Family Offices In 2024: The Pursuit For Resilience

It’s that time of the year when hip tech companies offer us a view into the “year in rewind” and the consultants and financial institutions launch into their foresight pieces. Looking back on various previous forecasts from the past few years it’s clear the word ‘volatile’ has had an overly large amount of time in the spotlight. But it’s hard to argue with that being the word of this time, as we enter another year with such clearly visible conflict and the ever present headlines around ongoing geopolitical uncertainty. Unfortunately for our inherent human nature, uncertainty leads to anxiety, by the definition of word anxiety as “a feeling of worry or unease about something with an uncertain outcome.”

What this means is either we’re set for another anxious year ahead, or to shift to a more optimistic view, we’re set for a year in which we find ways to deal with the perma-crisis more effectively and reduce the potential for anxiety.

Face anything for long enough and it starts to become normal, so we can accept the shift from an era of ‘multi-crisis’ to that of the ‘perma-crisis’ has taken place and businesses must shift their approach accordingly. There was some optimism this year as we saw growth in emerging markets and lower than expected unemployment despite the high inflation and interest rates, and during this year that rushed by, the family office industry emerged to be more prominent than ever.

A Time For Resilience

Looking ahead at 2024 and it’s set to be one framed around resilience and authenticity, overarching themes uncovered in the recent Simple outlook on the year ahead for family offices. These themes are not just relevant to family offices. A recent conversation with Nicolas Arroyo, Partner and Head of Strategic Foresight at Manyone strategy consultancy, suggested that resilience will become a standard requirement for all businesses to move through this era of uncertainty.

“Resilience and the ability to withstand the fierce political, economic and social forces disrupting our landscape, has become a core skill,” says Arroyo, adding, “More than just able to navigate this complex landscape, businesses must learn how to thrive and use uncertainty as an asset to drive innovation, flexibility and creativity.”

Challenging times are having a visible effect on the markets and also how businesses adjust their strategic approach. Reading the outlook from the major investment banks, the most common theme is macroeconomic uncertainty (there’s that word again), with economic growth expected to continue slowing despite the likelihood that inflation pressures will ease. Businesses will need to seek new ways to offset the challenges this brings, and simultaneously deal with newfound challenges from a shifting global dynamic, where the Global South becomes more prominent.

For family offices, this shift emphasizes what is already underway, a greater emphasis on proactively managing portfolios to ensure they’re diversified enough to offset long-term uncertainties. It also requires considerations around opportunities with jurisdictions, as established markets come under pressure from emerging ones and locations like Dubai, Singapore and Hong Kong pile on the incentives to attract family offices.

Global Workforce Challenges

Resilience will be required in how businesses adapt to the global talent shortage, where a skills gap is already starting to shape how companies plan for growth, while shifting influence to those that are in demand. It has also cemented remote work as a permanent part of the global employment structure, with many companies now relying on it to attract and retain the best talent.

Similarly, family offices finding themselves increasingly in competition with larger institutional and private businesses, will need to offer larger and more flexible compensation structures and more ownership opportunities to retain top employees on a long-term basis.

The traditional norms of employment are shifting and the looming concern around what roles will be either entirely or somewhat replaced by artificial general intelligence (AGI) capabilities is an added agitation within the global workforce, over half of which is either disengaged or looking for opportunities elsewhere according to Gallup research earlier this year.

It calls for a more authentic approach in managing and communicating with teams to align them with business objectives, and to help them feel connected to a greater purpose. There’s also the element of providing comfort, as Arroyo notes, “It seems like authenticity is what we demand in order to feel safe in a world where everything we do online and offline seems to be choreographed, tracked, and definitely monetised.”

Tech Adoption and Authenticity

Both within and outside the workplace there is a search for authenticity in modern living. While this goes beyond technology, AGI is certainly at the forefront of concerns, specifically a need to determine what is real and what is produced by generative AI. While this is set to cause headlines, the progression of AGI and the accessibility of quantum computing look set to dominate and allow for some momentous milestones in the year ahead

For the family office industry, where research earlier this year showed 80% of vendors already include artificial intelligence functionality or plan to deploy it in their products and services, the rapid progress suggests the emerging technology could play a highly useful role in the year ahead by facilitating easier implementation of new software. This has been a major stumbling block with a significant number of family offices not having sufficient in-house resources and therefore resisting the adoption of new solutions.

Honesty And Hard Conversations

Authenticity again comes to the fore in healthcare and a need for openness around increasingly prevalent mental health issues which will gain focus in the year ahead. A greater capacity to understand the crisis and direct empathy towards those affected, at work, within personal lives or even interactions online, is also reliant on a more authentic relationship with ourselves, a consideration for our own wellbeing.

For family offices, authenticity ties closely to both human resource management and estate planning, specifically the willingness to tackle hard conversations around the migration of wealth to the next generation, where finding authentic commonalities around values can be at the core of an effective succession plan. Pressure will grow on the family office industry to clarify and make accessible benchmark solutions to this, with much of the expectation on the new generation of advisors.

Opportunities Beyond 2024

There are of course other themes that will be prevalent in the year ahead and likely to influence family offices, perhaps the opportunities and urgency around climate investments the most crucial, and there will be many challenges that roll from this year into next, but the outlook for 2024 is positive if both authenticity and resilience can become commonplace.

Face uncertainty for long enough and we find practical and creative ways to cope and even thrive in the face of it, meaning the outlook for the year ahead is one of more possibility than anxiety. Looking at the speed of evolution and growth within the private wealth and family office industry, it certainly won’t be uneventful.