The Professionalisation of the Single Family Office.

Family Offices have recently been the topic of many conversations and articles over the last 12 months, and as we begin 2025, I’ve analysed some of the reports provided by world leading institutions and have attempted to summarise where the concept of “Professionalisation of the Single Family Office” currently is, and where it is going.

Long considered elusive and hard to access, according to Deloitte’s Family Office Landscape report published in September 2024, there are an estimated 8,030 single family offices globally in 2024, a 31% increase from 2019. This is projected to grow by a further 12% in 2025, and 33% to over 10,000 family offices by 2030.

An August 2024 article on family office portfolio construction written by Josipa Majic Predin at Forbes, highlights the shift by family offices in their investment strategy to more diverse alternative asset classes, with the report finding 46% of family offices profiled, allocating to private equity, real estate, hedge funds, venture capital and private credit and only 26% of assets invested in publicly traded stocks.

This is similarly echoed by Goldman Sachs in their November 2024 Family Office Investment Insights Report, with 49% of 166 family offices surveyed, allocated to alternatives and 28% to public market equities.

With family offices typically well-positioned and able to employ a patient capital approach to alternative investing over decade-long time horizons, this longer-term investment focus provides family offices with the ability to endure shorter-term market volatility and market fluctuations for potentially higher returns.

Whilst most family offices also have public equity & fixed income exposure, the growth in alternative asset exposure of the family office portfolio provides a reporting headache for the principals and investment teams between their public and private market investments.

Balancing the combination of daily reporting available for public equities and fixed income, versus the quarterly, semi-annual and in some instances, annual reporting from illiquid investments provides a difficult problem for family offices who have a need for constant visibility on cash flow management and who are interested in monitoring their portfolios.

The UBS Global Family Office report published in May 2024, highlights that two-thirds of 320 family offices surveyed employ less than 10 people, with the cost of running an AUM $1bn+ family office averaging 39.8bps, a 4.5% increase to the previous year. Smaller family offices between AUM $100 - $250m this cost increases to 43.2bps.

There is therefore a notable trend in the enhanced professionalisation within family offices, and as Ron Diamond highlights in his article on The Evolution and Professionalisation of Family Offices, published in May 2024, the need to do so is being driven by complexities within the family offices themselves, global regulatory changes and the desire to maintain and protect wealth for future generations.

This professionalisation requires an institutional approach as to how the family office is structured, but equally as important, are the people in place to help manage and implement these best practices. Part of the professionalisation process also requires which functions within the family office to outsource to trusted third parties, and which to keep in-house, which usually depends on the size and resources of the family office in question.

Morgan Stanley’s Family Office whitepaper, published in November 2024, identifies areas such as data aggregation & validation, performance reporting & analytics, money movement and tax document preparation amongst others, to be the most efficient and scalable options to be outsourced and can be very expensive and inefficient when insourced by family offices depending on their size.

The Morgan Stanley report goes on to highlight the importance of an effective data-aggregation platform, where family offices can easily review and analyse their portfolio, public and private, rather than collating information from across numerous excel spreadsheets, google documents, physical documents, emails amongst multiple other sources. Without an effective data-aggregation platform, the family office loses their ability to accurately manage current investments, plan for the next generation, manage the current lifestyle of the family, and budget for any future investments.

Managing large and complex wealth across multiple jurisdictions with multiple entities, bank accounts, fund investments, company investments, real estate and a public markets portfolio, requires skill. As a result, implementing the required changes to help streamline and professionalise operations is a massive undertaking for any family office looking to do so, and requires a highly skilled team to implement.

An Orican study published in August 2024, found that whilst 85% of family office professionals said their family office had become more professional in its operations and structure, only 18% stated that the family office was in s strong position to handle the complex global financial landscape.

With the great wealth transfer estimated to be at over $100 trillion to be handed down to future generations over the next 25 years, the evolution of the family office to enhance operational efficiency, implement or improve governance structures and investment committees & processes, implement robust succession plans as well as battle for top talent is happening quickly.

Family Offices who can identify and implement these changes properly and continue to stay on top of an ever-changing global landscape will find themselves at the forefront of the best investment opportunities and collaborative partnerships.

The Binnacle Group