Family offices have taken significant steps to become more professional, a new survey reveals.
[See also: What is a family office and who needs one?]
Some 85 per cent of family offices reported they had formalised their governance, management and infrastructure over the last five years, according to the report by Ocorian.
Researchers interviewed more than 300 family office professionals across Europe, Africa, the Middle East, US, UK, and elsewhere, who oversee a total of around $155 billion in assets under management.
Michael Harman, commercial director of private client at Ocorian, suggested the rise has been driven by the recent boom in the number of family offices.
[See also: Number of family offices triples in four years]
The total number of family outfits worldwide grew from 1,285 in 2019 to 4,592 in 2023, according to research published earlier this year by Prequin. Single-family offices account for 59 per cent of the total.
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‘Family offices simply have to professionalise as a way to stand out in an increasingly crowded market,’ he explained.
Asked how they had professionalised their firms, respondents noted the establishment of a stronger succession plan (53 per cent), solidifying a family charter (48 per cent) and securing the support of more professional third-parties (46 per cent).
However, family offices still report significant challenges on the horizon. Having the right governance in place was identified as the biggest hurdle facing firms (86 per cent).
[See also: Why the Great Wealth Transfer will be a dangerous time for global capitalism]
Unsurprisingly, the great wealth transfer also looms large. Having a robust succession plan in place (44 per cent), preparing the next generation (36 per cent) and managing leadership transitions (27 per cent) are all listed among the 10 biggest concerns.
Harman added: ‘It is extremely positive that so many firms have taken significant steps in becoming more professional over the last five years, and it is certainly the biggest trend I’m seeing with my UK clients.
[See also: Preparing the next generation is a ‘primary concern’ for family offices]
‘Despite this rapid increase in sophistication, they face a number of significant challenges in the near future – particularly around regulation and compliance. We’re seeing an increasing number of family offices across the globe come to us for expert advice on these areas.’
