VIEW IN BROWSER

CNBC WEALTH EDITOR

Family offices head to college, South Florida’s condo market faces challenges and the bull market adds another $10 trillion for the wealthy. 

Tomorrow is a big day for Inside Wealth! We’re hosting our first live discussion, kicking it off with billionaire real estate investor Jeff Greene. Jeff famously made $800 million shorting the 2007 housing bubble. Now based in Palm Beach, Florida, he’s building office towers and a hotel in West Palm, investing in financial markets, overseeing the K-12 school he founded — the Greene School — and raising his kids. Jeff is always a lively interview, and we’ll talk about the fading Florida Dream, the election, taxes, wealth migration, family offices, the stock market, art collecting and philanthropy.

Sign up here to register and send me any questions you might have for Jeff!

In this week’s newsletter, we look at the boom in family office programs at elite universities, which see family offices as a rich new source of MBA students and funding, and a fast-growing career track. Meanwhile, U.S. philanthropic giving remains strong. And the bull market turned two years old this week, so I look at the stock wealth created for the top 10%. 

Hope you’ll join us Friday! And keep spreading the Inside Wealth!

Best, Robert

Join CNBC's Inside Wealth for an exclusive live discussion with billionaire real estate investor Jeff Greene tomorrow, Friday, Oct. 18, at 11 a.m. ET.

We’ll be taking questions from Inside Wealth readers and discussing everything from the November elections to interest rates, taxes, financial markets, the wealth-management industry, the real estate market, the wealth migration to Florida, the school he founded and raising the next generation. 

Register now. We hope you’ll join us!

Cobb Gate, University of Chicago. Credit: urbsinhorto1837 | Getty Images

Top universities are tapping into the family office boom, with 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, a combination of research programs, courses and summits aimed at current and future family office executives. The initiative includes a council of 50 family office leaders and Booth alumni who will help steer the program.

“If you think of the family office market, the amount of capital overseen, and the importance of family offices commercially, in investing and philanthropy, the growth has been significant,” said Paul Carbone, co-founder and vice chairman of Pritzker Private Capital and a member of the Family Office Initiative Steering Committee. “The challenges they face have only grown. Here at Booth we have a deep intellectual capital base that that can be applied to these questions.”

The Booth Initiative is part of a surge in family office programs at top universities. Business schools at Harvard, Columbia, Northwestern, Pepperdine and other universities have started offering courses aimed at family offices or family-owned companies.

Yet the Booth program marks the biggest university bet on family offices in 20 years. In 2004, the Wharton School at the University of Pennsylvania and CCC Alliance (the family office peer group) teamed up to form the Wharton Global Family Alliance. With research, roundtables, courses, special presentations and workshops, the 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, along with expertise in one of the fastest-growing fields in finance. For family offices, the programs can help train the next generation of family office leaders at a time when talent is scarce and family offices are battling for experienced investors, accountants, lawyers and estate planners.

The number of family offices has grown to over 8,000 from about 6,000 in 2019, according to Deloitte. Their assets are expected to top $5.4 trillion by 2030, up from $3.1 trillion today. As more wealthy alumni launch family offices or work for one, they’re becoming an important pipeline of donors and funding. Trust companies, private banks and consulting firms eager for family office clients are also potential sponsors for the programs.

“It’s a great opportunity for Booth School, the students and the community,” said John C. Heaton, a finance professor at Booth who will start teaching a new MBA course next year called “The Family Office.”

The core of the Booth and Wharton programs is research. Private banks and wealth management firms already publish a steady stream of family office surveys and analyses. Yet the universities say their research will be more rigorous and objective.

Booth, for instance, said it’s working with software companies that provide back-office platforms for family offices to get anonymized, aggregated data on their portfolios and investment changes.

“That’s real data, not filtered opinions about what people are doing,” Heaton said.

The initiative will decide what to research based on suggestions from its family office council. When Booth asked family offices for research priorities, for instance, the top answer was behavioral economics. Booth is famous for its behavioral economics program, so helping family office professionals navigate the interpersonal relationships with families and their decision-making process will be useful, Carbone said.

“It was surprising to us that the No. 1 issue wasn’t investing or risk management,” Carbone said. “It was about the human dynamics.”

Wharton’s research is also driven by questions from family offices. Along with regular research papers, it produces an annual, 100-page “benchmarking study” covering a broad array of topics that's only available to the participating family offices.

Raphael “Raffi” Amit, professor of management at the Wharton School who founded and leads the Wharton Global Family Alliance, said one issue he looked at in this year’s benchmark study was the rise of direct deals. While more family offices are bypassing private equity funds to invest directly in private companies, for instance, few have the necessary expertise.

“Most of these families don't staff up with private equity professionals,” he said.  “Those are professionals who know how to evaluate a transaction, structure a transaction, manage the exit, how to add value. They do club deals. But putting it politely, the jury is still out whether this strategy will actually work.”

Universities can also offer an increasingly rare experience for family office professionals — non-commercial gatherings. With the majority of family-office conferences becoming overrun by sponsors, salespeople and vendors, family offices are turning to universities to convene more “pure” gatherings of peers.

Wharton’s annual Family Office Roundtable Forum has become one of the most coveted events of the year for family offices, limited to 60 or 70 invitations a year. Last year’s roundtable was in Tokyo, while the 2022 meeting was in Zurich, Switzerland. This year’s meeting, to be held next month in Washington D.C., will be focused on geopolitical risks with speakers including former CIA director David Petraeus and former House Speaker Paul Ryan.

