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Rich families rely on large-scale investments with social standards
A new PwC study shows that wealthy families are increasingly making targeted investments in large-scale projects with a social or ecological focus.
Rich families rely on large-scale investments with social standards
Wealthy families are showing a growing interest in targeted investments, especially in companies and start-ups. This was highlighted by a recent analysis of over 11,000 family offices worldwide, presented in PwC's Global Family Office Deals study. This study highlights a turnaround in the investment strategies of the rich, who are becoming increasingly more focused and concentrating on a few, carefully selected large investments. These investments are often linked to a social or environmental claim, which reflects investors' awareness of sustainable and responsible corporate practices. The The standard reports that this model change could greatly influence financial flows in future developments.
The PwC study further shows that traditional categories of family offices are changing. Common types now include Single Family Offices (SFOs), Multi-Family Offices (MFOs), Embedded Family Offices (EFOs) and Virtual Family Offices (VFOs). In addition, new types such as principal/family investment offices and family business venture arms have become more important. All of these institutions are based on family wealth and reflect the entrepreneurial commitment of many wealthy families.
The evolution of family offices
The characteristics and structures of family offices are constantly evolving. Interestingly, only 20% of these offices are created through a cash event, such as the sale of a company. The vast majority, namely 80%, derive their wealth from active businesses. This shows that the majority of family office owners are entrepreneurs or entrepreneurial families, while only 5% are heirs. The influence of tech pioneers and hedge fund managers, also known as “Wall Street Billionaires,” is constantly growing and changing the investment strategies in family offices.
Another exciting point is that more than 75% of the family offices analyzed have been founded since 1993, and around half of them since 2006. This indicates the relative youth of these forms of investment and underlines the dynamic environment in which these institutions operate.
In summary, the investment behavior of wealthy families is increasingly moving towards targeted, sustainable and large-scale investments. These changes could not only affect families' private wealth, but also have far-reaching effects on markets and society.