Private Wealth, Alternative Assets, and AI: Smarter Investing with Legal Tech

Imagine receiving a $10M inheritance. While most of us might dream of a property deposit, a new car, or a luxury holiday, this scenario is quite common in cities like New York, where generational wealth transfers fuel the property and private school markets. 

According to UBS, an estimated $83.5T is set to be transferred from the wealthy to their heirs over the next 20-25 years. Private capital firms are keenly targeting this money. 

This makes sense. UBS’ global family office survey reveals that 42% of the overall strategic asset allocation is dedicated to alternative assets. Over half of this (22% of the total) is allocated to private equity, with 10% going to real estate, followed by hedge funds (5%) and private debt (2%). 

This allocation is significantly higher than the average allocation to alternatives across the total asset universe, which J.P. Morgan reported at just 14.9% by the end of 2023. 

Moreover, Bain & Capital predicts that a quarter (25%) of the growth in assets under management (AUM) in private markets between now and 2033 will come from private wealth. This includes high-net-worth and ultra-high-net-worth individuals, as well as the ‘mass affluent’. 

Hamilton Lane, a private markets service provider, found in a recent survey that over half of respondents (56%) plan to allocate more capital to private markets in 2025. This interest is driven by the enhanced performance and diversification that private markets offer. 

Family Offices 

The super wealthy often invest through family offices, which are privately-owned firms managing investments and trusts for one or multiple wealthy families. 

Globally, there were more than 8,000 single family offices in 2024, according to Deloitte. This number is expected to increase by 75% to nearly 11,000 single family offices by 2030. 

This growth is separate from multi-family offices, which manage the affairs of several families. Together, family offices managed $3.1T last year, a figure Deloitte forecasts will grow by 73% to $5.4T by 2030. 

This expansion is supported by a ‘meteoric rise in family wealth’. Total wealth held by families with family offices was $3.3T at the end of 2019 and is expected to almost triple to $9.5T by 2030, marking a 189% increase. 

However, as these smaller entities take on tasks and risks previously held by large banks, they need support to match the services provided by bigger players, such as cybersecurity and diligence. 

While some family offices employ hundreds of people, seven out of 10 surveyed by UBS employ fewer than 10 people. 

The gaps are significant: High net worth individuals are prime targets for cybercrime, but only 40% of those surveyed by UBS have cybersecurity controls in place. Just 31% have risk management processes beyond investment-related risks. 

As family offices and wealth managers allocate more to private markets, this adds complexity to deal flow, due diligence, and reporting. 

Fortunately, AI can help level this playing field by providing sophisticated capabilities without requiring massive infrastructure investments. This allows smaller firms to use AI to support faster, smoother workflows. Family offices or wealth managers can use AI to analyze thousands of documents across multiple data rooms simultaneously, flagging risks and opportunities for human review. 

For instance, GTIS, a global real estate firm, reduced the time spent on due diligence questionnaires from 5-10 days to just 1-2 days using specialized legal AI. 

Bain & Company’s Global Private Equity report states that “today’s winners are figuring out where AI can deliver meaningful results and how to build organizational support for AI adoption”.  

A version of this blog first appeared on the Robin AI website.