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EY teams recently engaged with more than 250 of the world’s leading single family offices (SFOs) – our aim was to gather and share deeper insights into their priorities in today’s high-pressure and fast changing environment.
The EY Single Family Office study was commissioned to get to the heart of how SFOs perceive their own capabilities, where they see growth opportunities or market challenges and how they learn from best practices. This study leverages that information to support families as they:
- Create and protect long-term value
- Optimize family office strategy and operations
- Innovate around purpose, priorities and legacy
In times of accelerating – and often unanticipated – economic, social and geopolitical disruption, the strategic role of the SFO continues to amplify and expand.
In speaking to these leading SFOs, it was striking that regardless of where they are and the functions they undertake, a number of common areas of focus emerged.
The key findings of the survey are set out across these focus areas and reflect the insights shared by our respondents:
- Wealth and regulation
- Digital transformation
- Risk and reputation
- Strategy and governance
Each of these four focus areas will be addressed in turn together with the actions that leading SFOs are taking to respond to the changing environment and to deliver gold standard support to the family office stakeholders.
First is the sheer pace of change when it comes to wealth and regulation including economic and, perhaps most significantly, tax policy and transparency initiatives. Changes in the wealth and regulatory landscape are impacting all aspects of family office strategy, planning and execution with the pace of developments necessitating the almost unprecedented demand for agility. For example, increasingly jurisdictions around the world are using tax policy and transparency initiatives as a platform for addressing broader economic and social policy issues. Now more than ever fresh perspectives are needed to satisfy critical obligations while sustaining the strategic focus in support of family stakeholders.
Another finding is that technology and digital transformation trends are featured more and more as a key priority of SFOs – not only with respect to the SFO itself but also related to connected businesses and to the family itself. Whether it’s cybersecurity or intelligent automation to improve efficiency and manage risk, there is a clear drive towards a “digital first” mindset in many SFOs. Both within the family and its operating business, digital transformation offers profound opportunities and important considerations for SFOs. Disruptive tech is here to stay.
A third area raised by SFOs was the need for more sophisticated and rigorous models for managing an expanding scope of risk and reputation considerations. Risk management has long been a strategic focus for most SFOs and yet many are seeing the need to revisit scope, methods and leading practices. A failure to do so can leave families and family office leaders exposed to unexpected surprises. One of the dynamics driving new risk and reputation frameworks is the expanding definition of value and risk to include new environmental, social and governance (ESG) considerations. SFOs identified this as an area for increased focus and action particularly as it relates to evolving, multi-generational family priorities and legacy amidst more prominent ESG trends.
Above all else, amidst this backdrop, SFOs and prominent families themselves are being intentional in designing and operating more sophisticated and strategic governance constructs. Dual Governance that both distinguishes and aligns the business and family governance, integrates where appropriate and contemplates the strategic and often essential role of the family office is facilitating clarity, execution and stakeholder alignment.