The next major career path in business schools: Family offices

• An increasing number of family offices are being targeted by top universities, with programs and courses designed to develop the next generation of family office leaders.
• The Booth Family Office Initiative was launched by the University of Chicago Booth School of Business, which includes research programs, courses, and summits for current and future family office executives.
• Experienced investors, accountants, lawyers, and estate planners are in high demand among family offices, as talent is a scarce resource.

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An increasing number of family offices are being targeted by top universities, with programs and courses designed to develop the next generation of family office leaders.

The University of Chicago Booth School of Business recently launched the Booth Family Office Initiative, which comprises research programs, courses, and summits designed for current and future family office executives. The initiative features a council of 50 family office leaders and Booth alumni who will guide the program.

"According to Paul Carbone, co-founder and vice chairman of Pritzker Private Capital and a member of the Family Office Initiative Steering Committee, the growth in the family office market, particularly in terms of capital overseen and their importance in commercial investing and philanthropy, has been substantial. However, the challenges faced by family offices have also increased. Booth has a strong intellectual capital base that can be utilized to address these challenges."

Family office programs are on the rise at top universities, with courses being offered at Harvard, Columbia, Northwestern, Pepperdine, and other institutions aimed at family offices or family-owned companies.

The Wharton Global Family Alliance, formed in 2004 by the Wharton School at the University of Pennsylvania and the CCC Alliance, has become a leading resource for family offices and the broader wealth-management industry through research, roundtables, courses, special presentations, and workshops.

Family offices can benefit from top universities by gaining access to research funding and business school students with expertise in finance. In turn, universities can benefit from family offices by training the next generation of family office leaders and providing them with the necessary skills and knowledge to succeed in the fast-growing field of finance.

The number of family offices has increased to over 8,000 from approximately 6,000 in 2019, according to Deloitte. By 2030, their assets are predicted to reach $5.4 trillion, up from $3.1 trillion currently. As more wealthy alumni establish family offices or work for them, they are becoming a crucial source of donors and funding. Trust companies, private banks, and consulting firms are all potential sponsors for programs seeking family office clients.

"John C. Heaton, a finance professor at Booth School, stated that it is a fantastic opportunity for the students and the community with the launch of a new MBA course, "The Family Office," next year."

While private banks and wealth management firms regularly release family office surveys and analyses, the Booth and Wharton programs emphasize research as their core. The universities assure that their research will be more thorough and impartial.

Booth stated that they are collaborating with software companies that offer back-office platforms for family offices to obtain anonymized, consolidated data on their portfolios and investment transactions.

Heaton stated, "That's genuine information, not biased views on individuals' behaviors."

The family office council will determine the research priorities based on suggestions from its family office council. For example, when Booth asked family offices for research priorities, the top answer was behavioral economics. Booth is renowned for its behavioral economics program, so assisting family office professionals in managing interpersonal relationships with families and their decision-making process will be beneficial, Carbone stated.

"According to Carbone, it was surprising that the top concern wasn't related to investing or risk management, but rather focused on human dynamics."

The benchmarking study, a 100-page annual report covering a wide range of topics, is produced by Wharton in response to questions from family offices in addition to regular research papers.

Professor Raphael "Raffi" Amit of the Wharton School, who founded and leads the Wharton Global Family Alliance, examined the rise of direct deals in this year's benchmark study. Although more family offices are bypassing private equity funds to invest directly in private companies, few possess the necessary expertise.

"He stated that most families do not hire private equity professionals, who are skilled in evaluating transactions, structuring deals, managing exits, and adding value. These professionals typically work on club deals. However, it is uncertain whether this strategy will be successful."

Family offices are increasingly seeking non-commercial gatherings, which universities can provide, as most family-office conferences are dominated by sponsors, salespeople, and vendors.

The Family Office Roundtable Forum, a joint initiative between Wharton and prominent families, is highly sought after by family offices, with only 60 to 70 invitations available annually. The 2021 roundtable took place in Tokyo, while the 2022 meeting will be held in Zurich.

"Amit stated that although many family offices expressed interest in attending, they were limited to 76 families due to the desire for a private and intimate setting where ideas and perspectives could be shared freely. The event was purely focused on exchanging ideas without any commercial agenda."

Booth is hosting a Family Office Summit in May, inviting approximately 200 attendees from families and multifamily offices, including members of its family office council.

"Carbone stated that families can attend a weekly family office gathering, but the focus is on creating a secure network with no commercial objectives or product/service sales."