In a fast-evolving wealth management environment, family offices are standing at the crossroads of tradition and innovation. In this article, we’ll examine the key findings of the latest benchmarking survey by Northern Trust and the Wharton Global Family Alliance to see how these entities are navigating geopolitical and economic uncertainty, with a renewed focus on core principles to secure long-term family goals.

The Return to Core Investing and Governance Principles

As global uncertainties loom, family offices are recalibrating their strategies to ensure the safeguarding of their legacy and wealth. The survey, which spans 24 countries with a significant portion of respondents managing assets over $1 billion, indicates a strategic pivot towards private investments and a cautious approach towards ESG investing.

“Investing in private markets offers the tantalising prospect of higher returns, but it necessitates a meticulous approach to resource allocation and management,” comments Professor Raphael Amit, Founder and Chairman of the Wharton Global Family Alliance. This sentiment reflects a broader trend of family offices intensifying their direct investment ventures, albeit with a keen eye on the complexities involved.

The ESG Investment Conundrum

While the allure of ESG investments is undeniable, the survey uncovers a hesitancy among family offices, with a notable portion allocating less than 10% of their portfolios to such investments. The challenge lies in reconciling family consensus on investment themes and the apprehension of sacrificing returns for values, a dilemma that underscores the intricate balance family offices must navigate.

Preparing for Succession: The Unspoken Challenge

One of the most critical yet overlooked aspects of family office management is succession planning. The survey reveals that a mere third of the respondents have a formal succession plan, highlighting a significant gap in preparedness and awareness among stakeholders.

David W. Fox, President of Northern Trust Global Family and Private Investment Office Services, stresses the importance of initiating these conversations early. “The risks of postponing succession planning are significant. It’s a process that requires time and thoughtful deliberation,” he asserts.

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The insights from the Northern Trust and Wharton Global Family Alliance survey offer a compelling glimpse into the priorities and challenges facing family offices today. Amidst a landscape marked by uncertainty, the emphasis on strategic investment, governance, and succession planning emerges as a clear pathway to ensuring the longevity and prosperity of family legacies.

In a world where change is the only constant, family offices are demonstrating resilience and adaptability, guided by a blend of traditional wisdom and forward-looking strategies. As they navigate the complexities of the modern economic and geopolitical environment, the principles of thorough investment management, ESG integration, and succession planning stand as beacons of stability and growth.