Evolution of Family Offices — Evening Brief – 08.19.24
Family offices have made considerable improvements to their professional operations over the past five years. However, these offices still struggle greatly in governance, investment management, and succession planning, according to research from Ocorian, a specialist service provider for high-net-worth individuals and financial institutions.
The global study, which surveyed over 300 family office professionals managing over $155 billion in assets, discovered that 85% of respondents felt their family offices have grown more professional since 2019.
The trend towards professionalization is seen in various aspects. For instance, 53% of organizations have implemented more robust succession plans, 48% have reinforced or implemented family constitutions or charters, 46% have sought additional assistance from professional third parties, and 45% have improved their management teams.
Notwithstanding these enhancements, family offices still struggle with substantial obstacles. According to 86% of the participants, the most urgent matter is to build governance structures that effectively cater to the requirements and expectations of family members. Additional significant issues involve the management of financial portfolios, which is a concern for 59% of individuals, and the implementation of strong succession plans, which is a concern for 44% of individuals.
“The rapid professionalization we’re seeing is likely a response to the growing number of family offices,” said Michael Harman, commercial director of private client at Ocorian. “They need to distinguish themselves in an increasingly competitive market.”
Additionally, Harman pointed out that meeting regulatory requirements continues to be a big obstacle, as 34% of participants recognized it as a severe difficulty. Just 18% of family offices feel very prepared to address the changing regulatory requirements.
As family offices expand, many turn to outside professionals for advice on complicated concerns such as legislation and compliance. This study focuses on the continual evolution of family offices as they adjust to a changing financial landscape, blending professionalism with the specific needs of the families they represent.