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A version of this article first appeared in CNBC’s Inside Wealth newsletter with Robert Frank, a weekly guide to the high-net-worth investor and consumer. Sign up to receive future editions, straight to your inbox.
As the world’s rich have gotten richer, their investment firms have doubled down on private assets such as direct lending and data centers.
The number of family offices with allocations to private markets has surged by 524% since 2016, rising from 651 to 4,067, per Preqin data. This increase surpasses that of wealth management firms (410%) and endowments and foundations (81%) with allocations to private markets, according to the alternative investment data platform owned by BlackRock.
This growth has been marked in recent years, surging nearly 21% in 2023 and about 26% in 2024. In the first half of 2025, the number of family offices with private markets exposure increased by 8%.
Armando Senra, who leads BlackRock’s institutional business in the Americas, said family office activity reflects broader interest in private credit and infrastructure from investors. A BlackRock survey conducted this past spring reported that nearly a third of single-family offices planned to invest more in private credit and infrastructure from 2025 through 2026.
PwC’s Jonathan Flack told CNBC via email that much of this activity can be attributed to family offices having far more wealth to manage. By Deloitte’s estimate, family offices managed a combined $3.1 trillion in 2024, up 63% from 2019.
Family offices have less need for quick cash, so they can afford to make illiquid private investments, Flack said. With family offices known to invest for decades or even generations, private markets appeal to their long-term mindset, according to Flack, the leader of the consulting giant’s U.S. and global family office practice.
“Private markets allow the families to invest longer term in a more stable growth environment as compared to the public markets which have proven to be more volatile over the same period,” he said.
But family offices have become increasingly selective about private offerings. A May survey by UBS found that family offices planned to increase their private debt holdings but trim their private equity bets in favor of developed market equities in 2025. For U.S. family offices, the expected drawdown was especially steep.
That said, when asked about their five-year plans, more family offices intended to increase rather than decrease their allocations to private equity and other private assets.
The Rising Trend of Family Offices in Private Markets: Understanding the Shift and Its Implications
In today’s rapidly evolving financial landscape, family offices are making headlines with a staggering 500% increase in allocations to private markets since 2016. This seismic shift underscores a transformative approach to wealth management, investing, and risk mitigation. Understanding this trend not only reveals personal finance tips but also illuminates effective business growth strategies and robust insurance coverage options that resonate with a wide range of investors. Here’s how family offices can navigate the complexities of private markets while addressing diverse financial goals.
Understanding Family Offices and Their Role in Finance
Family offices, which manage the wealth of high-net-worth families, have traditionally focused on public equity and debt markets. However, the current economic climate encourages diversification, compelling them to explore private market investments such as private equity, venture capital, and real estate. The potential for higher returns comes with inherent risks, making it essential to develop a comprehensive risk management solution tailored to each family’s unique financial situation.
Key Benefits of Investing in Private Markets
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Higher Returns: Historically, private markets have outperformed public markets. Family offices are increasingly attracted to unique investment opportunities that can yield substantial returns over time.
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Diversification: Allocating investments in private markets allows family offices to spread risk and reduce volatility associated with public equity markets.
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Control: Direct investments in private companies or projects provide greater control and oversight, aligning investments with the family’s values and long-term objectives.
Practical Steps for Family Offices Looking to Enter Private Markets
1. Assess Your Investment Strategy
Before diving into private markets, family offices should evaluate their overall investment strategy. This includes:
- Defining family goals and values.
- Identifying risk tolerance levels.
- Creating a clear investment policy.
2. Research and Identify Opportunities
Explore diverse private market options such as:
- Private Equity Funds: Engaging with experienced fund managers who focus on specific industries.
- Venture Capital: Investing in startups with high growth potential.
- Real Estate: Exploring commercial or residential properties that promise solid returns.
3. Build a Strong Network
Cultivating relationships with industry experts, fund managers, and co-investors is essential. Networking can open doors to exclusive investment opportunities and provide insights into market trends.
4. Conduct Due Diligence
Thoroughly investigate potential investments by analyzing:
- Company fundamentals.
- Market conditions.
- Financial projections.
5. Implement Effective Risk Management Solutions
Employing robust risk management strategies is crucial. This may include diversifying investments across sectors, employing hedging techniques, and regularly reviewing portfolio performance.
Insuring Your Investments: Coverage Options for Family Offices
Family offices must also consider appropriate insurance coverage to protect their assets and investments. Here are some insurance options to explore:
- Directors and Officers Liability Insurance: Protects against claims made against the leadership of invested companies.
- General Liability Insurance: Safeguards against legal claims related to business operations.
- Property Insurance: Covers any physical assets owned by the family office.
Frequently Asked Questions (FAQs)
1. What are the main risks associated with private market investments?
Private markets can be illiquid and less regulated than public markets, leading to potential loss of value or difficulty in selling assets.
2. How do family offices typically invest in private markets?
Investments often come in the form of direct investments, private equity funds, venture capital, or real estate projects.
3. What’s the average return on investment in private markets?
While it varies widely, private market investments can yield returns exceeding those of public markets over a longer time frame.
4. Are family offices typically more risk-tolerant?
Generally, family offices might have a higher risk tolerance due to their long-term investment horizon and the ability to withstand short-term volatility.
Conclusion: Join the Conversation
As family offices increasingly pivot towards private markets, the need for a strategic approach becomes paramount. We invite you to share your experiences, concerns, and questions in the comments below. Engaging in discussions fosters a knowledgeable community, empowering each other to navigate the complexities of finance, business, and insurance.
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