Damon Mcknight
Australia's ultra-rich have been getting richer, with the wealth of the richest 200 people nearly tripling as a share of GDP over the last two decades. This growing inequality has been attributed in part to Australia's distorted tax system. So, how do they manage their money? Many wealthy Australians have turned to ''family office' investment structures, which provide an all-encompassing wealth management service. These structures allow rich families to professionalise their money management and maintain control over their wealth. In terms of investments, the ultra-rich tend to favour tangible assets such as property, fine art, luxury cars, and term deposits. They also invest in international and Australian shares, commercial property, and private equity. While the ultra-rich may take on similar risks as their less wealthy counterparts, they have a larger level of diversification and access to exclusive investment opportunities.
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What You'll Learn
Family offices
The primary appeal of family offices lies in the level of control and personalisation they offer to wealthy families. These structures provide a bespoke management strategy tailored to substantial wealth, ensuring a seamless transition of wealth across generations. Family offices cater to the expansive visions and personal ambitions of ultra-high-net-worth individuals, who typically have investments of $10 million or more outside of their family home.
The growth potential for the family office sector in Australia is significant, especially for the multi-family office segment, which lags behind its US and European counterparts. The increasing popularity of family offices in Australia is evident, with an estimated 2000 family or private offices operating in the country as of 2025, representing a 150% increase over the past decade.
The discreet nature of family office operations poses challenges for investment management firms seeking new investment opportunities. However, platforms like Dakota Marketplace aim to streamline the process by connecting investment firms with influential family offices, fostering lasting partnerships.
Overall, family offices play a pivotal role in the financial ecosystem, empowering Australia's ultra-rich to effectively manage and transition their substantial wealth across generations.
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Wealth management
Australia's ultra-rich have a variety of methods for managing their wealth. One popular method is the use of "'family offices', which are all-encompassing wealth management structures designed to provide oversight and control over family money. These offices can be used to professionalise money management and create a succession plan for future generations. Australia has an estimated 250 single-family offices, with notable families such as Rinehart, Lowy, and Packer utilising this wealth management approach.
The ultra-rich in Australia also invest in a diverse range of asset classes. In the first half of 2023, amidst economic uncertainties, cash and term deposits were the top asset choices, followed by shares, real estate, and exchange-traded funds (ETFs). International and Australian shares typically make up about 15% of their portfolios, with a preference for unhedged holdings and wholesale managed funds. UHNW clients tend to hold more property, especially commercial property, and they often invest directly or through 'club' investments or wholesale property syndicates.
Additionally, alternative assets such as infrastructure, private equity, and commodities constitute a small portion of their portfolios (around 1-2%). Direct commercial property and ownership stakes in family businesses are also favoured by UHNW clients. While UHNW clients generally exhibit a conservative investment approach, they do so differently from regular clients, involving family members in decision-making and considering environmental and social impact in their investments.
The spending habits of Australia's ultra-rich also provide insight into their wealth management. They often purchase tangible assets such as luxury properties, fine art, fine wine, and expensive luxury cars. Sydney and Melbourne, specifically suburbs like Port Piper, Vaucluse, Rose Bay, and Toorak, are known for housing some of the wealthiest individuals in the country.
It is worth noting that the wealth of Australia's richest has been increasing, with the top 200 people's wealth nearly tripling as a share of GDP over the last two decades. This growing inequality has been attributed in part to Australia's distorted tax system.
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Investment strategies
Australia's ultra-rich have been increasingly adopting "family office" investment structures to manage their wealth. This involves professionalising their money management to ensure top-quality oversight and the optimal structure for running their family money. This approach provides them with greater control over their wealth compared to traditional private wealth management.
In terms of specific investment strategies, the ultra-wealthy in Australia tend to diversify their portfolios across various asset classes, including cash and term deposits, shares, real estate, exchange-traded funds (ETFs), and alternative assets. They often hold a larger proportion of their wealth in physical assets, such as commercial property, full ownership or stakes in family businesses, luxury properties, fine art, fine wine, and expensive luxury cars.
International shares and Australian shares typically make up around 15% of their portfolio, with a growing preference for international holdings. They also invest in wholesale managed funds and direct investments through international brokers. UHNW clients tend to hold more property, especially commercial property, and often make "club" investments with friends or through wholesale property syndicates.
When it comes to Australian shares, private office clients of the ultra-wealthy tend to utilise funds more frequently than regular wealth advisory clients. They also exhibit a higher preference for index and exchange trade funds (ETFs), delegating the buy/sell decision-making and portfolio management to professionals.
In times of economic uncertainty, such as during the war in Ukraine or periods of high inflation, Australia's ultra-rich tend to retreat to safe-haven assets like cash and term deposits. They also consider environmental and social impact when investing, with a focus on sustainability.
