What will the profiles of successful family offices be in the future?

Family offices have evolved significantly over time, reflecting affluent business families’ changing needs and complexities. 

Initially established to manage the wealth of successful entrepreneurs, family offices have transformed into sophisticated entities serving many objectives and purposes. 

Today, approximately 9,000 family offices worldwide manage assets of at least $16 trillion, making them a force in global investments. 

Most family offices’ overall goal remains to create risk-adjusted growth to preserve or increase family wealth. Achieving this goal is becoming increasingly challenging. If one looks at the various studies that are available, wealthy families need to accept heightened complexity. 

Modern family offices blend tradition and innovation, adapting to the evolving financial landscape and family dynamics. Many family offices have been established since 2006. With a significant rise in their numbers in locations like the US, UK, Germany,  Switzerland and Singapore, they have become vital players in global investments,  including venture capital and increasingly impact investing. 

Challenges and trends 

Navigating the complexities of today’s financial markets requires family offices to  address various challenges and trends: 

1. Geopolitical Diversification: Wealthy families seek to diversify globally to mitigate risks and seize opportunities. 
2. Regulatory Compliance: Compliance with evolving tax and regulatory frameworks demands specialised expertise.
3. Family Governance: Preserving family legacy and values through effective governance and succession planning. 
4. Political Stability: Political instability influences investment decisions and wealth structuring strategies. 
5. Philanthropy: Families increasingly engage in philanthropic activities to create a positive impact and unite generations. 

Discussing how philanthropy aligns with family values can foster cohesion between an extended international family’s different branches and generations. Moreover,  involving the Next Generation of a family at a young age can instil pride, responsibility, and identification with the family values. This ongoing dialogue also fosters a long-term commitment to specific philanthropic activities. 

Succession within a family continues to be the most important – and challenging – issue that owning families face. The principals of family offices want to pass on a company and a legacy to the following generations. However, any discussion regarding succession in a family starts with a fundamental question: Is there a capable,  qualified Next Generation willing to take on responsibility and leadership? And when we are called in to support the owning family with this tricky and challenging question,  it’s not only about assessing qualifications, experience and competencies. The starting point is often the willingness of the NextGen to take on responsibility – and the ability of the NowGen “to let go”.  

Since 2018, we have observed that family offices worldwide have increasingly shifted their investments from real estate to start-ups. In addition, the proportion of club deals and smaller transactions – less than $25 million – is increasing. 

According to family officers we have talked to, one reason is that NextGen members of owning families are increasingly interested in working with – often in – a family office rather than in the original family business. This trend is also changing their investment behaviour – away from “rather boring property investments” and more towards investments in  “start-ups, scale-ups and new technologies”. This change in investment behaviour also requires a different skill set among family officers and employees within family offices. 

The profile of a successful family officer 

So, let us look closely at the external leaders within family offices. And from my perspective, the war for talent has long been a challenge for global family offices.  The demand for “top talents” for family offices worldwide has reached unprecedented levels, and understanding why it surpasses the available supply is crucial. Family offices have matured. 

They are no longer mostly small and intimate entities managing the extraordinary wealth of individuals and their families. Many have become institutionalised machines equipped with exceptional professionals to match. A little more than 50% of all global family offices have, on average, between 2 and 10 employees, but almost 25% employ more than 20 people.

As family offices evolve, so do the profiles of successful family officers of the future.  These professionals require a diverse skill set to navigate the complexities of wealth management and family dynamics. Key attributes will increasingly include: 

1. Strategic Vision and Innovation: Anticipating changes in the financial landscape and implementing forward-thinking solutions. 
2. Global Acumen: Cultural fluency and expertise in navigating international regulations and cross-cultural dynamics. 
3. Technology Proficiency: Leveraging technology for operational efficiency, risk management, and decision-making. 
4. Family Governance and Communication: Facilitating communication, aligning with family values, and managing relationships. 
5. Sustainable and Impact Investing: Integrating ESG principles into investment strategies for societal impact. 
6. Adaptability and Resilience: Navigating uncertainties and fostering a culture of agility and innovation. 
7. Cybersecurity and Risk Management: Protecting assets against digital threats and implementing robust risk management frameworks. 
8. Talent Development and Succession Planning: Nurturing a skilled team and ensuring smooth transitions in leadership. 
9. Ethical Leadership: Upholding transparency, accountability, and integrity in all dealings. 
10. Risk Management: Identifying and mitigating potential risks while communicating effectively. 

Family offices’ future relies on their leaders’ capabilities and competencies. The ideal family officer of the future will be a multifaceted professional with a holistic understanding of wealth management, family dynamics, and global trends. 

As family offices continue to play a big role in the financial landscape,  attracting and retaining top talent becomes paramount. By fostering a culture of continuous learning, embracing technological advancements, and prioritising ethical leadership, family offices can navigate the complexities of wealth management and ensure long-term prosperity for generations to come.

Andreas von Specht is the managing partner and chairman of AvS Advisors