7 Family Office Investor Archetypes

Author

Mr FamilyOffice
December 22, 2023

7 Family Office Investor Archetypes

It’s hard to pigeonhole family offices

There’s no typical family office

There is no typical family office investment portfolio

Circumstances and backgrounds influence their approach to investment decisions, wealth preservation, and generation

However, despite this diversity, we can identify archetypal family office investment portfolios

These exemplify common strategies and orientations

1/The Legacy Steward: 🏰

Endowment Portfolio Archetype

  • Typically managed by multi-generational families (3rd, 4th generation or beyond)

  • Assets Under Management (AUM) usually from $1B+

  • Employs a strategy similar to large university endowments

  • Prioritizes maximum diversification across various asset classes and geographies

  • Focuses on asset retention and long-term capital preservation

  • Often includes a mix of traditional and alternative investments

  • Real-life example: Cargill & MacMillan Family Office

2/ The Hands-On Investor: 💼

Direct Investment Portfolio Archetype

  • Prefers direct control over investments rather than relying on external fund managers

  • Typically avoids traditional stock markets and mutual funds

  • Investment strategy often includes a mix of real estate developments and private equity

  • Seeks to maintain a diverse portfolio while retaining significant control

  • Investments are often aligned with the family’s expertise or business background

  • Real-life example: Koch Industries

3/ The Entrepreneur: 🚀

Private Equity Portfolio Archetype 

  • Wealth created through business ventures and IPOs

  • Employs strategies similar to private equity funds, often investing in startups or buyouts

  • Focuses on specific industries, usually where the family has prior business experience

  • Involvement can range from passive investment to active management roles in portfolio companies

  • Real-life example: Elon Musk's Family Office, Excession


4/ The Property Tycoon: 🏢

Real Estate Portfolio Archetype

  • Predominant focus on building wealth through real estate investments

  • Allocates a significant portion of assets (50-75%) in property

  • Portfolio typically includes a range of real estate types such as apartments, hotels, and office spaces

  • Often involved in both the development and long-term ownership of properties

  • May also engage in property management activities

  • Real-life example: Grosvenor Estate, owned by the Grosvenor family in the UK

5/ The Market Maverick: 📈

Stock Market Archetype

  • Primarily focuses on investments in public markets

  • Strategy involves active stock picking and trading

  • Aims to build wealth through market timing and individual security selection

  • Portfolio is often diversified across different industries, sectors, and asset classes

  • May employ both traditional and alternative investment strategies

  • Real-life example: Soros Fund Management

6/ The Conscious Capitalist: 🌍

Impact Investment Archetype:

  • Emphasizes investments that are environmentally sustainable, socially responsible (ESG, SRI)

  • Aims to create positive social and environmental impacts alongside financial returns

  • Investment decisions consider ethical and sustainability factors

  • Often invests in renewable energy, sustainable agriculture, healthcare, and education

  • Balances the pursuit of profit with the need to address global challenges

  • Real-life example: Generation Investment Management, founded by Al Gore and David Blood

7/ The Flexible Allocator: 🧩

Hybrid Portfolio Archetype

  • Combines various investment strategies and models into a single portfolio

  • Customizes asset allocation to align with the family’s specific goals, values, and mission

  • Portfolio may include a wide range of asset classes and investment styles

  • Emphasizes flexibility to adapt to changing market conditions and family circumstances

  • Often employs a team of diverse investment professionals to manage different aspects of the portfolio

  • In reality, this archetype is quite common among family offices, reflecting the unique needs and preferences of each family

If you don't understand the motivation and goals of a family office, you cannot expect to work with them on deals or as a vendor

If you don't understand the motivation and goals of a family office, you cannot expect to work with them effectively on deals or as a vendor

Recognizing the unique priorities, values, and long-term objectives of each family office is crucial for establishing a successful partnership. Without this understanding, aligning interests and expectations becomes a challenge, potentially leading to misunderstandings and missed opportunities

Therefore, a deep understanding of what drives a family office is not just beneficial but essential for anyone looking to engage with them in any meaningful capacity

𝕏 highlights

Proactive due diligence:

Insights from a Texas-based single family office:

Who doesn’t love a SWOT analysis?

📚 what to read

What They Teach You At Harvard Business School by Philip Delves Broughton is a classic. An insider's perspective on the renowned MBA program at Harvard

📻 what to listen to

Economist readers will be familiar with The World Ahead issue. Subscribers can tune into the accompanying podcast

📺 what to watch

Black Mirror’s White Christmas is dark, thought-provoking, chilling. One of the best Black Mirror episodes and festive too (not one for younger kids)

Here’s the trailer

📰 family offices news roundup

And finally…

Time to wish you all a very Merry Christmas

I hope you can be with friends and family. If Chrismas is a difficult time, then I hope you have a peaceful time

All the very best! 🎄 ❄️ 🎅 🥂