For decades, family offices have played by the same rulebook: park capital in private equity funds, let someone else manage the deals, and wait for the check to come in the mail. But that model is starting to crack—again. More and more family offices are taking back control and going direct—deploying capital into real estate, private credit, and venture deals themselves instead of handing it off to fund managers.
What’s driving the shift? Control. Cost. Performance.
The Resurrection of Direct Investing
Family offices aren’t just chasing higher returns—they’re chasing alignment. When you invest through a fund, you’re at the mercy of fees, carried interest, and whatever deal flow the GP brings in. If you’re reading this, chances are you’re not paying a private equity firm for market neutral results. Direct investing, on the other hand, gives you complete control over how you spend your time and where you put your money.
And the numbers back it up. A recent study found that only 40% of family offices now consider private equity central to their strategy, with growing allocations in high-growth sectors like tech and clean energy. (Tiger21)
The Problem with the Traditional LP Model
For years, the LP structure made sense—fund managers had the expertise, relationships, and resources to execute deals that individual family offices couldn’t. But as the competitive field for funds grows exponentially every year, more family offices are choosing to scale up their internal investment teams and build out a new family business. The downsides of private equity are harder to ignore:
- Fees Eat into Returns: Standard 2% management fees + 20% carry can gut upside potential, especially when current market conditions compress returns.
- Lack of Control: GPs control the deal flow, the timing of exits, and the reporting—LPs are often just along for the ride.
- Long Lock-Up Periods: Traditional PE funds tie up capital for years, limiting liquidity.
Lessons from Family Offices That Went Direct
Some of the largest and most sophisticated family offices have ditched funds entirely and built in-house teams to source and manage deals. We deal with many of them on a daily basis. Others have found a hybrid approach, keeping some fund exposure while selectively making direct investments.
What separates success from failure? Execution.
- Success Stories: Some family offices—including those we work with every day—have built out their own investment arms, hiring top-tier talent from private equity firms to manage direct deals. This allows them to cut fees, control decision-making, and move capital into high-conviction bets.
How Institutions Are Adapting to the Shift
Major firms like UBS, Campden Wealth, and JPMorgan are taking note—offering more customized investment structures and co-investment opportunities to keep family office capital engaged. Blackstone, for example, has expanded direct co-investment access to select LPs to prevent capital outflows. We should all be paying attention to why and how.
The shift is real, and emerging players in private equity should rethink their strategies to keep engagement high. Let’s talk. What’s everybody doing? Am I only seeing one tree in the forest?
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