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Navigating International Family Office Trends

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How global family offices can stay ahead of shifting client expectations and rapid tech transformation.

Across the world, international family offices and their clients are navigating a fast-changing and often disruptive environment. Clients increasingly seek a broader range of diverse investment options to meet their family’s unique—and often complex—needs and goals. Family offices want strategic guidance around generational transitions, from passing along ownership of a family business to preparing the next generation to be good stewards of family wealth. Those transitions also extend to family offices, as they develop their own succession plans that ensure seamless support for their clients as a new generation of talent takes the reins.

Meanwhile, family offices have to contend with volatile financial and regulatory environments while paying attention to shifting client expectations. They must consider strategic approaches to effectively serve families whose members live around the world and build the teams and internal processes needed to deliver the superior experiences their clients expect.

To meet the needs of their clients and keep their practices strong, international family offices need to take steps to ensure they don’t get caught flat-footed. A proactive approach to practice management can help  family offices deliver the most effective wealth management services to their clients. “The changing needs of both clients and advisors require family offices to take a more global view of their operations and investment strategy, to ensure they can adapt and remain successful from generation to generation,” says Belinda Aspinall, regional head of the Global Family and Private Investment Office practice, EMEA and APAC, at Northern Trust.

Investments, technology and talent are key issues to staying ahead of these changing dynamics. Here are some strategies we have found to help family offices successfully navigate evolving global trends.

Investments: a broader universe of opportunities

Family office clients have investment needs that continue to change. In recent years, clients have had to contend with a sharp uptick in market volatility, spiking inflation, and higher interest rates. While these issues have somewhat subsided, clients and their family offices continue to lean on strategies to effectively balance risk and return. Some of these strategies could include:

  •  Focusing on public market options, such as lower volatility stocks.
  •  Exploring more sophisticated approaches, such as tax-advantaged equity strategies designed to minimize tax liabilities and preserve after-tax wealth.
  •  Utilizing alternative assets, such as private equity, real estate, venture capital and hedge funds, to help boost return potential in what may be a slower-growth equity market in the coming years.

Additionally, capturing global investment opportunities sometimes requires family offices to take bold steps. For instance, that may include establishing an office in a market such as Singapore that offers regional investors access to a broader range of appealing investments. “Particularly as investment strategies become more alternatives-focused, family offices need expertise to take advantage of global investments, which may require looking for talent in other geographies,” Aspinall says.

Technology and Talent: a streamlined client experience

Today’s consumers are accustomed to fast, transparent and highly personalized digital experiences. Family office clients are no different: They want digital access to a wealth of real-time information about their accounts and the financial markets, and they want it coupled with an exceptionally high degree of safety and security. To deliver on these expectations, family offices need to carefully consider whether their current approach to technology—from the tech stack they rely on to the cyber risk strategies they have in place—is robust. Some of these considerations may include:

 

 

1

Seeking out trusted partners to help your family office design and implement a cost-effective technology approach to meet client needs.

That process should include working with all levels of the family to understand how best to incorporate solutions that will satisfy each generation. As an added benefit, these client conversations can help elevate engagement with the family’s rising generations.

2

Upgrading technology to free up employee capacity.

These investments tend to pay considerable dividends by allowing staff to spend more time on high-value, client-facing tasks, and help mitigate internal and external risks. For instance, automated and integrated systems can reduce the need for manual data entry, reduce the potential for human error and help ensure regulatory compliance.

3

Delivering an exceptional level of service to clients.

Having a successful client service model takes more than cutting edge technology; international family offices also need to consider perhaps their most important asset: talent. For many family offices, attracting and retaining talent is an ongoing challenge. That’s due to a number of factors, such as a highly competitive labor market and a shrinking population of experts in foundational areas like accounting, finance and taxes. Carefully considering issues of compensation and staff flexibility, in consultation with trusted advisors like those at Northern Trust, can help family offices address the challenges of attraction and retention.

For international family offices, recognizing the trends shaping the family office market is a crucial first step toward delivering on the promise of a streamlined and personalized client experience. The next step is to take action—and take advantage of opportunities to coordinate with trusted partners that can help family offices stay on top of changing trends around investments, technology and client engagement. “Experts with experience helping other offices through similar challenges can be invaluable sources of information, from implementing change-management strategies to connecting knowledgeable third-party vendors who can help a family office stay ahead of the curve,” Aspinall says.

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Disclosures

This information is not intended to be and should not be treated as legal, investment, accounting or tax advice and is for informational purposes only. Readers, including professionals, should under no circumstances rely upon this information as a substitute for their own research or for obtaining specific legal, accounting or tax advice from their own counsel.  All information discussed herein is current only as of the date appearing in this material and is subject to change at any time without notice.

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