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Entrepreneurs, not old money, the new face of family offices

By Jessica Tasman-Jones

Family office professionals are too focused on old money, despite the growth of entrepreneurial wealth, an industry professional says, as a new report reveals the world’s most entrepreneurial countries.

The Global Entrepreneurial Report, by London-based multi family office Oracle Capital, ranked India the most entrepreneurial country in the world, followed by Turkey and the US.

It assessed countries according to perception of entrepreneurs; attitude to risks in starting a new venture; attitudes to personal financial risk; and national levels of entrepreneurialism, amongst other factors.

Nine of the 10 least entrepreneurial countries were European, rounded out by Japan, which ranked at the bottom of the list of 33 major industrial nations and emerging economies.

Ireland, which came in at number seven, ranked as the top European country. All of the Bric countries (Brazil, Russia, India and China) ranked in the top 10.

Martin Graham, chairman of Oracle Capital, says the family office sector has not woken up to the changing face of wealth.

“Twenty to 30 years ago family offices would have been made up of a lot more old money. All the growth in family offices, to my mind, globally is going to come from more entrepreneurial and new wealth.”

He says when he started his career wealth creation was focused in the US and Europe, whereas now it’s coming from Asia, eastern Europe and the Middle East.

“A lot of family offices are looking after relationships that have been going on for years and they’re looking after those families, but they’re in a static state,” Graham says. “People who actually want to grow in the [family office] industry, they need to be able to cater to what entrepreneurs want, not just old money.”

Graham says while entrepreneurs have been very focused on building up their businesses, families from inherited wealth have been versed in managing their wealth from an early age.

Despite having a strong appetite for risk while growing their business, Graham says most entrepreneurs’ risk appetite, once they have a family office, is on par with that of inherited wealth.

“They might take more risk in a private equity investment in an industry they know themselves, but it’s more about wealth preservation and small amount of growth rather than spectacular returns,” Graham says.