Family offices find an appetite for credit risk
Family wealth funds are dumping hedge fund positions and taking control of their own investment decisions. But as some move into direct lending – to replace retreating banks – they face new risk management challenges. Peter Madigan reports
It might sound like the kind of vague maxim found inside a fortune cookie: “Wealth does not pass three generations.” In fact, this old Chinese proverb is closer to a universal rule, according to bankers who work in an advisory capacity to family offices – the operations established by rich families to guard and grow their wealth.
“Around 90% of family wealth is destroyed by the third generation,” says David Barraclough, managing director in the family offices advisory business at HSBC in London
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