Private wealth, alternative assets, and AI: Smarter investing with legal tech

What would you do with an inheritance? Property deposit? Maybe a car or a luxury holiday? Now imagine your parents give you $10M. A pipe dream for most of us, yes, but a common enough occurrence in cities like New York, where the property and private school markets are now fueled by generational wealth transfers.  

An estimated $83.5T is being transferred from the wealthy to their heirs over the next 20-25 years, according to UBS. And private capital firms are targeting this money.  

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

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

On top of that, a quarter (25%) of growth in assets under management (AUM) in private markets between now and 2033 is expected to come from private wealth, from high-net-worth and ultra-high-net-worth individuals as well as the ‘mass affluent’, according to management consultancy Bain & Capital.  

In a recent private wealth survey, Hamilton Lane, a private markets service provider, found that over half of respondents (56%) planned to allocate more capital to private markets in 2025. Interest is fueled by the enhanced performance and diversification that private markets can offer.  

‍

Family offices

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

Globally, there were more than 8,000 single family offices in 2024 according to estimates by Deloitte. The consultant expects this to increase by 75% to nearly 11,000 single family offices by 2030.  

And this is separate from multi-family offices, which manage the affairs of several families, rather than just one. Put together, family offices managed $3.1T last year, which Deloitte forecasts to grow 73% to $5.4T by 2030.  

This growth 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, a 189% increase.  

‍

Cyber security risks

But as these smaller entities take on the tasks and assume the risks previously held by large banks, they need support to match what the big players can provide when it comes to services like 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 cybercrime targets but just 40% of those surveyed by UBS have cybersecurity controls in place, and only 31% have risk management processes that go beyond those do to with investments.  

Meanwhile, as family offices and wealth managers allocate more to private markets, this brings additional complexity to deal flow, due diligence, and reporting.  

Luckily, AI can help to level this playing field, providing sophisticated capabilities without requiring massive infrastructure investments. This allows smaller firms to use AI to support a faster, smoother workflow. Family offices or wealth managers can use AI to analyze thousands of documents across multiple data rooms at the same time, flagging any risks and opportunities to be checked by people.  

GTIS, a global real estate firm, used to spend 5-10 days completing due diligence questionnaires, but can now complete this in just 1-2 days by 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”.  

‍