For many of the world's richest families, SFOs - Single Family Offices - play an essential role in their investment strategy. SFOs manage the family financial portfolio and often provide other services, such as handling children's college applications, hiring domestic staff or managing the family fleet of jets. About 1,000 SFOs are in operation around the world catering to families with a least $100 million in assets. More than half the SFOs are managing family wealth of more than $1 billion.
Up until now, little has been known about these powerful entities. New Wharton research, however, shows that they play an important role in managing major investment portfolios, guiding significant philanthropic endeavors and maintaining a core set of values across generations of extremely wealthy families.
Wharton management professor Raphael Amit says the survey's most important contribution is a better understanding of why families set up SFOs. For the most part, he says, it is to manage investment portfolios, but to do so in a way that is customized to the families' objectives. "First, and what surprised me most, is that family offices turn out to be private investment offices," says Amit. "The soft responsibilities, like coordinating the education of the next generation, is not as important as the financial wealth management issues."...
Knowledge@Wharton reports on the results of Raphael Amit's survey: "Single Family Offices: Private Wealth Management in the Family Context".
Knowledge@Wharton
Finance Professor
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