Family Office Trends 2022

The family office trends for 2022 will be mainly dominated by global conflict and rising prices, just as the world tries to find a new normal as the pandemic continues.

These things influence how family offices think, invest, and operate.

Establishing a family office is a great way to ensure family wealth is appropriately managed and eventually distributed to successive generations. There are opportunities to preserve assets and grow their wealth, as some of the ultra-wealthy have done during the viral outbreak.

However, there are always threats, as COVID-19 has shown. Positioning and preparing your organization accordingly will mitigate the risk and ensure a smooth operation.

Family Office Trends for 2022: 12 Things to Know

1. Return to Normalcy

The COVID-19 pandemic is not over, but vaccines have helped return a degree of normalcy into people’s lives.

With some restrictions, people are returning to the office, traveling, going out to eat, and enjoying public entertainment. This is good news for the economy and capital markets, and family offices are taking note.

That said, future mutations could derail whatever progress has been made. While the situation is improving overall, the last two years tell us there are no guarantees.

2. Family Offices' Cautiously Optimistic Investment Outlook for 2022

Despite the headwinds and uncertainties, most family offices are optimistic.

According to a Citi Private Bank survey, ¾ of family office respondents seek over 5% returns for 2022.

Family office respondents with over $500 million AUM have rosier outlooks, with 30% seeking 10% returns.

Ida Liu, Global Head of Private Banking at Citi, nicely summed up family offices’ investment.

"It's reassuring to note that investor sentiment isn't negative. Instead, family offices have weathered the COVID crisis well and are uniquely positioned to deploy further capital as they see opportunities arise."

3. Inflation Concerns for Family Offices

Inflation is a notable concern for family offices, as the same Citi Private Bank survey shows.

And all the ingredients for inflation are here:

  • Goods and services outstrip the supply.

  • The labor market is tight.

  • Trillions of new dollars are in circulation.

But really, is this a surprise?

First, supply chains have been severely disrupted since the start of the pandemic, leading to the undersupplies we currently see.

Second, a rapid economic rebound means more demand for goods and services, but there’s not enough supply and labor. As a result, prices and wages go up.

Many people have reconsidered their job options and priorities in life because of the pandemic. This leads to even more staffing shortages and price increases.

4. Growing Interest in Cryptocurrency

According to a Goldman Sachs survey, 15% of family offices globally and 25% in the Americas have already invested in cryptocurrencies. In addition, 45% globally are considering adding cryptocurrencies to their exposure in the future.

Based on the survey, Goldman Sachs noted the following:

"Some family offices are considering cryptocurrencies as a way to position for higher inflation, prolonged low rates, and other macroeconomic developments following a year of unprecedented global and fiscal stimulus."

5. The Rise in Family Office Private Equity and Direct Investing

Family offices on average allocate approximately 35% of their portfolios to alternative asset classes. Within the alternatives, 10%-25% account for private equity.

According to UBS, over 80% of family offices invest in private equity. Of those family offices, an increasing number of them are making direct investments. 69% of family offices view private equity as a key driver of returns.

Here are a few reasons why family offices like direct investing:

  • Greater control

  • The appeal to entrepreneurial families for a more hands-on approach to their investments.

  • Reduced fees

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