Family offices chase AI but governance and infrastructure lag

Source Domain: spearswms.com

Family offices are prioritizing artificial intelligence (AI) as a core investment theme, yet there is a notable gap between their investment ambitions and actual allocations.
Real allocation in growth equity or venture capital, which often back early AI businesses, remains limited, with more than half having no such allocations.
Investments in necessary infrastructure for AI, such as data centers and logistics, are almost non-existent, despite being crucial for AI scalability.
Family offices continue to favor familiar assets like public equities and private investments, largely avoiding assets that traditionally provide protection like gold and cryptocurrencies.
Concerning inflation, family offices view it as a major risk and hence allocate almost 60% of their capital to alternative assets like hedge funds and real estate for stability rather than rapid growth.
Succession planning remains inadequate, with more than 80% of family offices lacking a clear succession plan for key decision makers.
Operational costs for family offices managing over $1 billion are rising, often exceeding $6 million annually, driven by competition for skilled staff and increased regulatory burdens.
Family offices are recognizing the need for better governance and conflict resolution mechanisms to navigate growing complexities and internal conflicts.

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