EXECUTIVE SUMMARY: 2018 FAMILY OFFICE BENCHMARKING REPORT

Balancing Family and Financials

A Study of key performance drivers in family offices

This research was conducted to better understand the relationship between financial performance and operational strategy in Family Offices. Please explore the findings below.

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Key Observations

01. Managing the Money

Solid returns feed future optimism

Over the three-year period, the majority of family offices reported greater than 4% (three-year actual) return.

When we compare the 2017 survey to previous surveys we note that capital allocations to public equity and private equity have increased, while allocations to fixed income and hedge funds have declined.

Actual 3 Year Returns

2017 Comparison Of Asset Allocation

02. Managing the Family

Instituting formal governance

There is significant association between financial performance and formal governance institutions. While greater emphasis has been placed on governance over time, current trends indicate that most family offices still lack an audit committee and a contract committee.

Percent of Family Offices That Have The Following Governance Institutions

03. Managing the Office

Attracting and retaining top talent

In light of the ever-increasing complexities of capital markets and regulatory environments, attracting and retaining more qualified, more experienced – and thus more expensive – talent is the new normal for family offices. The data indicates that family offices are relying less on vendors and headhunters as recruitment sources and instead prioritizing word of mouth and referrals (captured below as “other”).

Sources Of Recruiting For Top Professionals

04. FinTech

Enabling Family Offices to enhance productivity and widen their scope

The technology platform of a family office streamlines many of the tasks associated with financial management, custody, client reporting, information consolidation and aggregation. Note that ease of use and adaptability are the primary criteria in selecting a technology platform, rather than price.

Frequency of reviewing asset classes

05. Working Together

High performers review asset classes and asset managers quarterly

The majority of low performers conducted reviews on a monthly basis, in a more granular level of detail.


Methodology

2018 Family Office Benchmarking Report

This report is the fourth in a series of benchmarking surveys that have been undertaken to develop a better understanding of trends and financial performance drivers of Family Offices. It highlights the latest knowledge and best practices that will benefit substantial global families.

Location of family office headquarters

Wealth level of Families in US$

The sample used in this survey spans 17 countries. With respect to assets under management, the majority of survey respondents have greater than $1 billion. Approximately half of the 2017 survey respondents are families who own, manage and/or control at least one business in addition to the wealth managed by their family offices.

For the purposes of the survey, a family office is defined as a professional organization, owned and controlled by a wealthy family, dedicated to managing the personal and financial affairs of family members.


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About The Partnership

Northern Trust’s Global Family and Private Investment Offices Group partnered with The Wharton Global Family Alliance (WGFA) with the shared mission of addressing the unique and complex needs of substantial families.

Northern Trust is a recognized leader in serving the needs of Family Offices, and was recently named Best Private Bank for Family Offices Globally by the Financial Times Group (2017, 2018). In partnership with WGFA, we strive to share knowledge that will foster the longevity, harmony, and prosperity of substantial families and their businesses.

The 2018 Family Office Benchmarking Report is the fourth in a series of benchmarking surveys that seek to better understand the key financial drivers of Family Offices and the relationship between financial performance and operational strategy.

This report is an executive summary of research conducted by WGFA. The full research report is sent exclusively to survey participants. If you are interested in participating in the next survey, scheduled for 2019, please contact your Northern Trust Relationship Manager or email the Wharton Global Family Alliance at wgfa@wharton.upenn.edu.


For More Information Contact

David W. Fox

President, Global Family & Private
Investment Offices Group,

Northern Trust

312.630.8001

DWF2@ntrs.com

Raphael (“Raffi”) Amit

Founder and Chairman, The Wharton Global Family Alliance

The Marie and Joseph Melone Professor, Professor of Managment

The Wharton School, University of Pennsylvania

215.898.7731

amit@wharton.upenn.edu