Maximizing Investment Opportunities: BlackRock’s Strategic Partnerships with Family Offices in the Pursuit of Long-Term Growth
BlackRock, a global asset manager, is recognizing the growing trend of family offices seeking external resources to bolster their investment portfolios. As family offices, like institutional investors, allocate a significant portion of their funds to alternative and private investments, they are increasingly realizing the need for expertise and support in certain areas of investing. For instance, direct deals with companies have proven to be a challenge for many family offices, leading them to seek assistance from asset managers and other financial partners.
In the forthcoming 2023 family office report by BlackRock, family offices have identified key challenges in their private market investments. These challenges include gaining access to the best direct deals and managers, navigating high fees, managing liquidity constraints, and addressing the lack of transparency in certain investment opportunities. To overcome these hurdles, family offices are forming strategic partnerships with asset managers and relying on their insights, deal-sourcing capabilities, due diligence expertise, and allocation guidance.
Whitney Ehrlich, head of U.S. family offices at BlackRock, emphasizes that asset managers are becoming extensions of family office staff, providing valuable support in managing the volume of deals that come their way. With the expertise and knowledge possessed by asset managers, family offices can tap into subject matter experts who can properly evaluate investment opportunities. This approach allows family offices to avoid the need for a large in-house staff and instead leverage the specialized knowledge of external partners.
While family offices are seeking more assistance from their external partners, they are also streamlining their operations by reducing the number of managers they work with. This trend benefits firms like BlackRock, which offer broad expertise across different markets and asset classes. Private investments, in particular, are gaining popularity among family offices. According to the BlackRock survey, 28% of respondents intend to increase allocations to private credit, 23% plan to invest more in private equity direct deals, 22% want to allocate more to private equity funds, and 8% aim to increase commitments to real estate. The survey covered 120 family offices with a combined asset value of $243 billion.
Building trust with family offices is crucial for asset managers, and this is achieved by offering tailored solutions and opportunities that align with their investment goals. Ehrlich emphasizes the importance of understanding a family’s values and aspirations in managing their wealth. By addressing their specific needs and providing personalized services, asset managers can form strong and enduring partnerships with family offices.
However, as family offices have a wide range of options for solutions and services, the competition among asset managers has increased. To stand out, asset managers must continually raise the bar by delivering exceptional value, comprehensive solutions, and an in-depth understanding of family office requirements. Recognizing that internal resourcing and technology are areas where family offices seek assistance, asset managers like BlackRock are investing in these capabilities to meet the evolving needs of their clients.
BlackRock’s strategic partnerships with family offices demonstrate the growing trend of seeking external resources to enhance investment capabilities. Family offices value the expertise and support of asset managers in areas such as deal sourcing, due diligence, and portfolio construction. By fostering strong partnerships and understanding family office values, asset managers can provide tailored solutions and build trust with their clients. As family offices continue to evolve and grow in number, asset managers must continuously raise the bar to meet their expectations and deliver comprehensive services.