bank, with a focus on capital efficiency and businesses that offer a superior structural growth and profitability outlook.

About Campden Wealth Research

Campden Wealth is the leading independent provider of education, information and networking for generational family business owners and family offices globally in person, in print, via research and online. Campden Research supplies market insight on key sector issues for its client community and their advisers and suppliers. Through in-depth studies and comprehensive methodologies, Campden Research provides unique and proprietary data and analysis based on primary sources. For more information, please visit campdenresearch.com or email research@campdenwealth.com