J.P. Morgan Private Bank has recently unveiled its highly anticipated Global Family Office Report, providing valuable insights into the investment strategies, governance, succession planning, and operational dynamics of family offices worldwide. The report, derived from a comprehensive survey of 190 family offices conducted from October to December 2023, offers a quantitative perspective on the practices adopted by ultra-high-net-worth families in managing their wealth.
David Frame, CEO of J.P. Morgan U.S. Private Bank, underscored the significance of the report, emphasizing, "J.P. Morgan has been working with family offices for more than 200 years, starting close to home with the creation of one of the first family offices, the House of Morgan, established in 1838."
William Sinclair, Head of the U.S. Family Office Practice at J.P. Morgan Private Bank, highlighted the growing complexities faced by ultra-high-net-worth families over the past decade, resulting in a notable increase in the number of single family offices globally. The inaugural report aims to serve as a benchmarking tool, offering valuable insights for family offices to navigate current and future challenges effectively.
Key findings from the report indicate a diversification of investment portfolios among family offices, with nearly 80% collaborating with external investment advisors. Notably, the average portfolio exhibits a 45% allocation to alternative assets, with private equity emerging as the most commonly held asset class at 86%.
Jamie Lavin Buzzard, Head of Investments and Advice of the U.S. Family Office Practice, attributed this trend to family offices' willingness to embrace illiquidity risk in pursuit of long-term returns. Additionally, family offices are increasingly focusing on developing core, liquid portfolios, allocating significant portions to public equity and fixed income.
However, the report also sheds light on emerging challenges faced by family offices, particularly concerning cybersecurity. Despite the rising prevalence of cyber-attacks, only one in five family offices reported having cybersecurity measures in place, highlighting a critical gap for improvement.
Elisa Shevlin Rizzo, Head of Family Office Advisory at J.P. Morgan Private Bank, emphasized the importance of managing costs and talent retention for family offices of all sizes. As a solution, outsourcing certain functions through a hybrid approach is becoming increasingly common among family offices.
With insights into staffing preferences, operational costs, and strategies for preparing the next generation, the Global Family Office Report serves as a comprehensive resource for ultra-high-net-worth families and their advisors. As J.P. Morgan continues to provide customized financial advice and elevate client experiences, the report underscores the firm's commitment to supporting families in achieving their financial goals.