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Asset allocation
Australia's ultra-rich have increasingly adopted 'family office' investment structures to manage their wealth. These structures provide an all-encompassing wealth management solution, allowing wealthy families to professionalise their money management and maintain control over their assets. As of 2016, there were an estimated 250 single-family offices in Australia, catering to the country's richest families and individuals.
In terms of asset allocation, the ultra-wealthy in Australia tend to favour a diverse range of investments, including safe-haven assets such as cash and term deposits, particularly during times of economic uncertainty. In the first half of 2023, cash and term deposits were the top asset class among the ultra-rich, followed by shares, real estate, and exchange-traded funds (ETFs).
International and Australian shares typically make up about 15% of their portfolio, with a growing preference for international holdings. They also hold alternative assets, such as infrastructure, private equity, and commodities, which account for a small percentage of their overall portfolio (around 1-2%).
Ultra-high-net-worth (UHNW) individuals often hold a larger proportion of their wealth in physical property, especially commercial property, which they may own directly or through 'club' investments or wholesale property syndicates. They also tend to hold assets such as fine art, wine, and luxury cars, as well as direct ownership or part stakes in family businesses.
While the ultra-rich take on similar risks as other investors in terms of overall asset allocation, they benefit from greater diversification and access to exclusive investment opportunities. They often focus on growing their wealth for future generations rather than taking large, speculative risks. Additionally, the younger generation of wealthy individuals is increasingly considering environmental and social impact when making investment decisions.
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Spending habits
Australia's ultra-rich have unique spending habits that set them apart from the average individual. While they have the means to acquire any material possession, their spending often goes beyond flashy cars or extravagant homes. Here are some insights into their spending habits:
Experiences and Investments
The ultra-wealthy in Australia prioritise spending on experiences and investments that offer lasting value and contribute to their personal growth. They understand that a luxury item may provide temporary satisfaction, but investing in memorable journeys, exclusive events, and new activities can bring lasting joy and broaden their perspectives. This shift towards experiential spending is a notable trend among the ultra-rich, reflecting their desire for enrichment beyond material possessions.
Health and Wellness
Maintaining their health and wellness is a key focus for Australia's ultra-rich. They invest significant sums in personalised training and nutrition plans, exclusive gym memberships, and regular consultations with renowned medical professionals. They embrace preventative healthcare, ensuring they take proactive measures to maintain their physical and mental well-being. This includes access to cutting-edge medical treatments and regular health check-ups, reflecting their commitment to staying fit and healthy.
Luxury Assets and Collectibles
Australia's ultra-rich still indulge in luxury assets and collectibles, a traditional aspect of their spending habits. In 2023, they invested in superyachts, coloured diamonds, rare whiskies, and classic cars, such as a 1962 Ferrari 330 LM/250 GTO that sold at auction for $51.7 million. Art is also a popular acquisition, with 48% of global ultra-high-net-worth individuals (UHNWIs) considering it a valuable investment, according to Knight Frank's 2024 Attitude Survey.
Relationships and Social Investments
The ultra-wealthy understand the importance of cultivating strong relationships and social connections. They invest in activities that strengthen their bonds with family and friends, such as intimate gatherings and family retreats. They value quality over quantity in their social circle, surrounding themselves with positive influences that contribute to their personal growth and emotional stability. This curated network of relationships becomes a source of consistent joy and support in their lives.
Property Investments
Australia's ultra-rich are attracted to luxurious properties in the country's most expensive locations. In 2021, they spent nearly AU$7 billion on luxury properties, particularly in Sydney's exclusive suburbs like Port Piper, Vaucluse, and Rose Bay. Melbourne's suburb of Toorak, located near the CBD, is also home to some of the wealthiest individuals in the country.
While this provides an overview of their spending habits, it's important to recognise that each individual within this ultra-rich cohort may have unique financial strategies and priorities.
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Frequently asked questions
Australia's ultra-rich tend to invest in a variety of asset classes, including cash and term deposits, shares, real estate, exchange-traded funds (ETFs), and alternative assets such as infrastructure, private equity, and commodities. They also hold more property, especially commercial property, compared to their less wealthy counterparts. Additionally, they may invest in tangible assets such as fine art, wine, and luxury cars.
Many of Australia's ultra-rich families have adopted family office structures to professionalise their money management. These structures provide an all-encompassing wealth management approach, allowing wealthy families to have better control over their wealth compared to traditional private wealth management. As of 2016, there were an estimated 250 single-family offices in Australia, with notable families such as Rinehart, Lowy, and Packer utilising this approach.
Australia's ultra-rich tend to take a conservative approach to investing, focusing on growing their wealth for future generations rather than taking on speculative risks. They also have a larger level of diversification in their portfolios. In the first half of 2023, wealthy investors retreated to safe-haven assets due to uncertainties associated with the Ukraine-Russia conflict and rising inflation.
