2019 Family Office Trends

Overview

Changes in technological advances and market disruption, global instability and other political developments are redefining what is possible for all organisations - both in terms of opportunities and threats. For family offices, these changes are challenging them to re-examine their purpose and the strategies that will best enable them to achieve their goals, both now and into the future.

During our 2018 Family Office Symposium, over 75 family office executives gathered to discuss what’s on the horizon for family offices and how best to prepare.

Our 2019 Family Office Trends report is a distillation of our thoughts since the event and our observations more generally on what we’re hearing from family offices, as well as our own global network of subject matter experts. The report captures some of the insights from the day, as well as the results of our delegate survey, including: what is keeping family offices awake at night? The emerging trends in family offices; and our recommendations for 2019.

Our key findings

What’s keeping family offices awake at night?

• Generational change – After the efficient management of family enterprises, the issue of educating and motivating the next generation is the single greatest strategic concern for UK family office executives, while their European peers place its significance even higher than running the family business.
• Professionalising the family office – Family office executives, particularly those running larger or more complex family offices, increasingly recognise the need for specialist skills and expertise in specific disciplines, particularly in areas such as IT and HR.
• Competing priorities and blurred lines – In an environment where multiple centres of power and decision-making is the norm, family office executives are concerned about the potential for challenges with governance and effective communication, especially where the families’ business interests extend over multiple jurisdictions or revolve around globally recognised brands.
• Global mobility – The accelerating pace of change, combined with political tensions in some economies is leading family enterprises, and the families themselves, to re-examine where they would be most optimally located.
• Technology – Technology and its influence on all aspects of business and life is also a major concern for family office executives. In particular, staying up to date and secure.

Looking ahead

Emerging trends in family offices

• Recruitment, retention and reward – Building the right team to deliver on the family’s objectives, drawing on specialist expertise in recruitment and remuneration.
• External audit assurance – Benchmarking performance and assets, and reassurance that systems and structures are fit for purpose to protect the family and its assets.
• Family office executive succession – Effective succession planning for the family office executive which minimises disruption and the loss of institutional memory.
• Real estate – Understanding forthcoming changes which will impact commercial property investments going forward, such as the new tax rules coming into effect just eight days after Brexit.
• Offshore tax and transparency – Reviewing current structures, particularly those which are complex and span multiple jurisdictions, to ensure they are fit for purpose in the new global tax landscape, and that compliance obligations are fully met.
• Adapting to change – Contingency planning in the current political and economic climate.
• Co-investment – Finding the right fit with private equity or with other family offices to by-pass traditional investment pathways and invest directly, particularly in areas such as hotels, real estate and entrepreneurial businesses.