Research - 04.06.2024 - 18:00 

Swiss Single Family Offices: Study provides a better understanding

Single family offices are an important part of the Swiss economy. A new study provides an insight into the structures, activities and characteristics of these businesses. Conducted in collaboration with the Institute of Banking and Finance at the University of St.Gallen (s/bf-HSG), the Swiss Single Family Office Association and UBS, the study provides a comprehensive overview of this important sector.

Single Family Offices (SFOs) are legal entities established by families to manage the wealth and needs of a wealthy family or multiple branches of a larger family. The characteristics of each SFO are defined by the unique values, visions and goals of the family it serves, resulting in a highly diverse industry. 

This study, the first systematic analysis of Swiss SFOs, estimates their total net worth at around CHF 600 billion. It examines the structures, activities and unique characteristics of these businesses. It also identifies the areas and regions in which SFOs invest and suggests ways to enhance Switzerland's attractiveness as a location for these companies.

Key data of the survey

The survey targeted Swiss SFOs known to the Swiss Single Family Office Association (both members and non-members) or clients of UBS. The survey was conducted between 27 November and 18 December and received responses from 70 of the 220 SFOs invited, representing approximately 25% of the industry. The SFOA estimates that there are between 250 and 300 SFOs in Switzerland.

“70% of SFOs hold a family business enterprise. They act as an institutional pillar for the management of multi-generational family businesses. In addition, 82% of those surveyed own at least one strategic investment. In addition to their importance for the Swiss financial centre, SFOs also contribute to the preservation and development of the Swiss real economy,” says study director Prof. Dr. Markus Schmid, professor of Corporate Finance at the Institute of Banking and Finance at the University of St.Gallen (s/bf-HSG).” 

Survey Findings in a nutshell: 

Net worth: The net worth of the SFOs surveyed in Switzerland ranges from less than CHF 250 million to more than CHF 10 billion. The total net worth of the SFO sector in Switzerland is conservatively estimated at around CHF 600 billion. The majority of these offices comprise a family business or hold strategic investments.

Location factors: Switzerland is facing increasing competition to a constantly growing competition as a family office location but remains a preferred location due to the origin of the beneficial owner, political stability, and legal certainty. The majority of SFOs support a self-regulatory licensing regime for the industry in order to protect, preserve and promote this Swiss economic sector internationally and to create a minimum quality standard for market participants.

Structure: Almost half of the SFOs are owned by family members. 70% of family offices serve the first three generations of the family, 20% serve families that are either in the 4th generation or older. A smaller share is held by foundations.

Distribution of roles and services: 70% of SFOs employ a CEO. Very few employ a Chief Technology Officer or a Chief Sustainability Officer. The main services offered by an SFO are asset allocation, investments, and accounting and reporting. Investment services are offered by almost all companies, while family wealth services and concierge services are less common. Most services are provided in-house. However, legal and tax planning advice is often outsourced.

Asset allocation: Investments in alternative asset classes, such as private equity, outweigh traditional asset classes. 32% of SFOs plan to adjust their asset allocation in 2024. Swiss investments are significantly overweighted: Around one third of SFO assets are invested in Switzerland.

Outlook: Over the next five years, SFOs see an increasing emphasis on risk management, geopolitical risk and cyber security. In sustainability, the focus is on 'impact investments' that generate financial returns and measurable social or environmental impact. 73% of SFOs prioritise positive social or environmental outcomes, although ESG score remains controversial.

Conclusion of the first report

“This first report on SFOs in Switzerland aims to promote an informed discussion on the development of the industry,” says Professor Markus Schmid, head of the study. "Our findings highlight the important role SFOs play in the management and succession planning of family businesses, benefiting both the Swiss financial centre and the real economy.”

Image: Adobe Stock / WS Studio 1985

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