University of Chicago Booth School of Business.
Image courtesy of the University of Chicago Booth School of Business.
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Top universities are capitalizing on the family office craze, launching a growing number of programs and courses aimed at training the next generation of family office leaders.
Last week, the University of Chicago Booth School of Business launched the Booth Family Office Initiative, which combines research projects, courses and summits for current and future family office executives. The program includes a committee of 50 family office leaders and Booth alumni who will help guide the program.
“If you think about the family office market, the amount of capital regulated and the importance of family offices in business, investing and philanthropy, the growth is very significant,” said Paul Carbone, co-founder and vice chairman of Pritzker Private Capital. Member of the Family Office Initiative Steering Committee. “The challenges they face will only grow. At Booth, we have a deep foundation of intellectual capital that we can apply to solve these problems.”
Booth’s plan is part of a surge in family office programs at top universities. Business schools at Harvard, Columbia, Northwestern, Pepperdine and other universities have begun offering courses focused on family offices or family businesses.
Yet the Booth plan marks the university’s biggest bet on family offices in 20 years. In 2004, the Wharton School of the University of Pennsylvania joined forces with the CCC Alliance, a peer group of family offices, to form the Wharton Global Family Alliance. Through research, roundtables, courses, special presentations and seminars, Wharton Global Family Alliance has become a leading resource for family offices and the broader wealth management industry.
For top universities, family offices offer a rich potential source of research funding and business school students, as well as expertise in one of the fastest-growing areas of finance. For family offices, these programs can help train the next generation of family office leaders at a time when talent is scarce and family offices are competing for experienced investors, accountants, attorneys and estate planners.
According to Deloitte, the number of family offices has increased from about 6,000 in 2019 to more than 8,000. Their assets are expected to grow from the current $3.1 trillion to $5.4 trillion by 2030. As more wealthy alumni open or work for family offices, they are becoming important conduits of donors and funds. Trust companies, private banks and advisory firms hungry for family office clients are also potential sponsors of the scheme.
“This is a great opportunity for Booth, students and the community,” said John C. Heaton, a professor of finance at Booth who will begin teaching a class next year. A new MBA program called Family Office.
Research is at the core of programs at Booth and Wharton. Private banks and wealth management firms have released a steady stream of family office surveys and analyses. However, universities say their research will be more rigorous and objective.
For example, Booth said it is working with software companies that provide back-end platforms for family offices to obtain anonymized aggregate data on their portfolios and investment changes.
“This is real data, not a filtered opinion about what people are doing,” Heaton said.
The program will determine the content of the study based on recommendations from the Family Office Council. For example, when Booth asked family offices about research priorities, the top answer was behavioral economics. Carbon said Booth is known for its behavioral economics courses, so it would be useful to help family office professionals navigate their relationships with families and their decision-making processes.
“To our surprise, the No. 1 issue was not investment or risk management,” Carbon said. “It’s about human dynamics.”
The Wharton study was also driven by family office issues. In addition to regular research papers, it publishes an annual 100-page “benchmark study” covering a wide range of topics, available only to participating family offices.
Wharton management professor Raphael “Rafi” Amit, who founded and leads the Wharton Global Families Alliance, said one of the issues he focused on in this year’s benchmark study was the rise of direct deals. For example, while a growing number of family offices are bypassing private equity funds and investing directly in private companies, few have the necessary expertise.
“Most of these families don’t have private equity professionals on staff,” he said. “These are professionals who know how to evaluate deals, structure deals, manage exits, how to add value. They do club deals. But the jury is still out, to put it politely, on whether this strategy actually works.”
Universities can also provide family office professionals with an increasingly rare experience—non-business gatherings. With most family office conferences being swamped by sponsors, salespeople and vendors, family offices are turning to universities to host more “pure” gatherings of peers.
Wharton’s annual Family Office Roundtable Forum, a collaboration between Wharton and leading families, has become one of the most coveted events of the year for family offices, limited to 60 or 70 invitations each year. Last year’s roundtable was held in Tokyo, and the 2022 conference will be held in Zurich.
“We have a lot of family offices that want to join, but we have to limit it to 76 families,” Amit said. “We want to keep it private and small enough for people to share ideas and opinions. It’s a pure game. There’s no commercial agenda.”
Booth plans to host his own family office summit next May. It invited around 200 attendees from family and multi-family offices, including members of the Family Office Council.
“Families can attend weekly family office gatherings if they wish,” Carbone said. “But we are creating a secure network — there is no business angle and no one selling products or services.”
