Family Office’s Boom: Rapidly Growing Billions
- the demand for sophisticated wealth management is on the rise globally.
- The number of ultra-high-net-worth individuals is increasing worldwide, fueling the rapid growth of "Family Offices" catering to the "Super Rich." Domestic securities firms are also expanding their family...
- Altrata, a global asset information company, projects the number of ultra-high-net-worth individuals worldwide to reach 528,100 by 2027, up from 395,070 in 2022.
Family Offices Surge as Ultra-high Net Worth Individuals Increase
Table of Contents
- Family Offices Surge as Ultra-high Net Worth Individuals Increase
- Family Offices: Your Guide to Ultra-high Net Worth Wealth Management
- what is a Family Office?
- Why are Family Offices Becoming More Popular?
- How Many Ultra-High-net-Worth Individuals Are There?
- what Services Do Family Offices Provide?
- What are the Key Differences Between Domestic and Overseas Family Offices?
- How do Family Offices Help with Wealth Preservation?
- What is the Outlook for Family Offices?
- What are the standards of Family Offices for Clients?
- Challenges and Future Trends in Domestic family Offices
the demand for sophisticated wealth management is on the rise globally.
The number of ultra-high-net-worth individuals is increasing worldwide, fueling the rapid growth of “Family Offices” catering to the “Super Rich.” Domestic securities firms are also expanding their family office services, though challenges remain in areas such as option investments and investment banking (IB) integration.
Altrata, a global asset information company, projects the number of ultra-high-net-worth individuals worldwide to reach 528,100 by 2027, up from 395,070 in 2022. These individuals hold assets exceeding $30 million (approximately 44 billion won), accounting for 10.6% of total global assets.
The number of family offices systematically managing wealth is expected to rise from 8,030 in 2023 to 1,720 by 2030.Asia is projected to see a particularly significant increase, with a 40% growth in family offices by 2030. In South korea, both large and small to medium-sized securities firms are actively vying for market share.
financial asset standards for family office clients at domestic securities firms typically range from 1 billion to 100 billion won. Samsung Securities sets the highest bar, requiring over 100 billion won in total assets and more than 30 billion won in deposited assets.
Domestic Family Offices offer customized investment strategies tailored to individual client preferences, along with extensive financial management services encompassing legal, tax, real estate, and inheritance matters. Korea Investment & Securities, such as, collaborates with the global real estate consulting firm Nightpank to provide overseas real estate investment and development support.
Inheritance and gifting strategies are also key services,including personalized financial education for the next generation and guidance on long-term family business succession planning.
Though, experts note that domestic securities firms’ family offices are still in their nascent stages, particularly in monetizing advisory services, expanding alternative investment options, and strengthening IB connections. While overseas family offices commonly charge advisory fees and trading platform usage fees, domestic counterparts generally do not. This can lead to concerns about needless transactions or recommendations of high-commission products.
Ther is a risk of operating investment management services by focusing on the short-term profit generation of securities firms rather than long-term investment performance.Choi Soon-young, a senior researcher at the Korea Institute of Capital Markets
Strengthening the link between family office services and the IB sector is also crucial. Currently, domestic securities firms’ assets are heavily weighted toward conventional assets, including stocks (20%), bonds (40%), other financial products (27%), and cash (13%).
We can develop in the direction of expanding the proportion of internal deal sourcing in external deal sourcing, such as venture capital and private equity funds for ultra-high assets.Choi Soon-young,a senior researcher at the Korea institute of Capital Markets
Family Offices: Your Guide to Ultra-high Net Worth Wealth Management
what is a Family Office?
A family office is a private wealth management firm that serves ultra-high-net-worth individuals (UHNWIs) and their families. They offer a extensive suite of services to manage and preserve wealth across generations.
Why are Family Offices Becoming More Popular?
The demand for sophisticated wealth management is on the rise globally due to the increasing number of ultra-high-net-worth individuals. As the number of wealthy individuals grows, so does the need for specialized services to manage their complex financial needs.
How Many Ultra-High-net-Worth Individuals Are There?
The number of UHNWIs (individuals with assets exceeding $30 million) is rapidly increasing. According to Altrata, a global asset details company, the worldwide number of UHNWIs is projected to reach 528,100 by 2027, up from 395,070 in 2022. These individuals control a notable portion of global assets, accounting for 10.6% of the total.
what Services Do Family Offices Provide?
Family offices offer a wide array of services tailored to the unique needs of UHNWIs, including:
Investment Management: Custom investment strategies, including stocks, bonds, and alternative investments.
Financial planning: Comprehensive financial planning, including retirement planning, education planning, and estate planning.
Tax Planning: Strategies to minimize tax liabilities and optimize wealth preservation.
Legal Services: Legal advice and assistance with trusts, wills, and other legal matters.
Real estate Management: Management of real estate assets, including investment and development support.
Family Governance: guidance on family dynamics, interaction, and succession planning.
Inheritance and Gifting Strategies: Personalized strategies for transferring wealth to the next generation and planning for long-term family business succession.
What are the Key Differences Between Domestic and Overseas Family Offices?
Domestic family offices, especially those in South Korea, are still developing and have some key differences compared to their more established overseas counterparts.
Fee Structures: Domestic family offices frequently enough don’t charge advisory or trading platform usage fees, unlike many overseas offices. This can raise concerns about potential conflicts of interest.
Investment Options: Domestic family offices are working to expand their alternative investment options and strengthen connections with investment banking (IB) sectors.
Investment Focus: There’s currently a heavy weighting toward conventional assets.
How do Family Offices Help with Wealth Preservation?
Family offices focus on long-term investment performance and seek to protect wealth across generations. they offer:
Customized Investment Strategies: Tailored to individual client preferences, helping to manage risk and maximize returns.
Succession Planning: Helping families plan for the transfer of wealth and business ownership to future generations.
Financial Education: Providing financial education to the next generation to ensure responsible wealth management.
What is the Outlook for Family Offices?
the family office market is expected to continue growing significantly. The number of family offices is expected to rise from 8,030 in 2023 to 1,720 by 2030. Asia is projected to see a particularly significant increase, with a 40% growth in family offices by 2030.
What are the standards of Family Offices for Clients?
Domestic securities firms have financial asset standards for family office clients typically ranging from 1 billion to 100 billion won.
| Securities Firm | Total Assets (KRW) | Deposited Assets (KRW) |
| ——————- | —————— | ———————– |
| Samsung Securities | Over 100 Billion | Over 30 Billion |
| Other Firms | 1B-100B | Varies |
Challenges and Future Trends in Domestic family Offices
Domestic family offices are working to overcome challenges and capitalize on future trends:
Fee Monetization: developing methods to monetize advisory services and align incentives with long-term client goals.
Alternative Investments: Expanding access to venture capital, private equity, and other alternative investments.
IB Integration: Strengthening connections with the investment banking sector to broaden service offerings.
According to Choi Soon-young, a senior researcher at the Korea Institute of Capital Markets, “There is a risk of operating investment management services by focusing on the short-term profit generation of securities firms rather than long-term investment performance.”