The shape of the family office is changing, with technology and generational movement being among the drivers.

The following article is from Helene Jaron from Philadelphia-based Cozen O'Connor’s family office practice. The article explores the challenges single family offices will face amid wealth transferal and other administrative considerations for office operations such as growing cybersecurity risks and evolving tech stacks. The authors talk about strategies for retaining qualified family office staff, exploring the benefits and risks of outsourcing core services, and sharing tips for making the family office more efficient.

The editors are pleased to share these views; the usual editorial disclaimers apply to articles from outside contributors. To jump into the conversation, email tom.burroughes@wealthbriefing.com and amanda.cheesley@clearviewpublishing.com

A healthy, vibrant family office fostering solid relationships is best for both the families it serves and its staff. Make sure your office stays vital by considering these essential future-focused steps.

Family offices have long served as the cornerstone for managing ultra-high net worth families’ financial and non-financial needs, providing a suite of services that include investment strategy and execution, estate planning, tax advice, and often much more. Reports show that the family office landscape is growing swiftly, both in number of offices and the size of assets.

Looking toward the future, it is crucial to consider not just the transition of wealth to the next generation, but also the evolution of the family office itself. Welcome to Family Office 2.0 – the redefined, modernized, and tech-savvy family office of the next generation.

Preparing the next generation for wealth transition is a crucial family office tenet. However, equally important is the succession plan for the family office itself. As the needs and expectations of next-gen clients evolve, so must the operations and services of the family office. This transition requires a strategic approach to ensure continuity, relevance, and efficiency.

Redefining the family office for the next gen
The next generation brings with it a new set of priorities and expectations. Family Office 2.0 must redefine its role to more closely align with these changes. Reassessing the current services provided and determining which of these will continue to add value going forward are important steps.

Family offices and the families served by them should consider these updates:

Focusing services. Should the family office continue to offer a broad range of services, or would it be more effective to concentrate on specific, high-impact areas? For example, wise offices may consider outsourcing tasks such as reporting and bill payment to streamline operations and enhance efficiency.

Assessing investment priorities. Direct investments have become increasingly popular in reaction to market volatility, low interest rates, inflation, and other trends, as well as families’ desire for more control over outcomes. Will the family office continue to prioritize direct investments, or is it time to shift toward alternative investment strategies that better align with the goals and risk tolerance of the next generation?

Bolstering investment tracking. A significant challenge facing UHNW families is tracking their wide variety of investments and related duties. Effective family offices will pursue ways to digitize this function, including outsourcing, to ease and clarify the process.

Modernizing the operating model
The digital revolution continues to transform every industry at a breathtaking pace, and family offices are no exception. To meet the digital expectations of next-gen clients, family offices need to modernize their tech infrastructure. Important steps to remain abreast of cyber developments include:

Updating tech. Successful family offices will implement advanced technology solutions to ensure seamless, user-friendly, and mobile-accessible platforms that furnish up-to-the-minute data. This is essential for catering to tech-savvy clients who value convenience and real-time access to information.

Data security. Ensuring robust cybersecurity measures to protect sensitive financial information and maintain client trust will be the bedrock of family offices’ advancing tech capacities.

Engaging with the next generation
Developing a deeper connection with the next generation is paramount for the sustained success of family offices. Long-term planning vital to office functionality hinges on participation and buy-in from rising generations. Forward-thinking family offices will consider proactive engagement strategies such as:

Regular communication. Establishing frequent and meaningful interactions to understand and address the unique needs of next-gen clients will be key. This may go well beyond financial and operational arenas, stretching into health and other lifestyle sectors.

Education and involvement. Providing educational resources and opportunities for the next generation to integrate into family office operations and decision-making is crucial to the sustainability of both the office and the family’s goals. Establishing or strengthening education is one of the fastest-growing areas in office budgets.

Family office agility is a must
The family office of the future must be adaptable, focused, and technologically advanced to meet the evolving needs of the next generation. By redefining services, modernizing the operating model, and fostering strong relationships with next-gen clients, family offices can ensure that they remain relevant and valuable in the years to come.