What family offices need from wealth managers today

FAMILY offices globally, including in Asia, are experiencing a significant shift. Once relatively straightforward structures for preserving wealth, they have today evolved into sophisticated, multi-generational institutions managing diverse asset classes and complex structures.

This shift presents an important challenge for traditional wealth managers. To remain relevant and a vital partner to these family offices, the industry must adapt swiftly.

A decade ago, most family offices were simple set-ups, managing the fortunes of first-generation entrepreneurs. Fast-forward to today, and they have evolved into complex organisations, serving multiple generations. They now boast professional investment teams, sophisticated technological infrastructure with the ability to extend administration, reporting and tailored advice to individual family members, and global perspectives rivalling institutional investors.

This shift is fuelled by several factors: the growing complexity inherent in managing significant wealth and serving large numbers of family members; a heightened desire for more robust risk management; and the constant need to navigate an increasingly intricate regulatory landscape.

The growing involvement of next-generation family members, who often possess deeper financial acumen and may be interested in newer areas such as impact investing and cryptocurrency, is also contributing to this trend.

What do today’s family offices need from a wealth manager?

Comprehensive investment capabilities

Today’s family offices expect access to the full spectrum of investment opportunities across public and private markets. According to McKinsey, family offices globally are allocating a significant portion of their portfolios to alternative investments, with Europe leading the way at around 50 per cent. Asia’s allocation is at 30 per cent, reflecting a growing appetite for such investments.

This growing investment sophistication is further reflected in Schroders’ Global Investor Insights Survey 2024. The study found that 77 per cent of family offices invest in private markets, significantly higher than the nearly 70 per cent among other institutional investors. A third of family offices report that private markets constitute 20 per cent or more of their overall portfolio, underscoring their higher risk tolerance and greater flexibility in investment choices.

Such investment sophistication demands wealth managers adept at navigating complex asset allocation strategies – from traditional equities and bonds to alternatives such as private equity, real estate, and hedge funds – supported by equally advanced platforms and broad expertise.

Robust administration and technology infrastructure

Family offices today often manage wealth for extended family networks, serving dozens of individuals across generations and jurisdictions. This inherent complexity calls for scalable administration capabilities and leading technology solutions from their wealth management partners. On top of basics such as portfolio performance, reporting systems must be able to handle the complexities of large family networks. These systems should provide consolidated views across generations and diverse wealth structures.

As the demand for advanced technology grows, so does the focus on cybersecurity. According to Deloitte’s Family Office Cybersecurity Report 2024, 43 per cent of family offices globally have experienced a cyberattack over the last 12 to 24 months, with 25 per cent experiencing three or more attacks. Those in North America are the most likely to report being attacked (at 57 per cent versus 41 per cent in Europe and 24 per cent in the Asia-Pacific), along with those with assets under management (AUM) over US$1 billion (62 per cent versus 38 per cent for those with AUM under US$1 billion).

As the threat landscape continues to evolve, family offices require assurance that their partners are fully equipped, both through employee training and technology, to protect against cyber threats while maintaining operational efficiency.

Relationship stability and continuity

Family offices think in generations, not quarters. They seek wealth management partners who share this long-term perspective and can provide relationship continuity over decades.

The hire-and-fire culture that characterises parts of the financial services industry runs counter to the core principles and values of family offices. They prefer to work with wealth managers who make substantial investments in their people and understand that trust is built over years, not months. This approach reflects their core belief that meaningful partnerships require time to develop and mature.

This long-term view also addresses a significant challenge many family offices face: key-person risk. Heavy reliance on a small number of critical individuals – such as an internal chief investment officer or private equity specialist – creates vulnerability when those individuals leave. With broader teams and institutional continuity that extends beyond any single relationship manager, established wealth managers help mitigate the risk.

Holistic service offerings

Beyond investment management and administration, family offices need advice and support on a wider range of issues that affect the family’s overall well-being, long-term goals and legacy. This includes succession planning, family governance, philanthropy and education for younger generations to prepare them to be responsible stewards of wealth.

According to McKinsey, an estimated US$5.8 trillion in wealth transfer is expected to take place among ultra-high-net-worth and high-net-worth families in the Asia-Pacific between 2023 and 2030.

Yet succession planning remains inadequate. In a Transamerica Life Bermuda 2024 survey of 129 high-net-worth advisers (a third were family offices), 41 per cent said clients in South-east Asia were most worried about family disputes due to a lack of succession planning, compared to 27 per cent in North Asia, Middle East and Europe.

Philanthropy has become increasingly important as wealthy families seek to create meaningful impact, alongside financial returns. A global study by Ocorian in 2024 found that seven in 10 family office professionals, including those working for multi-family offices, expect philanthropic giving to rise by 15 per cent or more over the next two years.

Given these complex needs and the great wealth transfer on the horizon, wealth managers must evolve beyond purely financial services. Whether it’s strategies for charitable giving and impact investing strategies that align with the family across generations, or establishing clear governance structures for decision-making, wealth managers need to become trusted advisers who can offer integrated solutions and specialist guidance.

Call for change

This is an exciting and pivotal moment for the wealth management industry. Organisations that recognise and proactively adapt to the evolving demands of family offices will thrive in this new environment. Conversely, those that remain stuck with outdated service models run the risk of losing clients to more sophisticated competitors.

The future belongs to wealth managers who can combine institutional-grade capabilities with the personal touch that family offices have always valued. The evolution is already underway; the question is whether wealth managers will evolve alongside their clients or be left behind.

The writer is chief executive officer, Schroders Wealth Management, Asia