Family offices have always focused on staying ahead of emerging trends, providing sustainable growth and effective adaptation to economic changes to ensure wealth preservation and development. However, every year holds new challenges, be it in investment opportunities or technological changes. The TM Group has gathered insights from industry experts to shed light on the evolving dynamics of the family office landscape in 2024 to help us predict what may come as we approach the new year.
Since family offices act as private wealth management entities for high-net-worth individuals, they often address a broad spectrum of needs — from investment management and philanthropy to wealth transfer to the future generation.
By centralizing these functions, family offices play a pivotal role in sustaining wealth across generations, but they also need to consider many moving parts to maintain a successful investment strategy. In fact, 60% of family offices have built an investment team led by a CIO, according to Citi Private Bank, which speaks for the increasing levels of sophistication within family offices.
The sector’s growing sophistication is marked by heightened attention to sustainability, technology integration and global diversification. As family offices increasingly diversify portfolios, adopting innovative strategies ensures alignment with long-term financial and societal goals.
At the same time, geopolitical tensions, market volatility and evolving regulatory landscapes amplify the need for robust strategic planning. Analyzing and addressing these trends can help family offices mitigate risks and capitalize on opportunities.
Family offices have evolved into multifaceted entities, adapting to shifting investment landscapes, technological advancements and global challenges, on top of the constant task of data consolidation across multiple entities. Below, we explore key trends shaping their strategies and operations in 2024 and beyond.
Family offices are diversifying their portfolios with a notable focus on alternative investments. Private equity and private debt stand out, accounting for 26% of allocations in many family offices. These investments offer opportunities to achieve higher returns in a competitive market.
At the same time, traditional asset classes like bonds and equities are regaining prominence. Inflation and interest rate adjustments are influencing a more balanced approach, as family offices aim to mitigate risks and secure steady growth.
Sustainability has become a cornerstone of family office strategies. 32% of family offices believe that they’ll expand their sustainable investments and operations, with European offices at the forefront of this transition. This commitment to environmental, social and governance (ESG) principles reflects a broader alignment with global trends and value-based investing.
Moreover, almost 20% of family offices are dedicating over 10% of their portfolios to ESG-related opportunities. This focus is driven by the potential for long-term returns and the growing recognition of ESG investments as a vehicle for positive impact.
Technology is reshaping the operational backbone of family offices. Approximately 43% of family offices are integrating new technologies to streamline processes and enhance efficiency. From data analytics to AI, these tools are transforming decision-making and administrative workflows. Generative AI is particularly noteworthy, with 78% of family offices anticipating investments in this technology within the next two to three years, revolutionizing how they analyze data, predict market trends and deliver customized solutions.
TMG is particularly well-suited to address these challenges, leveraging decades of expertise and strategic partnerships like the one with Elysys. This collaboration enhances financial management through Elysys's robust family office software, designed to simplify complex accounting, investment management and compliance tasks. Coupled with the power of Microsoft Dynamics 365 Business Central, TMG provides a scalable, integrated platform that streamlines operations, delivers real-time insights and supports decision-making.
Through expert consulting and custom solutions, TMG ensures that family offices can fully capitalize on advanced technologies, equipping them with tools to manage intergenerational wealth, maintain governance, and achieve their strategic goals efficiently. Together, Microsoft Dynamics, Elysys, and TMG form a comprehensive ecosystem tailored to meet the unique needs of family offices.
Navigating an unpredictable geopolitical landscape remains a top priority. 58% of family offices identify geopolitical risks as a critical concern for the next 12 months. These risks, coupled with economic uncertainty, are prompting family offices to adopt cautious strategies.
One such strategy includes maintaining high cash holdings. This approach allows them to hedge against market instability while preserving the flexibility to capitalize on emerging opportunities.
Having a sound financial and operations system can make transitions easier by providing clear, organized, and transparent frameworks for decision-making and resource management. A robust system like Microsoft Dynamics 365 Business Central with Elysys’s family office applications ensures that financial records, investment strategies and operational processes are not only well-documented but also accessible to incoming generations. This level of organization reduces the potential for conflicts, facilitates informed decision-making and helps preserve the family legacy.
Modern financial tools, such as ERP solutions and specialized family office software, play a critical role in this process. These tools enable seamless communication, track key performance indicators and provide real-time insights into assets and liabilities. By integrating governance policies within these systems, family offices can ensure alignment with the family's long-term goals and values.
The TM Group specializes in implementing and customizing ERP solutions and family office software to support governance and succession planning. By integrating tools for accounting, investment tracking, transparent reporting and secure data management, The TM Group helps family offices streamline operations and align with long-term goals. Their expertise ensures a seamless infrastructure that supports intergenerational wealth transfer and preserves the family legacy efficiently and effectively.
As family offices adapt to a dynamic financial landscape, they encounter a unique blend of challenges and opportunities that require strategic approaches and innovative solutions.
The demand for skilled professionals is rising, with 40% of family offices planning to expand their teams to support complex operations and growth initiatives. However, this focus on talent comes at a cost — annual operating expenses for family offices average $3.2 million, with a significant portion dedicated to talent acquisition and retention.
Operational efficiency remains a top priority. TMG’s solutions prioritize operational efficiency, streamlining workflows to enhance overall productivity. Since every system will be tailored to the business’ unique setup, that setup can also account for integrations with tools supporting hiring processes, making it easier to onboard new hires and align them with existing systems.
Technology reliance is a double-edged sword. While it enhances operations, it also exposes family offices to cyber threats. Alarmingly, 25% of family offices have experienced breaches, yet 20% still lack adequate cybersecurity measures. These gaps highlight the urgency for robust cybersecurity frameworks to mitigate risks and protect sensitive data.
TMG’s expertise in operational efficiency extends to technology integration, ensuring that family offices can adopt secure systems that safeguard their digital assets.
Family offices are increasingly global in scope, with 71% operating internationally. This expansion adds layers of complexity to governance, compliance and cultural considerations. Tailored strategies are essential to navigate these challenges effectively.
At the same time, managing multi-generational wealth requires a delicate balance between honoring familial objectives and employing professional management. TMG’s solutions empower family offices to address these needs by providing customizable tools that align with both operational demands and the personal values of the families they serve.
The future of family offices lies in embracing innovation, resilience and technology. Cutting-edge investments, such as those in AI, private equity and sustainability, are increasingly shaping strategies for long-term growth. By leveraging these advanced opportunities, family offices can secure their place in a competitive market.
At the same time, resilience remains paramount. Enhanced risk management frameworks and thoughtful asset allocation are essential for navigating geopolitical uncertainties and market volatility. The ability to adapt quickly to changing conditions will define success for family offices in the years to come.
Technology will also continue to revolutionize operations. The adoption of AI and automation tools is set to improve decision-making capabilities and streamline workflows, ensuring efficiency at every level.
As a trusted partner, TMG is here to help family offices overcome challenges and embrace new opportunities. Leveraging the power of Microsoft Dynamics 365 Business Central and Elysys's family office applications, we provide tailored solutions to streamline operations, enhance financial management and support strategic decision-making. With a proven track record and cutting-edge tools designed for today’s complexities, we empower organizations to innovate, adapt and thrive. Contact us today to learn how we can support your goals and drive your success.