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The report synthesised responses to a survey of 102 European single family offices and private multi-family offices having US $91 billion in aggregate assets under management (AUM).
According to the report:
The majority of European family offices had a relatively good 2022 in terms of both AUM growth and client satisfaction.
- Despite a challenging global macroeconomic environment, 53% of respondents reported an increase in AUM, and 40% stated that their portfolios outperformed relative to benchmarks.
- Over 70% of respondents expressed satisfaction with their family office’s investment options, dedicated staff, and capabilities to handle complex activities. Additionally, more than 60% said their family offices offered value for money and found them proficient at managing privacy issues as well as estate and tax planning.
Private markets emerged as the favoured asset class for increased exposure among European family offices.
- A report-high 38% of European respondents said they were aiming to up their allocations to direct private equity investments. This class accounted for 11% of family office allocations in 2022, ranking as the third most held asset class after developed market equities (24%) and real estate (18%).
- Following direct private equity investments, the respondents prioritised venture capital, private equity funds, developed market bonds, and real estate in their future allocation plans. This increasing appetite for bonds is driven by expectations of lower interest rates as inflation stabilises.
- Forestry / agricultural land was the only asset class to which none of the respondents said they were planning to reduce exposure. 15% said they would increase exposure here.
European family offices identified cybersecurity and regulatory compliance as top operational concerns.
- A report-high 51% of respondents cited cybersecurity as an operational risk. 11% of European family offices reported that they had been targeted in cyberattacks during the last 24 months.
- European family office’s next most cited operational concern was regulatory compliance, with 38% of them expressing worries that they could effectively keep up with increasingly complex requirements related to, for example, cross-border taxation in the digital age.
European family offices are most keen to adopt technology for automated investment reporting and wealth aggregation.
- A report-high 26% of respondents said that they were not – but would like to be – using technology for automated investment reporting. 62% of respondents said they were currently using such solutions.
- The next most desired digital tools were those supporting wealth aggregation, with 20% of respondents noting a potential capability gap to be filled here. Only 32% of respondents said they were currently using this sort of technology.
- The authors suggested that family offices’ hesitation to adopt desired technologies could be due to difficulties in judging the cost-benefit of an increasing array of options.
- Nearly all (93%) respondents reported using and being satisfied with their technology providing access to financial market information. No respondents said they were not using such a solution but would like to be.
The majority of European family offices share similar approaches to governance, succession priority-setting, and philanthropy.
- A full 85% of respondents reported relying on an investment committee for governance. 80% said they have documented their strategic investment guidelines.
- In succession planning, an overwhelming 92% of family offices reported early exposure of next-generation family members to family values as an important factor. 88% cited the importance of having existing family leadership embrace the issue of succession, and 84% highlighted the commitment of younger family members to their family legacies.
- 65% of European family offices reported making philanthropic donations. Education is their favourite cause, with 69% of donations supporting initiatives in this sphere.
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