Rich families,

against traditional financial firms, said David Druley, chief executive of Cambridge Associates, which advises investors including family offices.

“They need people that are good at manager selection, that are good at strategy selection and understanding where to deploy capital and how to be effective,” Druley said Tuesday at the Milken Institute Global Conference in Beverly Hills, California.

More than half of families in the survey said they plan to increase direct investments in operating businesses or real estate this year. Returns from those direct investments averaged 8% last year, according to the survey. That figure may not reflect realized gains because some investments in private companies may not have been sold, Ms. Kuechler said. In 2016, family offices dedicated an average 12% of their portfolios to private investments, 7% directly and 5% through privateequity funds, according to the report.

On the hedge fund front, family offices dropped their average allocation to 10% in 2016 compared with 12% in 2014, said Ms. Kuechler.

“We’ve seen a steady decline in the hedge fund allocation over the last several years,” she said. “And there appears to be very little appetite for increasing the allocation.”

When asked if they plan to increase their allocation this year, 85% of respondents said no.

Natural resources, including commodities, had the best return last year for the respondents, averaging 15%. Domestic equities followed with a 13% return, compared with a total return of 12% for the S&P 500 index. Real estate investments by families returned an average of 9%, according to the survey. — Bloomberg