Family offices in non-Western countries are mostly funded by first-generation wealth, which takes more risk.

[00:49]

"So, first off, I think the major difference between western countries and non-western countries in terms of family offices is just how popular the family office concept is."

[02:18]

"It was really interesting to hear that in israel there's only two or three family offices that really provide a full service model family office solution in the whole country."

[04:00]

"What I've found, at least in my experience, is that generally in non-western countries, that it's the first generational wealth that's going into these family offices. I think that's a really important point to know, because first generational wealth, people generally take more risk."

Full transcript

Hello, this is richard wilson, coming to you from zurich, switzerland. I'm here in town to help chair a conference on investments and ultra high net worth and hedge funds, and what I want to talk to you today, being in zurich, was about how family offices are different around the world. Today I'm in switzerland. A few days ago I was in brazil, in sao paulo, brazil, and soon I'll be hosting a training workshop in boston and meeting with family offices in those three cities.

Um, these types of experiences have helped me see the big differences between family offices, say, in singapore and tokyo versus london and switzerland versus the united states and canada, and I just wanted to share some of those differences with you here today so you could get a better understanding of what kind of the global landscape of family offices really looks like. So, first off, I think the major difference between western countries and non-western countries in terms of family offices is just how popular the family office concept is. In the united states and in london and western europe there are thousands of family offices. It's estimated that there are around 3,000 family offices the united states alone.

I actually think that's a pretty conservative number. I think there's closer to 5,000 and globally there's got to be close to 10,000 family offices. But the bulk are based in western europe and the united states and that's important to know because these markets are very developed in those areas, the ultra high net worth people. They know exactly what a family office is.

In most cases they have friends and peers that use family offices. They might hear about family offices in the news relatively often and the models here have been developed so that the family offices are very competitive against each other and what services they offer and what their rates are, whereas if you go to indonesia or if you go to south africa or if you go to israel, you really have very few options when it comes to a well-developed family office. It really has a lot of experience in providing a full balance sheet, 360 degree financial solution for the ultra wealthy. I recently had the chance to interview family offices in dubai and israel and australia and singapore and all different parts of the world for a book and interview series I'm working on with family offices.

It was really interesting to hear that in israel there's only two or three family offices that really provide a full service model family office solution in the whole country. I also found in australia that while in a couple of the big cities there's a decent amount of family office competition because australia has a pretty well developed and healthy financial center, even so on the west coast and even the western half of the country really there are very few family offices operating, but those operating are growing quickly. So I think that this is going to change um over the next seven to ten years, that family offices are going to be spreading globally and they probably will have more and more in common over time. But at this point the non-western, non-western europe, non-united states family offices do look a lot different than the ones that you would see, say, based in new york or california or london.

So I hope this video helps you understand a little bit about some of the very basic differences in family offices. Actually just before you go, is one more thing. What I found is that typically in australia and the middle east and a few other areas such as southern asia, where family offices are relatively new but growing quickly, lots of the time it's the first generational wealth that are flowing into those family offices. It's the people who are just now being the wealth creators.

As an owner of the business where they took a business, public which has sold a business, and those people are really driving the growth of the family office industry. It's much less so second, third, fourth generation wealth that's now deciding to put their money instead of a wealth management firm into a family office. What I've found, at least in my experience, is that generally in non-western countries, that it's the first generational wealth that's going into these family offices. I think that's a really important point to know, because first generational wealth, people generally take more risk.

They're more interested in growth. Some of them are very conservative and one, capital preservation, is their number one goal, but many times it's more the second, third, fourth generation that are more worried about capital preservation and uh focused more on keeping the money instead of making more. So I hope you enjoyed this video on the global differences in family office operations and how they operate and what they look like in different parts of the world. It's richard wilson and we'll see you again soon.