Family offices are moving from preserving wealth to creating it

Addepar, the wealth management technology platform, holds more than $9 trillion of client assets on its systems, of which $1.4 trillion belongs to hundreds of family offices. That aggregated and anonymised data gives the company an unusual view of how the portfolios of the very wealthy are changing, and Peter O'Brien, its chief revenue officer, has been reading it.

In written answers to Disrupts, O'Brien described family offices behaving less like custodians and more like institutions: taking direct positions, investing across generations rather than market cycles, and allocating almost half of their portfolios to alternatives. His answers also cover what the growing weight of private markets means for liquidity and risk, and what the advisers who serve these families will need that they do not have today.

"Family offices are shifting from wealth preservation to wealth creation," O'Brien said. "Increasingly, they are operating like sophisticated institutions, taking a more active role in investment decisions, pursuing direct opportunities and putting capital to work over longer time horizons."

The advantage they hold over most institutional investors is time. A family office can invest across generations rather than market cycles, and O'Brien said he is seeing them use that flexibility to be more deliberate about how they create long-term value.

Why the money is going private

The numbers carry the argument. Family offices on Addepar's platform now allocate 48 per cent of their portfolios to alternatives, a category that includes private companies, private equity, real estate, hedge funds and private credit. Private companies alone account for around 16 per cent of the average portfolio.

O'Brien's explanation is that companies are staying private for longer. He cited a rise in the median age of a company at IPO from 6.9 years in 2014 to 10.7 years in 2024, "so investors looking to participate in a company's full growth trajectory increasingly need access before it reaches the public markets".

Nor does he see this as a cyclical tilt. "Across the $9 trillion managed on Addepar's platform, roughly 40 per cent is invested in alternatives, and that proportion has remained remarkably consistent as the platform has scaled over the last 15 years. This is not a short-term allocation trend. Private markets are an integral part of sophisticated portfolios."

The next generation is not waiting

The great wealth transfer is usually discussed in terms of who inherits. O'Brien's point is that the inheritors are already in the room. "The next generation is not waiting to inherit wealth to become involved. They want a more active role in how it is invested today."

He put two figures behind that. More than £5.5 trillion is expected to pass between generations in the UK over the next 30 years, and 79 per cent of family office professionals say younger generations are already influencing investment strategy. Those younger entrants are showing greater interest in private markets and direct investments, and bringing higher expectations of transparency, personalisation and access. "They want to understand what they own, where they are exposed and how their investments are performing, without waiting for a quarterly report."

For the family offices and investment professionals serving them, that raises the bar. Trusted expertise still matters, O'Brien said, but the next generation expects it to come with immediate transparency, more tailored strategies and technology that gives them a deeper view of their wealth. Getting that combination right, in his view, is what builds relationships that last across generations.

Liquidity, ten years out

A portfolio that is half alternatives is a portfolio with capital calls, distributions and fund exposures to manage, and O'Brien was candid that this used to be done badly. "Historically, that was difficult and highly manual. Investors could hold too much cash as a buffer, creating a drag on returns, or too little, limiting their ability to act when opportunities arise."

What has changed is the ability to look through private fund holdings to the underlying sector and geographic exposures, to model expected cash flows and capital calls, and to run scenarios across the whole portfolio as far as ten years out. That, he said, lets family offices manage liquidity proactively and deploy capital more efficiently, and make informed decisions through periods of volatility rather than reacting to headlines.

What advisers will need

The role of the investment professional is changing because the families are. Preserving wealth and reporting on past performance, O'Brien said, "is no longer enough". Advisers need to help families evaluate new opportunities, manage increasingly complex portfolios and deliver tailored strategies across generations.

The foundation is trusted, connected data; the opportunity is turning it into intelligence. That is where he expects AI to land. "When AI is built on trusted, permission-aware portfolio data, investment professionals can move much faster from reactivity to proactivity. They can quickly investigate an exposure, understand performance or identify an emerging risk or opportunity without spending hours gathering and reconciling information."

"AI does not replace human judgement. It gives investment professionals more time to apply it."

Asked what the typical private wealth portfolio looks like in five years, O'Brien expects family offices to be more active and more sophisticated still, with deeper insight at their fingertips and the ability to act on it faster. That, he said, creates room for genuinely tailored portfolios that reflect a family's specific goals and adapt as those goals pass between generations. "For families, that should mean more choice, more personalisation and ultimately better investment outcomes."

Addepar's family office allocation figures are drawn from the aggregated, anonymised data of the hundreds of family offices on its platform, representing $1.4 trillion of the $9 trillion it administers.