The family office landscape in North America
Family offices continue to grow and seek innovative ways to navigate an uncertain environment. The 2022 North America family office report explores this growth, focusing on 179 family offices across Canada and the United States.
The family office and mindset trends
The North American family office landscape continues to grow, with many family offices seizing opportunities and many families contemplating setting up their own. In addition, family offices have shifted their mindset in 2022.
Private equity takes center stage
Investment into equities has remained stagnant in North America amid a turbulent stock market.
Instead, family offices are taking larger positions in private equity, increasing from 22 percent in 2021 to 27 percent in 2022.
The trend is expected to continue to rise to 46 percent in 2023.
Sustainable investing is heating up
Thirty-seven percent of family offices in North America now engage in sustainable investing, up slightly from 34 percent in 2021 and 26 percent in 2019.
Despite this increase, North American family offices are behind their counterparts in Europe (66 percent) and Asia-Pacific (42 percent).
When it comes to the average North American family office portfolio, sustainable investing accounts for 20 percent, but this is expected to rise to 31 percent within five years (compared to 38 percent globally).
Avid investors in tech
Currently, 71 percent of family offices invest in healthcare tech and 39 percent plan on increasing their investment in this sector in the year ahead.
Sixty-two percent of family offices invest in biotech, making it the second most popular technology investment. This is closely followed by fintech (59 percent), digital technology (52 percent) and green tech (50 percent).
Like healthcare, artificial intelligence (40 percent), green tech (35 percent) and biotech (34 percent) are also expected to see a rise in family office portfolio allocations in 2023.
Falling behind the succession curve
Globally, a significant generational wealth transfer is underway, with trillions in family wealth—including enterprises—transitioning to heirs. As a result, the need for formal succession plans hasn’t been greater. Fifty-four percent of North American families have a succession plan in place (compared to 61 percent globally). This is up slightly from 50 percent in 2021.
In the next 10 years, 27 percent of the next generation are expected to assume control of the family enterprise, and 36 percent are expected to take control in 11+ years.
Despite these numbers, preparing the next generation continues to be an opportunity, as just 39 percent of respondents feel the next generation is prepared for succession—significantly lower than the global average of 61 percent.
Surprisingly, just 33 percent of family offices have a succession plan in place for their senior executives.
Risk Management is an important focus for family offices
When it comes to family office governance priorities over the next 1–2 years, 78 percent of respondents say they’re focused on risk management.
Cyberattacks continue to be on the rise, and 37 percent of family offices experienced at least one attack in 2022, up from 28 percent in 2021. Despite the increased risk, just 32 percent of family offices lack a cyber security plan in place. However, 75 percent of those without a plan are in the process of getting one.