Family Offices Become More Reliant On Outsourcers

Amanda Cheesley Deputy Editor January 17, 2024

Family Offices Become More Reliant On Outsourcers

Ocorian, a provider of services to high net worth individuals, family offices, financial institutions, asset managers, and corporates, has released a new global survey focusing on outsourcing services.

Despite some concerns, family office professionals are increasingly reliant on outsourcing key services – a trend which is expected to accelerate over the next three years, research from Ocorian reveals. 

Almost all (98 per cent) of family office professionals questioned in Ocorian’s international study plan to increase the level of outsourcing at their organization over the next three years with nearly half planning to increase the level of outsourcing by between 25 per cent and 50 per cent.

That builds on expansion in the past two years, with 96 per cent of family office professionals reporting a rise in the level of outsourcing, the firm said. One key area for investment was regulation and compliance, with 92 per cent of family office professionals saying budgets for those outsourced services had increased in the past two years.

The trend of outsourcing functions to specialist businesses is not a new issue: for some time, this publication has been told of how the question of what to do in-house and farm out is one of the biggest challenges for the family offices sector. As costs, including regulatory burdens have risen, the outsourcing side of the argument has gained more traction. 

But service quality can be a problem. The study found some dissatisfaction with the services provided by outsourcers, with 12 per cent saying the level of service is average and 10 per cent saying outsourcers are average at solving complex business problems for them. Key criticisms include poor responsiveness, a limited scope of service, level of expertise and technology issues. Some respondents complained about poor onboarding.

Nearly half of those questioned said they expect their organization to use a wider range of outsourcing partners. By contrast, 38 per cent plan to consolidate to one partner or a smaller number of partners and around 14 per cent plan to switch from their current provider, the survey reveals. More than two out of five surveyed also said it is very important that their provider offers a wide range of services, while 52 per cent say it is quite important.

"There are significant numbers of family offices who feel the service they receive could be improved and quite often on issues such as expertise. Outsourcers need to improve and expand their service offering as there is a growing preference for consolidation,” Michael Betley, global head of private client at Ocorian, said.

Ocorian commissioned the research company PureProfile to conduct the global study of 301 senior executives including 50 family office investment managers.

The survey was carried out among board directors at companies with annual turnover of more than $250 million, fund managers working in family offices, private equity, venture capital and real estate. Respondents to the survey, which was conducted in November 2023, were based in the UK, continental Europe, Asia, the Middle East and North America, including 150 alternative fund managers.

Ocorian, which specializes in corporate and fiduciary services, fund administration and capital markets, has locations in Bermuda, BVI, Cayman, Denmark, Guernsey, Finland, Hong Kong, Ireland, the Isle of Man, Jersey, Luxembourg, Mauritius, the Netherlands, Norway, Singapore, Sweden, the UAE, the UK, and the US.

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