How Family Offices Can Adapt to Rapid Growth and Complexity

Deloitte’s Family Office Insights report reveals that the number of family offices worldwide is expected to grow from 6,130 in 2019 to 10,720 by 2030—a 75% increase. Assets under management (AUM) could rise from $3.1 trillion to $5.4 trillion, driven by rising global wealth, generational transitions, and demand for personalised wealth strategies.

“Globally, family offices are expanding rapidly by focusing on their growing presence throughout different areas of the world, asset base, industry impact, and what makes a family office successful,” says Wolfe Tone, Deloitte Private Global leader, Deloitte Global.

With growth, however, comes complexity. Here’s how family offices can manage these challenges and seize new opportunities.

1. Master Cross-Border Regulations

As family offices expand globally, they must navigate a complex landscape of tax laws, reporting standards, and compliance requirements. North America remains the largest market, however, Asia-Pacific is growing rapidly, projected to increase from 1,790 in 2019 to 3,200 by 2030, potentially surpassing Europe. Each region has unique regulatory challenges, and missteps can lead to costly penalties or reputational damage.

What to Do:

• Hire Local Experts: Engaging advisors with deep knowledge of local tax laws, inheritance regulations, and compliance requirements is essential. For example, establishing a family office in Hong Kong can offer substantial tax benefits but demands strict adherence to anti-money laundering (AML) regulations. Ensure your team includes specialists who understand the nuances of each jurisdiction.
• Plan Locations Strategically: Selecting the right jurisdiction involves more than just tax advantages. Consider stability, governance standards, and market access. Mauritius, for instance, is becoming increasingly popular for trust setups due to its flexible trust laws and strategic position between Asia and Africa. Evaluate locations based on a comprehensive view of both risks and opportunities.

2. Build a Diverse, Resilient Portfolio

Deloitte’s research indicates that 55% of family offices are moving beyond traditional assets like stocks and bonds, turning to private equity, real estate, and digital assets to diversify their portfolios. This strategy balances risk and return and capitalises on new growth opportunities. Younger investors, particularly, favour digital assets like cryptocurrencies for higher returns in low-yield environments, aligning with diversification goals.

What to Do:

• Broaden Investment Strategies: Diversify your portfolio with private equity, real estate, and digital assets to manage risk and tap into growth. For instance, investing in real estate can provide stability and access to high-growth markets. Diversification should be based on a deep understanding of market dynamics and tailored to your risk tolerance.
• Leverage Advanced Digital Tools: Utilise AI and predictive analytics to enhance decision-making. Advanced tools can analyse global markets and forecast trends, such as property value shifts in real estate. Incorporating these technologies into your wealth management approach can help you stay ahead of market movements.

3. Strengthen Governance and Plan for Succession

With 68% of family offices established after 2000, many are navigating succession planning for the first time. As these offices mature, transferring wealth to the next generation requires robust governance frameworks to manage transitions smoothly and prevent conflicts.

What to Do:

• Establish Clear Governance Frameworks: Implement a family constitution outlining roles, responsibilities, and decision-making protocols to avoid disputes. This document should outline governance structures and succession plans, ensuring clarity for all involved. This framework helps maintain harmony and continuity, especially in multi-jurisdictional setups.
• Incorporate ESG Principles: Integrating Environmental, Social, and Governance (ESG) criteria into your investment strategy is increasingly important. Sustainable investments can be socially responsible and financially sound. Research shows that companies with strong ESG credentials often outperform those without, making them attractive to both older and younger generations.

4. Engage the Right Experts

Deloitte’s research shows that 36% of family offices plan to expand their service offerings to manage more complex portfolios and navigate tax laws effectively. Managing cross-border operations and evolving tax laws requires specialised knowledge.

What to Do:

• Select Experienced Advisors: Choose advisors with a strong understanding of international law, tax treaties, and financial regulations. For example, entering certain markets requires expertise in both domestic and international tax treaties to optimise tax positions and avoid legal pitfalls. Experienced advisors can provide tailored guidance for your unique situation.
• Stay Updated on Global Trends: Regular engagement with thought leaders and participation in global networks can offer valuable market intelligence and potential partnerships. Staying informed about global developments helps ensure you’re prepared to adapt quickly to new regulations or market changes.

Prepare for Sustainable Growth

Navigating growth and complexity is challenging, but with diversified investments, robust governance, digital tools, and expert partnerships, family offices can transform these challenges into opportunities and secure a lasting legacy.

Email Osiris today or call +230 650 4030 to discuss how how our tailored strategies and multi-jurisdictional expertise can help secure your family’s future.

Source: Family Office Insights Series – Global Edition, Defining the Family Office landscape

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