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CNBC WEALTH EDITOR

Family offices go clubbing, women earn their wealth cred and the ultra-wealthy give big in 2024, while preparing for a volatile 2025.

Jorge Perez and his sons Nicholas (left) and Jon Paul (right). Credit: Courtesy of Related Group

Greetings from Singapore!

As you read this, I’ll be wrapping up the CNBC Converge conference in Singapore and a terrific interview with Ferrari CEO Benedetto Vigna. I’ll send you all a quick recap Monday, complete with “Crazy Rich Asians” highlights from the Lion City. For now, suffice it to say that Singapore is attracting massive amounts of personal wealth for good reason.

Continuing my tour of new wealth hubs, I’ll be in Miami Beach next week for Future Proof Citywide in Miami and a special interview for Inside Wealth viewers.

On Tuesday, March 18, I’ll be interviewing Russ Savage, previously known as Russ Weiner, the founder of Rockstar Energy Drinks, on stage at Future Proof. Russ is like a human caffeine shot, full of energy, ideas and excitement. We’ll talk about how he sold Rockstar to Pepsi for roughly $4 billion and how he’s made the transition to become a full-time investor.

Also on March 18, at 4:30 p.m. ET, I’ll be hosting an interview with billionaire real-estate developer Jorge Perez and his sons Jon Paul and Nicholas. It will be live-streamed for Inside Wealth viewers, so click here to register. 

I’d love your questions, so if you have any for Jorge, Jon Paul or Nicholas, send them my way. We’ll be talking real estate, financial markets, Florida wealth migration and — most importantly — the secrets to keeping the business in the family, and the family in the business.

I’ll also be throwing a small reception afterward at the Versace Mansion. So if you’re in Miami and would like to join me for a drink, send me an email!

For this week’s newsletter, Hayley is running the show. She has a terrific piece on family office club deals, which have become popular among family offices but should also come with warning labels. She also has a piece on how women are preparing for the Great Wealth Transfer and how charitable giving rose in 2024, but 2025 may not look as bright.

Thanks for reading and watching. Send me your emails, questions and story ideas. And hope you’ll tune in for the Miami special!

Best, Robert

For sponsorship, event or content opportunities with Inside Wealth, please email us here. 

Credit: Drazen_ | E+ | Getty Images

Family offices, the private investment arms of ultra-wealthy families, have been putting a larger share of their investments into private equity, especially direct investments in private companies. When it comes to investing, family offices prefer to stick together, with co-investments making up 60% of their overall deal volume, per Deloitte. This percentage is higher for impact investments (74%) and startup bets (83%). 

These so-called “club deals” allow family offices to reduce their risk exposure and benefit from one another’s expertise. Some family offices are more comfortable trusting other entrepreneurs than they would be with banks or vendors.

“It is a pretty tight network,” said Vicki Odette, a lawyer who works with family offices, funds and institutional investors.

But there’s a catch, according to Odette, a partner at Haynes Boone. A family office can run afoul of regulators if it takes a leadership role in the club, making investment decisions and shouldering responsibilities like due diligence. This can be interpreted as giving investment advice, which requires registration with the Securities and Exchange Commission. Family offices are generally exempt from registering with the SEC — but not if they act like investment advisors.

“It can really be a trap for the unwary,” said Odette, who chairs the law firm’s investment management practice group. “Certainly the SEC will look at these things, and come in and say, ‘Prove to us that you aren't providing this advice.’”

Many family offices prize their privacy and are loath to register, according to Odette. They can mitigate this risk by sharing investment duties and decisions with the other club members. 

However, some family offices choose to seize the opportunity and set up their own registered investment advisories, or RIAs. They often have expertise in a specific industry or asset class — such as oil and gas or real estate — that attracts other investors.

“I don't think most families start off with the idea, ‘Hey, we're going to start managing other people's money,’” Odette said. “I think what happens is they start doing club deals, and then they have other families that are introduced to them that say, ‘I just want to rely on you. You know what you're doing.’”

Family office spinoffs are gaining steam. Cercano Management, born from late Microsoft co-founder Paul Allen’s family office in 2021, manages $10.5 billion in assets. CFT Capital Partners, formerly part of Panda Express co-founders Peggy and Andrew Cherng’s family office, closed its second fund of $781 million in August. 

Families that go this route typically have strong backgrounds in investing, according to Odette. Last month, Madison River Capital, a spinout of Blackstone billionaire Tony James’ family office, raised a $370 million private equity fund.

Principals setting up RIAs should take several precautions to keep the advisory business and the family office separate, Odette said. For instance, it is harder for the SEC to make a case for auditing the family office if it has employees who are distinct from the RIA.

