Family offices have their roots in the sixth century, when a king’s steward was responsible for managing royal wealth. Later on, the aristocracy also called on this service from the steward, creating the concept of stewardship that still exists today. But the modern concept of the family office developed in the 19th century. In 1838, the family of financier and art collector J.P. Morgan founded the House of Morgan to manage the family assets. In 1882, the Rockefellers founded their own family office, which is still in existence and provides services to other families.
The expression ‘family office’ covers all forms of organisations and services involved in managing large private fortunes. These can be organised either as family-owned companies, in which the family wealth is pooled, or as companies like Generational that provide services for these clients, while the family retains decision-making powers.
Family offices are arguably the fastest-growing investment vehicles in the world today, as families with substantial wealth are increasingly seeing the virtue of setting one up. It is difficult to estimate how many family offices there are in the world, because of the various definitions of what constitutes a family office, but there are only single figure thousands of family offices in existence globally due to the experience and expertise required in operating one.
The increasing concentration of wealth held by very wealthy families and rising globalisation are fueling their growth. Particularly important in the years ahead will be the strong growth of family offices in emerging markets, where for the most part they have yet to take hold — despite the plethora of large family businesses in these economies.
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