Key Findings From The Leading Family Office Benchmark Report And What They Mean For You In 2020

Family offices have been known to fly under the radar and often not share much about themselves. What they all want to know, however, is what other family offices are doing. For this reason, many reports are always keenly anticipated and the UBS Global Family Office report, in partnership with Campden Wealth has become one of the definitive sources for benchmark data.

In 2019 Campden Research surveyed the principals and executives of 360 family offices across the globe, with an average of $917 million assets under management. Key findings showed that in comparison to last year, average investment returns have dropped, coming in at around 5.4% for the past 12 months. Sustainable investing interest has risen, with 1 in 3 family offices now engaging in such practices. There has also been an upsurge in succession planning driven by generational wealth transfer. An in-depth look at the report reveals several important findings for family offices to consider in the year to come. Responses to this year’s survey identified cybersecurity and market disruption with the possibility of an impending financial recession as the most significant threats that family offices face. Cybersecurity Threats Based on the findings of the report, 20% of family offices have knowingly experienced a cybersecurity attack. The most common of which include phishing (76%), social engineering (33%) and malware (33%). With Cybersecurity Ventures estimating that the cost of global cyber-crime could reach an astounding $6 trillion by 2021 and that up to 90% of companies fall victim to cyber-attacks, cybersecurity remains a top priority. As such, family offices need to ensure that they have continuity plans in place and that these have sufficient safeguards to protect private and confidential information. Furthermore, they need to ask themselves whether their staff adequately trained on how to apply these guidelines in their daily functions. Market disruption and risk of a looming financial recession The report reveals a growing degree of caution and in some cases, discomfort, surrounding geopolitical tensions, and the short-term influences these could have on financial markets. Of the family office executive respondents surveyed, more than half believe that a market downturn will occur by 2020. As a result, these executives are re-thinking some aspects of their investment strategies and considering measures to curb potential losses and capitalize on new opportunities. For family offices who have not yet fully prepared for possible financial market disruptions and the impending recession these could bring, it is vital to identify where their most significant risk lies should these changes occur. Doing so can assist in the identification of long-term strategies that ensure wealth preservation and growth. Global Family Office Trends In addition to identifying threats, the Campden report also has its finger on the pulse of global family office trends. This year, these continue to focus on impact and sustainable investment, while also embracing globalization and a rise in the remote workforce. Impact and sustainable investment Rising levels of socioeconomic inequality and concern regarding climate change are issues garnering global debate and interest. Of the executives surveyed, 65% believe family offices will play an integral role in economic inequality alleviation. It is, however, interesting to note that this was more of a priority for those based in regions other than North America.

We have seen family offices become much more engaged in discussions about sustainable and impact investing over the last 12 months. This is no longer seen as a ‘side project’ or preoccupation of the Next Gen, but a priority for the family as a whole. Many products are now recognised by family offices as fully-fledged investment tools that can generate good returns.

This post originally appeared here.