Family offices ‘becoming more professional but face more complex challenges’

• 85% of family office professionals say their family office has become more professional in its operations and structure over the past five years, Ocorian study finds

• But less than one in five (18%) say they are in a very strong position to meet complex global regulatory demands

Family offices have become significantly more professional in their governance, management and infrastructure over the last five years but need to be prepared for further challenges ahead, new global research* from Ocorian, the specialist provider of services to high-net-worth individuals and family offices, financial institutions, asset managers and corporates, shows.

Its international study among more than 300 family office professionals, collectively responsible for around $155 billion assets under management, found more than eight in ten (85%) say their family office has become more professional in its operations and structure over the past five years. Of these, 19% say it has become much more professional and 15% say it was already professional and didn’t need to improve much. 

Family offices have become more professional in a number of different ways - around half (53%) have developed a stronger succession plan and 48% have strengthened the family constitution or charter, or introduced one for the first time. Almost half (46%) have secured the support of more professional third parties and 45% have strengthened the management team that runs the family office. 

Around 41% say they have developed a more diverse and professionally managed investment portfolio while 40% have strengthened compliance, tax and legal infrastructure. Around a third (34%) say they have developed a more cohesive and robust philanthropy programme and 11% say they now have much better oversight of all the assets owned by the family office.

But despite this increased professionalism family offices still face significant challenges, family office professionals surveyed say. The key challenge identified is ensuring they have the right governance in place to enable them to meet the needs and expectations of family members, such as giving each member the ability to be heard which was cited by 86%. 

This is followed by ensuring their investment portfolio is properly managed and aligned with the risk and return profile of the family (59%). The third biggest challenge is around having a robust family succession plan in place. 

10 biggest challenges facing family offices

As global regulatory demands facing family offices constantly change and increase in complexity, over a third (34%) of family office professionals surveyed say that navigating regulatory compliance issues is one of the biggest challenges they face. There is a mixed response to how well advised they feel they are to meet these regulatory demands, with less than one in five (18%) saying they are in a very strong position to do so. Around two thirds (65%) say they are in quite a strong position while 14% say their ability to meet these is average.

Michael Harman, Commercial Director – Private Client at Ocorian commented: “It is extremely positive that so many family offices have taken significant steps in becoming more professional over the last five years, and it is certainly the biggest trend I’m seeing with my UK clients. I’d suggest this rapid and widespread professionalisation is a result of the explosion of growth in number of family offices; they simply have to professionalise as a way to stand out in an increasingly crowded market. 

“Despite this rapid increase in sophistication, they face a number of significant challenges in the near future – particularly around regulation and compliance. We’re seeing an increasing number of family offices across the globe come to us for expert advice on these areas, benefitting from the guidance and professional support we offer, especially with access to our regulatory and compliance specialists – Bovill Newgate.”

Ocorian’s award winning dedicated family office team provides a seamless and holistic approach to the challenges and opportunities families face. Its service is built on long-term personal relationships that are founded on a deep understanding of what matters to family office clients. Its global presence means Ocorian can provide bespoke structures and services for international families no matter where they live.

About Bovill Newgate

Bovill-Newgate is an Ocorian company and specialist financial services regulatory consultancy with a global offering across the UK, the Channel Islands, Singapore, Hong Kong, Mauritius, and the Americas. The firm helps its clients meet complex and evolving regulatory obligations, providing certainty and peace of mind. Its clients are firms of every size across the financial services sector. Bovill Newgate supports its clients in managing regulatory change and dealing with regulatory scrutiny. Providing advice on regulatory change and preventing financial crime, applications to regulators, building or enhancing regulatory frameworks, conducting compliance investigations or diagnostics, training and fulfilling prescribed roles Bovill Newgate have experts based across all the world’s key financial centres who operate globally, acting as one team.