“I have a lot of family offices that want to come, but I had to cap it at 76 families,” Amit said. “I want to keep it private and small enough so people are sharing ideas and perspectives. It’s a pure play. There is no commercial agenda.”

Booth is planning its own Family Office Summit next May. It’s inviting around 200 attendees from families and multi-family offices, including members of its family office council.

“Families can go to a family office gathering every week if they want to,” Carbone said. “But we’re creating a safe network. No commercial angle and no one selling a product or service.”

Credit: Fiordaliso | Getty Images

The U.S. accounts for more than half of all global philanthropic giving, according to a new report.

Total philanthropic financial gifts reached about $770 billion a year worldwide, according to a report from Citi Private Bank’s Philanthropic Advisory team and Citi GPS. Giving in the U.S. totals about $417 billion, according to the report.

The U.S. lead in global giving is even larger when compared with individual countries. The U.K. ranks second to the U.S. in philanthropy, with charitable giving totaling $18 billion — about 4% of the U.S. total. India’s total is about $15 billion, while the Netherlands is $3 billion and Ireland and Singapore are both at $1.2 billion.

Even as a share of gross domestic product, the U.S. towers above the rest of the world. Charitable dollar giving represents about 1.64% of the U.S. GDP, according to the report. In New Zealand, giving represents 0.77% of GDP while the U.K. is at 0.56% and Canada and India are at 0.44%.

Of course, the U.S. has the most generous tax incentives in the world for giving. And there is evidence of a decline in the number of givers in the U.S. as the tax incentives have changed for middle-income and less-wealthy taxpayers.

Yet giving can also come in the form of volunteering time and skills. According to the report, the economic value of hours volunteered worldwide totals about $560 billion a year. The report estimates that when dollar giving and volunteering are combined, global giving may reach up to $1.3 trillion a year.

The New York Stock Exchange in New York City. Credit:  Michael M. Santiago | Getty Images News

The bull market officially turned two years old this week, creating over $12 trillion in added wealth to U.S. households, according to data from the Federal Reserve.

The bulk of the gains went to those at the top. The top 10% of Americans — or those with a net worth of over $1.8 million — own 87% of all individually held stocks and mutual funds, according to the Fed.

According to the Fed, the top 10% has gained over $10 trillion in added wealth over the past two years. Their total wealth now tops $100 trillion — up from $76 trillion before the pandemic. While real estate values and private companies have also increased in value since the 2019, stocks accounted for over 80% of the wealth gains of the top 10%.

Even among the top 10%, most of the gains have gone to the ultra-wealthy. The top 1% of Americans, or those with net worths of at least $10 million, have seen their stock wealth rise by $6 trillion over the past two years. Their holdings of corporate equities and mutual funds now top $20 trillion.

The total wealth of the top 1% has surged to over $46 trillion, up from $33 trillion in 2019, according to the Fed.

While the stock market could bounce around by the end of the year, the two-year bull run has created a large cushion for the wealthy against potential volatility ahead.

Residential apartment buildings at Brickell Key island in Miami, Florida. Credit: Alexander Spatari | Getty Images

South Florida’s condo market is facing a rapid increase in inventory that’s likely to accelerate after Hurricane Milton, according to brokers.

Condo listings in Coral Gables and Delray Beach were up over 70% in September, according to data from Douglas Elliman and Miller Samuel. West Palm Beach, Wellington and Ft. Lauderdale all saw condo inventory surges of over 60%.

There is now a 10-month supply of condos in South Florida, with over 20,000 units for sale, according to the Miami Association of Realtors. Not surprisingly, prices have started falling. In Miami, prices are down 12% — the biggest drop of any major housing market in the country, according to Realtor.com. Jacksonville, Orlando and Tampa all saw price drops of more than 5%.

Brokers say the recent hurricanes are likely to lead to even more listings and inventory. A new law requiring condo buildings to fund large cash reserves and improvements has led to a surge of condos on the market, especially in older buildings. Insurance costs in Florida are causing even wealthy buyers to look elsewhere.

Signed contracts for Miami homes priced over $3 million fell 57% in September, according to Miller Samuel and Douglas Elliman. In Palm Beach, contracts for over $5 million are down 50%.

For now, the ultra-high-end condo market in Miami and South Beach remains strong, brokers said. Yet many of the tall, lower-priced towers on Brickell and in Sunny Isles are seeing listings quickly pile up.

South Florida has a long history of real estate booms and busts. We’ll see if this time is different. 

• America’s new millionaire class — plumbers and HVAC entrepreneurs.

• How much does it take to be considered “ultra-high-net-worth?” Some say $10 million, others $100 million.

• Family offices need to embrace new technology and “stop relying on Excel.”

• Inside the secretive billionaire dynasty that controls Boar’s Head deli meats.

• Harvard president says he’s “disappointed” in a fundraising drop after last year’s campus turmoil.

• Movin’ out — Billy Joel lists his Long Island home for $49 million. The property taxes alone are $568,000 a year.

• France’s potential tax hikes on the wealthy may cause some to flee.

• Ed Ruscha’s famous “Standard Station” painting comes up for auction at Christie’s at over $50 million.

Ed Ruscha (b. 1937) Standard Station, Ten-Cent Western Being Torn in Half, 65 x 121½ in (165.1 x 308.6 cm), Painted in 1964, Estimate on request; in excess of $50 million. Credit: Christie's Images Ltd. 2024

Forwarded this email? Sign up here to join the Inside Wealth community.