The Family Office Insights Series – Global Edition

Despite economic and geopolitical uncertainty, family offices remain optimistic about their ability to navigate rocky terrain, as 70% expect to see their AUM rise in 2024, while 79% expect the family’s total wealth to increase. Balancing risk and opportunity, family offices plan to maintain a long-term investment outlook, but remain nimble by diversifying their portfolios and capitalizing on opportunistic deals.

Family offices rank recession fears, geopolitics, and inflation as this year’s top three market risks. In tandem, managing investment risk is the top strategic priority for family offices this year, with 61% seeking new investment opportunities, 53% looking to diversify their portfolios, and 33% employing inflation mitigation tactics.

Private equity has surpassed public equity as the number one asset class family offices invest in. In 2023, private equity accounted for 30% of the average family office portfolio, up from 22% in 2021, while public equities accounted for 25%, down from 34% in 2021. This year, nearly 30% of family offices plan to invest more into private equity.

46% of family offices currently invest sustainably. Adoption in Europe has risen from 45% in 2021 to 57% today, while it has dropped in North America from 34% to 26%. Despite this decline, sustainability’s average portfolio share is expected to rise from 17% to 29% globally over the next five years—a significant 71% increase.

Four in 10 family offices are looking to hire additional staff this year, with 28% opting toward professional (non-family) talent, a sign of rising professionalization. Just 35% of family office heads are currently non-family professionals; however, this figure is expected to jump to 49% post succession. The top sectors family offices are recruiting from are financial services (with 64% making it a core target for finding talent), accounting firms (44%), and consulting firms (25%).

With the average family office managing US$2 billion in AUM while employing merely 15 members of staff, a third (34%) of family offices are looking to rely more on third-party service providers this year to scale up their initiatives and gain added expertise.

Nearly half (43%) of family offices are developing or rolling out a technology strategy this year. This comes as nearly one in five (17%) identify inadequate investment in technology as a core family office risk, while nearly three-quarters (72%) admit they are either underinvested (34%) or only moderately invested (38%) in the operational technology needed to run a modern business.

A notable 43% of family offices have experienced a cyberattack over the last 12-24 months, with 25% experiencing three or more attacks. However, nearly a third (31%) of offices do not have a cybersecurity strategy in place, and 43% say they have a strategy, but it could be better. With more than one in five family offices (22%) heralding cyberattacks as a core risk this year, now is the time for pre-emptive action, with 15% making cybersecurity a top priority this year.

With four in 10 families (41%) undergoing generational succession within the next 10 years, succession planning has become a key priority for 2024—particularly as 41% of families are currently without a plan.

Nearly one-third of respondents say that the next generation is unprepared for family office succession (30%) or unqualified to take over (28%). As a result, 31% say Next Gens’ core priority for 2024 is to receive mentoring/training, while 22% say it is to plan for succession.