Family offices turning to third parties to overcome emerging challenges

Family offices are turning to third parties for specialist expertise to overcome new challenges and expand internationally, according to Ocorian.

Ocorian’s study of family members and senior family office employees found that advice on illiquid investments (55 per cent) and cyber security (49 per cent) was the most popular, followed by advice on personal finances (48 per cent).

At the other end of the spectrum, just 3 per cent of family offices were receiving third-party support on extended family services.

However, the research indicated that demand was set to rise, with 70 per cent planning to increase third-party support for extended family services as their needs and requirements change, and they are faced with emerging challenges.

Over three quarters (77) per cent of family offices said their use of third-party support for key services will increase across the board over the next three years.

Fewer than a quarter (21 per cent) said their use of third-party support would remain steady over the same period.

The primary drivers for increased demand were a desire for more sophisticated services (74 per cent), followed by a lack of expertise in-house as family offices grow (62 per cent), and that third parties can be more cost effective (55 per cent).

More than two thirds (68 per cent) of family offices expected to increase their use of outsourcing around wealth planning over the next three years.

When looking to appoint third parties, 62 per cent of family offices cited their capability to operate across multiple regions as an important factor, followed by the ability to establish a strong, trusted relationship (58 per cent), their technology and reporting proficiency (53 per cent) and cost (52 per cent).

“Family offices are facing new challenges as they grow and become increasingly international,” said Ocorian head of private clients – Mauritius, Lana So Wan Yuen.

“That means they are looking for third-party specialist expertise which can not only support them with the skills they need but also operate across multiple jurisdictions.

“In addition to still needing support with core services, our research findings also point towards family offices increasingly looking for support with extended services as they grow, such as concierge needs and global insurance programmes.”

Ocorian global head of regulatory consulting, Rebecca Thrope, added: “Outsourcing to a third-party not only provides family offices access to specialist technical advice, but also can help reduce cost, increase efficiency and help manage risk.

“Choosing the right partner is critical, and the upfront due diligence and ongoing monitoring and oversight is equally important to ensure the benefits of outsourcing are realised.”

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