Single Family Offices are accurately recognized as excellent sources of capital for all types of money managers. “Trillions of dollars in private wealth is controlled by single-family offices,”
Every year, more and more private wealth is invested by individuals through their family offices and this means that investors and entrepreneurs who rely on private finance have to start engaging with what is a burgeoning sector. Of course, the need for confidentiality represents an obstacle for those looking to engage with family offices; not only do they rarely publish details of forthcoming deals but they rarely accept meetings from unknown entities.
Without question, one key to unlocking access to single-family offices is referrals. Very simply, if you want to be able to discuss your offerings, either the single-family office has to invite you in or someone has to refer you. It’s quite rare for any form of cold calling to be effective. Therefore, the aim is to have single-family offices call you or to be recommended by another single-family office or someone they trust, such as an attorney or accountant.
Do not underestimate the strength of Family Office networks
Affluent families are generally well connected, as are the businesses they run. Recently, however, family offices have begun to strengthen and broaden these connections, much like their private equity peers, to not only keep up with market trends and best practices but also foster opportunities and proprietary deal flow.
These stronger, more diverse connections facilitate networking and information-sharing amongst larger numbers of family offices. This, in turn, helps those involved to diversify their investments and leverage each other's deal flow.
Some family offices have taken their collaborations a step further, pooling their capital and expertise, and entering cooperative investments or "club deals". This form of collaborative investing not only enables greater diversification but also reduces risk and leverages the expertise of close family networks in industries where these families already hold a significant strategic advantage.
Next generation families have started
As the next generation enters the family office and prepares to take the reins, many are asking how they can put the family's wealth to work for good. While philanthropy was often their predecessors' answer, and in many instances still has its place, for this generation, market-based tools like sustainable and impact investing are often far more appealing. Instead of making money and then giving it away, these forms of investing offer the opportunity to make money and do good simultaneously, a model which the younger generation considers far more sustainable.
These avenues offer several direct investment opportunities. In terms of performance, according to the Global Family Office report, 69% of sustainable investments matched investors' expectations, while 16% exceeded them.
Direct investing is not without its challenges and getting started is often significantly more complex and resource-intensive than some realize. However, when effectively planned for and managed, it can, as many family offices are successfully demonstrating, be both highly rewarding and lucrative for all involved.