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One in six family offices lack succession plans

More than a sixth of family offices managing on average close to $1 billion of assets have no plan for generational transfer, while only a third of offices have written succession plans.

More than a sixth of family offices managing on average close to $1 billion of assets have no plan for generational transfer, while only a third of offices have written succession plans.

The newly-released Global Family Office Report 2017 (GFOR) found while family office succession planning has increased in the past year, with nearly half of family offices (47.3%) having a succession plan, either written (33%) or verbally agreed (15%, a fifth had no plan or did not know if a plan existed.

The focus on succession follows a GFOR 2016 finding that 69% of family offices expect to undergo a generational wealth transfer within the next 15 years.

“There had been a nice step up in the amount of planning that family offices are conducting on their succession issues,” said Campden Wealth chief executive Dominic Samuelson.

“We are seeing nice progress but recognising that over 50% of the offices do not have plans yet in place, there is still work to be done,” he said.

The fourth annual report by Campden Wealth, in partnership with UBS, reported notable regional differences in succession preparation with family offices in Asia-Pacific lagging behind other regions as only 13% currently have written plans in place and 19% have no plan at all.

This is likely to change however, since almost half (48%) in Asia-Pacific were developing generational transfer.

Almost one-fifth of North American family offices had no succession plan in place— a surprising finding given the high level of sophistication in the North American family office space.

Close to one-third (30%) of family offices identified generational transition / succession as the primary driving force behind developing a succession plan, while a quarter (25%) noted the age and retirement of the current generation in charge as the key pull factor.

More than a third (36%) expect the next generation to take hands-on control of the family office, while 31% expect that the family office will be run by non-family members with oversight from the next generation.

An eighth of family offices executives surveyed expressed uncertainty about what will happen once the present family members step aside.

Global Family Office Report 2017 Fast Facts

  • Survey data was collected from 262 family offices from around the world.
  • Researchers also conducted 25 in-depth interviews with family office principals, executives and advisers.
  • The average family office surveyed has an average of $921 million assets under management.
  • There are 5,300 family offices in existence globally—including single family offices and private multi-family offices.
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