Family offices are becoming a popular solution for the wealthiest families who want to protect and grow their fortunes, but these clients are even pickier and more demanding than regular customers.
Flemming Højbo writes analyses for AMWatch about the Nordic asset and wealth management sector. Højbo was head of communications in the asset management industry for 15 years, and before that, he worked for 25 years as a financial and business reporter and as an editor. | Photo: Pr / Jan Bjarke Mindegaard
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Wealthy Nordic families with fortunes to protect and cultivate are the most prestigious clients of the asset and wealth management industry.
This segment of clients is growing significantly at the moment, and they are demanding and powerful customers, who can increasingly challenge asset and wealth managers on pricing. They can also bypass bankers, asset and wealth managers entirely by establishing family offices.
A growing number of billionaires
The number of super rich people is growing notably. For example, the number of ‘kronor billionaires’ in Sweden was 542 a couple of years ago, according to an analysis in the daily newspaper Aftonbladet. When it comes to ‘dollar billionaires’, Sweden has one of the world’s highest proportions per capita. Forbes magazine listed 43 Swedes worth a billion dollars or more in its 2024 list of the wealthiest individuals in the world.
In total, 71 Nordic dollar billionaires were listed by Forbes. Some of these billionaires belong to the same families, typically representing more generations, such as the Danish Kirk Kristiansen family that owns LEGO, the Swedish Kamprad IKEA dynasty or the Finnish Herlin family, which owns KONE, one of the world’s largest manufacturers of elevators and escalators.
Family Offices evolve significantly
Family Offices are increasingly important for investment management and, in general, managing the wealth of rich families. These privately held entities also often handle other related tasks for the families, such as managing legal affairs, property management, philanthropic projects, and succession planning.
The structures of family offices are evolving significantly. There are currently three main setups: the single family office, the multi-family office and the virtual family office.
The single-family office is typically for families with large fortunes, the super rich and billionaires which have such significant wealth and specific requirements that it makes sense to dedicate and tailor the office to one family covering the costs.
The multi-family office serves more families, and it is an organizational structure that is becoming more and more popular, as it makes it possible for people who are not part of the super rich class to gain from the exclusive services of a family office and share the costs with other wealthy families. A multi-family office is often established as a single family office that expands and over time offers its services to more families.
The virtual family office is a solution in a world of globalization where family members are spread all over the world. Thanks to digital tools, a virtual family office can deliver services remotely and keep costs down.
Due to the professionalization of family offices in the Nordics, they are able to attract and hire senior experts in investments, asset allocation, legal affairs, accounting, tax planning, etc. from the financial industry and leading consulting firms.
Approximately 300 Nordic family offices
The idea of a family office for the wealthy isn’t new.
The American Rockefeller family, who made their fortune in the petroleum industry in the late 19th and early 20th century, established family offices more than a century ago. But it wasn’t until 30-40 years ago that family offices gained popularity.
Some of the wealthiest Nordic families established their family offices during that period.
However, over the last 10-15 years, a large number of family offices have popped up. As the number of ultra-high net worth individuals worth at least USD 30bn in investable assets has increased significantly, the idea of family offices has spread to other wealthy people besides billionaires.
There are no official statistics for the number of family offices, but a guestimate is that there are approximately 300 entities currently operating in the Nordics, depending on how the offices are categorized.
Danish financial media Økonomisk Ugebrev recently estimated that there were around 60 family offices in Denmark.
The Nordic family offices with the largest assets under management include the families behind some of the most famous Nordic brands, such as the Persson family, which owns H&M and runs a family office called Ramsbury Invest, and the LEGO family of Kirk Kristiansen which invests through its family office, Kirkbi.
The picky clients
Family offices are picky clients for asset and wealth managers, as they are often in a position where they can pick and choose among products and services from the financial industry. They can bargain and obtain the most favorable prices, if they need any assistance from the financial sector at all.
Many family offices can carry out transactions themselves, and they have the volume of capital to invest directly into private equity projects, properties or individual private companies. When they do request products and services from private banks, asset management companies, etc., they have an in-house specialist with the inside knowledge and know-how to challenge them on quality and prices.
Besides that, the family offices are not necessarily dependent on local and regional financial institutions, as they are also attractive clients to international players.
Although it would mean giving up the prestige of serving the super rich, it might be a better business decision for many asset and wealth managers to stick to the large majority of the not-so-rich but still rather wealthy clients – a segment of customers that is less demanding and picky than the clients with a family office.
Flemming Højbo has researched and reported on the financial sector for decades. Flemming was a financial and business reporter, and an editor, for 25 years, as well as a communication partner and head of communication in the asset and wealth management industry for 15 years.