Family offices will soon surpass hedge funds with assets estimated to total an impressive $5.4 trillion by 2030.

Colleagues working together in an office.Aja Koska | E+ | Getty ImagesA version of this article first appeared in CNBC’s Inside Wealth newsletter with Robert Frank, which serves high net-worth investors and consumers. Sign up here to be kept up-to-date! Family offices are expected to accumulate over $2 trillion by 2030 due to an increase in wealth concentration and advancements in wealth management driving rapid expansion of family offices. A report released by Deloitte Private predicts the number of single-family offices (which handle investments of families worth $100 million or more) should rise from 8,000 today to 10,720 by 2030. As per this report, assets held by family offices are expected to skyrocket even faster over the decade and hit $5.4 trillion – up from an expected total wealth of $3.1 trillion today and more than doubling since 2019. Overall wealth for families with family offices should top $9.5 trillion by 2030 according to this estimate, representing another multifold increase over a decade’s period. “Growth in family offices has been rapid,” noted Rebecca Gooch, global head of insights for Deloitte Private. “Over the last decade we’ve witnessed an acceleration in their expansion.” “Family offices have emerged as an influential force within wealth management and are rapidly revolutionizing its landscape. Family offices may soon surpass hedge funds when it comes to assets under management; as their wealth increases rapidly. As venture capital firms, private equity interests, and private companies vie to capture some of their rising fortune. Their growth is being propelled by two broad economic forces: 1) Population increases + 2) Economic expansion Wealth accumulation has increased fastest at the top, due to technology and globalization creating winner-take-all markets and lucrative rewards for tech entrepreneurs. CapGemini reported in 2023 that Americans worth $30 million or more experienced an unprecedented 7.5% surge, to 90,700 with total assets exceeding $7.4 trillion, while their population more than doubled over this same timeframe, reaching over 28,000 centimillionaires (those worth $100 million or more). Forbes estimates there are now an estimated 2,700 billionaires around the globe – over 2.5 times what there was back in 2010. Meanwhile, ultra-wealthy individuals are altering how they manage investments and finances. Today’s mega-wealthy are increasingly opting to form their own single family offices instead of handing their fortune over to an exclusive private bank or wealth management firm for greater representation of their interests and long-term goals. Family offices can provide greater privacy, customization and tailored programs for the next generation of the family. “Families today want an office dedicated solely to them around-the-clock — not only when investing but in all areas of their life as well,” Gooch noted. After the financial crisis, wealthy families seek advisors that prioritize their best interests rather than those who are driven solely by product sales incentives. Eric Johnson, Deloitte’s Private Wealth Leader and Family Office Tax Leader. stated “there are some organizations without products they need to promote”, however many others do so Eric stated this was also applicable in their situation. “However, engaging their services may require buying what they sell – something which may not be in your family’s best interest. Since 2000 alone, almost two-thirds of family offices have been created.” According to Deloitte research, approximately 70% have been established since then. 41% were started by original wealth creators; 30% serve second generation inheritors (inheritors); 19% cater to third-generation beneficiaries; North America leads this revolution of family offices. Family office wealth in North America is expected to increase by 258% between 2019 and 2030, outstripping even Asia-Pacific’s 258 percent growth between these dates. North American single family offices may reach 4,190 by then – that would account for roughly 40% of world total. Asia-Pacific currently boasts 2,290 family offices and is expected to see this number more than double by 2030; similarly in North America family wealth held via family offices has almost quadrupled from 2019 levels, now totalling $2.4 trillion. Deloitte estimates it could reach $4 trillion by 2030 and receive Inside Wealth directly into your inbox!The $5 trillion global pool of capital has led to an outstretched hand on Wall Street to manage family offices’ money more efficiently. Goldman Sachs and Morgan Stanley, UBS, JP Morgan Private Bank and Citi Private Bank as well as various trust companies and multifamily offices are increasingly turning to family offices as an avenue for expansion. Accounting firms, tax attorneys, consulting firms and tech companies alike are awakening to this power as part of their business strategies to keep costs under control by outsourcing part of their operations to family offices. Gooch noted the rise of companies which utilize this ecosystem. Furthermore, as family offices increase in number and size they become more institutionalized. Today’s family offices have evolved beyond being two or three person shops focused on managing basic portfolios and planning travel arrangements for family members; instead they operate more like boutique investment firms than simple two or three person operations. Deloitte reports that an average family office employs 15 staffers managing $2 billion, as of 2014. Furthermore, family offices have increasingly changed how they invest. Family offices have increasingly moved away from traditional 60-40 stock and bond portfolios toward alternative assets like private equity, venture capital, real estate and private credit investments, according to J.P. Morgan Private Bank Global Family Office Report. Family offices now hold 46% of their portfolio in alternative investments. Private equity holds the greatest market share with 19%. Family offices have seen increasing success investing directly into private companies through direct deals. According to BNY Mellon Wealth Management research, 62% of family offices made at least six direct investments last year and plan on doing the same number this year; at the same time, major private equity players like Blackstone, KKR and Carlyle are expanding their private wealth teams in order to better target family offices as customers. Dealmakers for private companies have recently become aware that family offices offer opportunities to purchase equity stakes or even whole companies. As family offices tend to invest for decades or generations at once, they’re considered more “patient capital” compared with private equity or venture capital funds. “Family offices can be very reliable partners when investing,” Gooch stated. “Many private companies appreciate long-term patient capital from family offices as it supports their growing assets and responsibilities,” stated Gannon. Family offices have recently made waves with hiring sprees due to increased assets under management as they ramp up asset growth and take on greater responsibilities for supporting growing assets and liabilities. Deloitte reports that nearly 40% of family offices plan on hiring more staff this year and 36% plan to expand the services or increase family member counts served. Deloitte reports that 34% are increasing their outsourcing usage. Going forward, Deloitte predicts family offices will increasingly move toward institutionalizing themselves – employing professional management, governance and technology solutions in addition to human beings as leaders of family offices. Over one quarter of family offices now feature multiple “branches,” serving different parts of their families’ interests in different locations around the globe. Furthermore, with wealth being transferred through wealth transfers expected to shift trillions to spouses and inheritors across generations over coming decades, more women and inheritors may take over family offices themselves in time. Deloitte found that family office principals averaged 68 years old in its study of family offices worldwide, and 4 of 10 will go through some form of succession process within 10 years. Women account for 10% of wealth holders among those holding $100 Million+ assets while controlling 15% of family offices worldwide according to this survey. “Compared to men, women are somewhat more likely than their counterparts to become the principal of a family office,” Gooch stated. Family offices provide key benefits during important stages in life such as retirement planning or legacy stewardship – plus making sure future generations are adequately supported.” Don’t miss these insights from CNBC PRO!