Global Family Office 2024 Survey report 

Almost all respondents (97%) expected positive portfolio returns over a 12-month horizon. In 2023, the figure was 95%, which was indeed followed by upside across various asset classes. Over three quarters of respondents reported positive performance from the previous year, with 10% reporting no change and 12% experiencing negative performance.

Interest rate evolution – rates rising further or remaining high – was the top concern (52%). This was followed by US-China relations and market overvaluation, both on 45%. Inflation worries were thus not predominant for the first time since 2021. The conflict in the Middle East has overtaken the Russia-Ukraine war as a geopolitical fear, even for family offices in Europe.

Most family offices (60%) have built an investment team led by a CIO, as well as investment committees and investment policy statements. Sizeable allocations emphasized their ongoing commitment to alternative investments, with three quarters engaging in direct investing. These features mirror the behavior of many leading institutional investors.

Despite many similarities with institutional investors, most family offices have historically not always embraced institutional techniques. This has started to change, however. A third of the 70% that reported owning concentrated positions were considering active strategies to help manage the related risks. Three quarters of those were leaning toward capital market strategies and the rest toward outright sale. And while nearly half of respondents were not leveraging their portfolio at all, two thirds were exploring their financing needs.

Family offices have increasingly built portfolio exposure to artificial intelligence (AI), with half reporting investments in public or private equity and another quarter actively considering it. Exposure to AI investments was likely a driver of the strong portfolio returns that many respondents saw over the last year. However, the adoption of generative AI within family office operations is lagging, with only about one in ten mentioning it. This paradox mirrors the situation across the business world.

While 86% of family offices acknowledged facing at least eight categories of risk, most of these were felt to be very well- or well-managed. Exceptions were cyber security, geopolitical, and family dynamics risks. Tellingly, when asked about the primary roles of the head of the family office, risk manager was the responsibility with which most respondents identified after investment manager.

While two thirds of families relied on a governance system within investments, governance remains a work in progress across the broader family enterprise, i.e., other financial, business, philanthropic and family activities. Almost half (48%) reported not having an investment policy statement (IPS). For other family office and family activities, less than half reported a governance structure in place. Philanthropic decision making remains mostly informal.

Families’ foremost concern was asset preservation, followed closely by preparing the next generation for their future responsibilities. However, their family offices’ primary focus was investment management, accounting, reporting, and tax, while fostering family unity and continuity came third. Family offices now regard meeting family members’ expectations as their top challenge (54%), which has overtaken adapting to market conditions (47%).

While professionalization is most advanced in the investment function, it is extending to other areas such as family office governance and operations. Greater collaboration with outside providers is also in evidence. Investment management (54%) and reporting (62%) are the only two services provided internally by most family offices, with all others performed mostly externally or jointly. These trends may free up time for the likes of preparing the next generation and other family priorities.