Large family offices with $1 billion or more in assets have average annual operating costs of $6.1 million, according to J.P. Morgan Private Bank’s inaugural Global Family Office Report. As a result, management and strategic outsourcing have become a priority.
“Family offices are focused on managing costs and recruiting and retaining top talent. Like any business, these two objectives may find themselves at odds amid staffing particular roles and services,” said Elisa Shevlin Rizzo, head of family office advisory at J.P. Morgan Private Bank.
Other findings from the survey of principals and professionals at 190 family offices with an average net worth of $1.4 billion touch on the increasing appeal of alternative investments, the rising threat of cybersecurity and concern over succession issues.
The average portfolio of family offices in the survey has a 45% allocation in alternative assets. The most commonly held asset is private equity and the least commonly held infrastructure at 9%.
Almost a quarter of family offices reported their exposure to a cybersecurity breach or financial fraud, and only 20% of them have cybersecurity measures in place.
Nearly 30% of family office respondents don’t have a structured approach to prepare the next generation to inherit wealth, a rising concern among principals.