Running an RIA comes with hefty expenses like auditing staff, even if they’re outsourced, as well as responsibilities to investors, Odette warned. 

“There's a risk that you could lose everything overnight, and they're probably going to sue you, and then the SEC is going to come in,” she said. “There's just this whole other level of scrutiny. 

“That's why some families say, ‘We just don't want to do that,’” she added. “‘We’re happy investing our own money.’”

— Hayley Cuccinello

Michael Bloomberg topped the Chronicle of Philanthropy's annual lists of the top 50 givers. Credit: Andrew Caballero-Reynolds | AFP | Getty Images

The annual Philanthropy 50 list was released last week.

2024 was a tough year for nonprofits, marked by layoffs and closures. However, there was a silver lining. According to the Chronicle of Philanthropy, the top 50 donors increased their charitable giving by nearly a third to $16.2 billion. Media titan Michael Bloomberg topped the list with $3.7 billion. 

The outlet noted that the ultra-rich’s philanthropy has not kept pace with their booming wealth. According to the Chronicle, last year’s giving was only about 15% higher than the $13.7 billion, adjusted for inflation, donated by the top 50 donors in 2000. Over the same time period, the wealth of the top 0.1% of Americans has more than quadrupled to $22.13 trillion, per Federal Reserve data.

Nonprofits face even more challenges this year as federal funding is in jeopardy and social causes like diversity, equity and inclusion policies are under attack. In a webinar hosted by the Chronicle, Cecilia Conrad, CEO of nonprofit Lever for Change, said that unrestricted grants are more vital than ever.

“If you really want an organization to be able to sustain their work over time, think about how you can supply more flexible funding, unrestricted funding, funding that can create durable capital,” said Conrad, whose organization connects donors and charities, “because those are the organizations that are best able to kind of ride these waves of what is happening in the world at large.”

However, most of the top donors have not followed the lead of billionaire MacKenzie Scott, who has used her Amazon stock to make unrestricted grants totaling billions of dollars. (Scott was not included on the list as her representatives declined to disclose her donor-advised fund giving to the Chronicle.)

There are ways to encourage donors to give with fewer strings attached.

Matti Navellou, head of collaborative philanthropy at multifamily office Iconiq, tries to meet her entrepreneurial clients where they are. Iconiq’s clients include tech billionaires Mark Zuckerberg and Jack Dorsey.

“We ask them, ‘If you were supporting a business, would you just support one of their teams or would you support all of their teams? Would you support the full leader or just part of the leader,’” Navellou said. 

During this political turmoil, some of her high-net-worth clients have mobilized quickly to, for instance, support reproductive health care in the U.S. However, many philanthropic families have paused to evaluate their next steps, Navellou said.

“It is so overwhelming, and also, the scale of funding needed to fix where we are right now, philanthropy can’t fill that gap,” she said. “It’s really the question of where philanthropy can be the most additive in this moment and in what spaces.

— Hayley Cuccinello

Thanks to the Great Wealth Transfer that’s already underway, women are expected to control $34 trillion in investable assets by 2030, according to McKinsey.

However, according to a new survey by Citizens Bank, many women feel unequipped to manage their finances — let alone an inheritance. 

In a survey of 1,500 adults, 84% of women reported lacking the confidence to manage an inheritance or other windfall, compared with 73% of men. Nearly half (45%) of women said they felt confused or overwhelmed in managing their personal assets, while only 27% of men said the same.

The problem is acute for female baby boomers, who are also expected to be the primary beneficiaries of the Great Wealth Transfer, according to Citizens’ Tina Hurley.

“Boomer women have been late to the table in terms of their financial education,” said Hurley, who leads planning and ultra-high-net-worth solutions at Citizens Wealth. “Boomer women, in particular, were older when they first started investing, and so we have some catch-up work to do.”

This lack of confidence manifests in several ways. More than half (51%) of women reported never having opened an investment account compared with 34% of men. Hurley said many women assume they don’t have enough money to warrant meeting with a financial advisor.

“Well, you do,” she said. “At the end of the day, it’s about establishing a goal and building on that.”

Hurley recommended that advisors use one-on-one conversations rather than group forums to explain the basics of financial planning. Along those lines, the survey found that 54% of women would listen but not participate in group discussions about finance, compared with 40% of men. 

Fortunately, women of younger generations are ahead of the game. Nearly 40% of surveyed Gen Z women said they had opened an investment account by the time they were 21 years old compared with 6% of female baby boomers who had done so at the same age.

“It’s a really good sign,” Hurley said. “The education that we are doing is getting to them, although I would say we need to do more.”

— Hayley Cuccinello

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