How to optimise family offices and strengthen family governance in a fast-moving world

Peter Vogel - Professor of Family Business and Entrepreneurship – IMD Business School
Peter Vogel
Professor of Family Business and Entrepreneurship – IMD Business School
Marie-Christine von Pezold - Independent Family Governance consultant with Lombard Odier, Senior Advisor IMD Global Family Business Center
Marie-Christine von Pezold
Independent Family Governance consultant with Lombard Odier, Senior Advisor IMD Global Family Business Center
How to optimise family offices and strengthen family governance in a fast-moving world

Evolving investment ecosystems, the war for talent, new governance frameworks, family dynamics, changing wealth transfer rules and the emergence of new business landscapes – wealthy families and their family offices face many transformative trends. Yet, alongside these shifts, some best practices have endured across generations, ensuring long-term success and stability.

In this article, we explore emerging challenges and optimal strategies for family offices and family governance with two esteemed experts in the field. Peter Vogel is a distinguished Professor of Family Business and Entrepreneurship and holds the Debiopharm Chair for Family Philanthropy at the IMD Business School. Notably, he was recognised in 2024 by Family Capital as one of the “Top 25 Most Influential Academics in Family Enterprise”. Marie-Christine von Pezold is a renowned independent expert in family governance and strategic succession planning. She co-initiated the Lombard Odier Family Programme, established the family governance advisory service within the Group, and has supported clients in developing their family governance and drafting their family constitutions. Furthermore, she is Director of the Family Business Network Switzerland and Senior Advisor at the IMD Global Family Business Center. Together, they share with us their insights and research on the latest trends, and also their recommendations for structuring and optimising a family office.

Emerging trends in the family office landscape

Several trends are reshaping the family office sector. Firstly, a significant wealth transfer is underway across generations, requiring the next generation of leaders to be prepared to take on responsibilities. This shift coincides with a growing number of family offices. According to Deloitte, the number of single-family offices worldwide has risen from approximately 6,000 in 2019 to an estimated 8,000 today. This figure is projected to surpass 10,000 by 2030.

“A large amount of new wealth is being created by first-generation entrepreneurs,” notes Peter Vogel. Meanwhile, many traditional family businesses, particularly SMEs (small and medium-sized enterprises), are facing intense competition, and fewer family members are willing to take the reins compared to previous generations, adds Marie-Christine von Pezold.

The number of single-family offices worldwide has risen from approximately 6,000 in 2019 to an estimated 8,000 today

This has resulted in an increased willingness to sell businesses, leading to the creation of new family offices, each with its own unique challenges. Once established, these family offices must also define their new purpose. “Furthermore, transitioning from a family business to a family investment office represents a fundamental shift – similar to launching a start-up and starting over,” Marie-Christine von Pezold says. These combined factors result in a cross-cutting trend of increasing demand for financial and wealth management training for the next generations taking the lead with family wealth.

Read also: rethink family wealth

From a geographical perspective, Peter Vogel observes that while traditional financial hubs such as Switzerland, London, the US or Hong Kong remain strong, new centres have emerged in Singapore, Dubai, Saudi Arabia and, more recently, in smaller exotic places such as Mauritius. Political and regulatory stability are key criteria, but there are also other attractive framework conditions that appeal to families. “For instance, some European countries, including Italy, Portugal or Greece, currently offer highly attractive conditions for family offices. However, some investors remain cautious, perceiving these incentives to be potentially short-lived and vulnerable to shifts in political power.”

While traditional financial hubs such as Switzerland, London, the US or Hong Kong remain strong, new centres have emerged in Singapore, Dubai, Saudi Arabia

Increased regulation and the “war for talent”

According to Peter Vogel, family offices are under increasing regulatory scrutiny, requiring them to adapt and embrace greater transparency. In the context of tightening global financial regulations, family offices can expect heightened oversight in the coming years, aimed at preventing financial misconduct, minimising cyber risks and enhancing investor protection.

He and Marie-Christine von Pezold also highlight the ongoing “war for talent,” as family offices seek professionals capable of managing increasingly complex portfolios. “Finding individuals who not only possess financial expertise but also exhibit emotional intelligence, diplomatic skills and the ability to work with a single client is exceptionally challenging,” they explain. To attract and retain top talent, family offices are adapting their remuneration strategies, offering more competitive packages and long-term incentives. However, many families are not yet well-equipped to implement sophisticated talent management strategies.

Digital transformation and the rise of impact investing

Digital transformation is playing a pivotal role in enhancing efficiency and optimising operations within family offices. “We are on the cusp of a major shift,” says Peter Vogel. “In many cases, family office operations remain rudimentary. Even seasoned investment specialists do not necessarily have a strong technical background, which often results in reliance on basic tools like Excel spreadsheets. However, significant improvements are expected over the next decade, particularly with advancements in artificial intelligence.”

Read also: investing in global system changes

On the societal front, impact investing and ESG-driven portfolios are gaining traction, with families increasingly seeking to align their investments with their values. “That said, only a relatively small group of family offices are fully committed to sustainable and impact investing,” Peter Vogel notes. “At present, we are not witnessing a widespread shift towards these investment strategies, but they are being used as a tool to engage the next generation.”

Six best practices for multigenerational success

1. Engage in open, inclusive discussions
Involve all impacted family members in open discussions on mission, vision, values and ownership. Ensure every voice is heard, even if not actively involved. Use external experts for structure and objectivity.

2. Clarify core elements and define your family’s identity
Clearly outline your mission (why), vision (what) and values (how). Ensure shared understanding before establishing governance structures.

3. Develop a robust ownership strategy and governance framework
Set clear rules, decision-making processes, shareholding policies and succession plans to uphold the mission and vision. External experts can help ensure clarity and fairness.

4. Formalise in a family constitution
Document key principles, roles, responsibilities, processes, governance frameworks and shareholding policies in a constitution, guided by an impartial expert.

5. Legalise and adapt documents
Ensure principles are legally enforceable through company articles, shareholder agreements, wills, powers of attorney and prenuptial agreements.

6. Maintain flexibility and review regularly
Recognise evolving family and business needs. Update governance and legal documents periodically with expert guidance to ensure relevance and effectiveness.

Definition: the various forms of family capital

Family capital encompasses much more than just financial and physical capital. It includes human capital – the talents, skills and health of family members; social capital – the networks and relationships that can be leveraged; intellectual capital – the knowledge, culture and values passed through generations; reputational and symbolic capital – the family’s image and influence in society, and even environmental and societal contributions, such as impact investing and corporate social responsibility; and last but not least, its emotional capital. Each of these forms of capital plays a vital role in the family enterprise ecosystem and should be managed carefully by the family office to preserve the family’s legacy.

important information

This is a marketing communication issued by Bank Lombard Odier & Co Ltd (hereinafter “Lombard Odier”).
It is not intended for distribution, publication, or use in any jurisdiction where such distribution, publication, or use would be unlawful, nor is it aimed at any person or entity to whom it would be unlawful to address such a marketing communication.

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