Some families aren't concerned by cost creep, but their children usually are, consultants to the ultra-wealthy told Inside Wealth.
A version of this article first appeared in CNBC's Inside Wealth newsletter with Robert Frank, a weekly guide to the high-net-worth investor and consumer. Sign up to receive future editions, straight to your inbox.
As the world's wealthiest pad their fortunes, they are spending more to run their private investment firms, according to a recent report by J. P. Morgan Private Bank.
Family offices with at least $1 billion in assets spent an average of $6.6 million in annual operating costs, the bank's survey found. The average cost has increased by $500,000 since JPMorgan's previous family office poll conducted in 2023.
Family office consultant Kirby Rosplock said the rise in expenses is the natural result of the surge in wealth.
"Usually offices try to reduce their expense line items if they feel like their assets are shrinking," said Rosplock, CEO of Tamarind Partners. "Most people don't recognize that the volume of wealth created just in the last decade means that you need more heads, more bodies, more people to support more systems."
William Sinclair, global co-head of J. P. Morgan Private Bank's family office practice, credited much of the increase in expenses to rising compensation costs on investment talent, which are the largest portion of operating budgets.
"There is a war for talent, and family offices are competing against other financial services and related businesses -- private equity and hedge funds -- if they're trying to build out an investment team," he said.
