Growth of the family office
Historically, family businesses and wealth were largely passed down to male heirs, typically raised surrounded by the decision making of business and investment from an early age. Female heirs, on the other hand, were not given the same exposure and, although they may have ultimately received ownership in family structures, they were less likely to obtain leading roles.
Times are changing. By 2025, it is estimated that 60% of the UK's wealth will belong to women. How will this impact the leadership and ownership of family businesses? Will this also affect how family offices are run?
Gender diversity in the family office
Reports suggest that women are underrepresented in family offices, making up an estimated 22% of family office professionals worldwide (although statistics in this area are notoriously difficult to quantify). According to a report carried out by Family Capital in 2021, only 3.5% of single-family offices employed female CEOs, and only 12% of family offices employed women in a senior legal role (including general counsel). Even with more wealth being held in female hands than ever before, family office principals and senior roles are still largely dominated by men.
There is, however, expected to be a shift toward more gender equality in family offices, particularly as more women become the wealth holders in the family. There is also growing recognition that more diverse teams (in every sense) bring a net benefit to their organisations, bringing in a wider scope of experiences, viewpoints, risk appetites and management styles. These considerations become more relevant for family offices as they continue to grow, professionalise their approach and widen their scope. There are also more women in the finance, wealth management, legal and accounting industries now than ever before, industries that family offices historically recruit from.
The increasing emphasis on governance and professionalisation within family offices is also expected to lead to increased diversity. Private family offices are not required to report on gender diversity quotas and guidelines as many listed companies currently do, particularly where privacy is a key element of their work. However, in order to attract and retain the brightest talent and to demonstrate a commitment to the families that they serve (who will increasingly involve female principals) they may impose their own diversity targets and guidelines.
With increased gender diversity hopefully on the horizon, how is this likely to change the family office landscape?
Changing landscape of the family office
- Understanding next gen clients: 63% of family offices consider supporting the generational wealth transfer as their number one purpose according to the UBS Global Family Office Report 2023. As wealth transfers to the next generation, increasingly led by women, the face of the family office is also changing. For single family offices where the relationship with the family is key, that will involve putting people in place whom the next gen can relate to and build positive relationships with going forward. Similarly for multi-family offices who act for multiple clients, they need a more diverse range of advisors to work with the more diverse next gen of clients.
- Investment profile: Evidence suggests that women are more likely to make investment decisions that align with their values on sustainability, community support and gender diversity. Multiplied across significant investment positions that family offices hold, this could continue the upward trend of ESG investment considerations.
- Risk taking: Women are not necessarily risk averse (as has historically been the narrative by many) but more calculated in the risks that they take. This bears out in the statistics that compare the performance of funds with female and mixed gender management teams compared to those with only male teams. Mixed gender management teams tend to out-perform all male teams, demonstrating how diversity ultimately boosts returns.
Mishcon de Reya and family offices
We work with single and multi family offices throughout their life cycle and understand that their needs can be complex and varied. From establishment to navigating tax, regulatory, employment and immigration issues, to disputes, M&A and debt restructuring and financing advice – we are able to advise on a broad spectrum of issues that family offices face. Please visit our family offices and family business page for more information on how we work with family offices.