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Follow the trend

Dr Roderik Strobl surveys the global family office landscape and analyses its trends

The purpose of family offices (FOs) is to manage, oversee and preserve the wealth management and business affairs of high-net-worth (HNW) families, as well as financial, family and philanthropic legacies.[1] The rising importance of FOs in recent years has increased the demand for services of single- and multi-FOs worldwide. FO trends are normally monitored through extensive international surveys. In this article, primary FO trends, predominantly related to 126 major FOs in North America (60 per cent), Latin America (17 per cent), Asia Pacific (12 per cent) and Africa, Europe and the Middle East (11 per cent), are discussed below. 

 

Increased importance of third-party service providers

Third-party service providers are likely to see the next generation being more involved in developing and reviewing wealth strategies, as they will be in the process of taking more control of the family’s affairs. Although generational transfer of wealth is one of the main purposes of FOs succession, around 60 per cent of surveyed succession plans have yet to be developed, especially for FOs with assets of USD100–250 million.[2] Due to increased complexity in investments (both liquid and illiquid) and the outsourcing of functions such as legal advice, third-party service providers are being used ever more frequently to provide additional security and expertise.[3] Although key competencies are dealt within the FOs, such as strategic allocations in the area of private equity, outsourcing to third-party service providers is perceived by FOs as an improvement to the overall service quality for existing clients, in part as it frees up extra resources. Service quality is one of the key antecedents of trust formation and continuity in advisor and FO business relationships.[4] One area of significant potential growth is digital asset services, such as non-fungible tokens (NFTs), where FOs require expert advice in regulation and reporting obligations.[5] The demand for philanthropic services related to impact investing is also growing and practical expertise in targeted causes is highly sought after. 

 

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