Professional mindset key to playing happy family offices

Many principals underestimate the complexities of running a family office, with challenges extending far beyond wealth management, making sustainability a critical consideration.

Sustainable family offices, surviving and thriving into their fourth or fifth generation, are rare yet crucial in supporting families and society at large. Most family offices (90 per cent) serve first, second and third generation families, with only one in 10 catering to families that have broken ‘the third-generation curse’.

Many lack essential succession strategies, with 41 per cent of families having no leadership succession plan, according to Deloitte Private, while only 26 per cent address ‘key person risk’, UBS reports.

Some family offices may never withstand the pressures of a generational transfer. Others can underperform, operating “on three cylinders” due to internal disputes or operational inefficiencies, says Scott Saslow, founder and CEO of One World Investments, a mid-sized Silicon Valley-based family office.

Such inefficiencies extend beyond family wealth, affecting philanthropy and innovation. In the US alone, family offices donate an average of $12m annually, according to Campden Wealth. They also account for up to 30 per cent of investments in Silicon Valley start-ups, reports Mr Saslow.

By 2030, family offices are forecast to manage $5.4tn in assets, surpassing the hedge fund sector, emerging as a critical funding source for private companies.

Examples like the Rockefeller and Estée Lauder family offices show that longevity is achievable. Enduring success often hinges on at least a few of five key pillars of sustainability, says Mr Saslow. He transitioned his family office many times, from an embedded model to a multi-family office and now a single-family office, which today also powers a family-owned training company for CEOs and founders, a consultancy, an impact investment fund, and a family foundation.

Five pillars

“The first pillar for a sustainable family office is mindset. Leading a family office requires treating it as a professional enterprise, not a side project,” explains Mr Saslow, author of the recently published book ‘Building a sustainable family office’.

The second element is a clear mission that extends beyond wealth generation. Sustainable family offices are those able to blend financial objectives with societal contributions.

Structure is equally vital. Fragmented processes and outdated frameworks often plague family offices. Mr Saslow advises regular reviews to align operations with evolving objectives, especially during transitions. “It’s important to ask: ‘Are we working for the structure, or is the structure working for us?’”

Attracting and nurturing top talent, both within the family and externally, is equally important

“Much of the wealth originates from operating companies, where hiring or firing a CEO and cultivating top talent are top priorities,” says Mr Saslow. “But these principles often get washed away within family offices, where far less attention is given to talent management.”

Finally, a sustainable family office must have flexibility and adapt continuously. “You're never done building the family office,” he says. It must be treated as “a living and breathing organisation”, which requires constant updates and occasional major changes.

“Research shows if you can't get in the top decile of private equity or venture capital funds, it's not worth it” – Scott Saslow, One World Investments

Standout strategies

Ensuring meaningful engagement with the next generation is critical for sustainability. “The perception among many of the next gen is that the family office is just about investing, asset allocation and ROI. It is just not interesting,” says Mr Saslow.

Two effective strategies stand out. The first is impact investing, which aligns with next gen values, across both public and private markets.

The second is encouraging next gen involvement in entrepreneurial ventures, such as early-stage start-ups.

Attending a start-up demo day, a common occurrence in Silicon Valley, can foster interest. With a growing number of women-led businesses showcasing at such events, they resonate strongly with younger generations, he says, sharing how these events inspired his teenage daughter.

Initiatives such as Stanford University’s Emergence programme, which connects family offices with social entrepreneurship, offer the next-gen exposure to founders and venture-building, which can spark interest and foster relevant skills.

Bypassing gatekeepers

Family offices increasingly turn to direct investments in start-ups, but face hurdles. “Family offices are getting tired of the ‘two-and-twenty’ private equity and venture capital model,” says Mr Saslow, pointing to both high fees and long investment horizons.

Additionally, accessing top-tier funds remains a significant challenge for those outside established networks in financial hubs such as Silicon Valley, New York or London. Moreover, capital requirements further restrict entry. “Research shows if you can't get in the top decile of private equity or venture capital funds, it's not worth it.”

In response, innovative solutions are emerging. Platforms like Allocate aim to connect family offices with high-quality investment opportunities, bypassing traditional gatekeepers. Similarly, the maturation of ecosystems like Y Combinator and other online platforms has democratised access to startups, enabling broader participation in early-stage ventures. “In the future, it will become easier for family offices to invest directly in early-stage companies,” predicts Mr Saslow.

Nearly half of family offices invest in sustainable investment solutions, according to Deloitte Private. Yet, many do so minimally. “Older generations often perceive impact investing as risky or concessionary, while younger members advocate for market-rate, socially conscious investments,” states Ms Saslow. Education and small steps, like investing in impact funds or start-ups, can bridge this gap.

Families like the Waltons – the largest shareholders in Walmart – exemplify this approach, creating platforms like Builders Vision to align purpose with returns, inspiring other family offices.

Foundations offer another route, by sustainably managing endowments while disbursing grants, allowing families to amplify both impact and financial growth.

“In the decade I’ve spent managing investments and navigating the impact investing landscape, I’ve observed a seismic shift,” says Mr Saslow. “What began as a niche for early adopters and innovators has entered the mainstream, drawing investors motivated by both moral imperatives and attractive business opportunities.”

The politicisation of environmental, social, and governance (ESG) investing in the US is baffling and counterproductive, he says. ESG principles should be viewed as tools to inform better investment decisions, by empowering investors with data, not as a political battleground.

The backlash against ESG investing, while likely to recede outside election cycles, has already left its mark. Many companies, wary of political friction, are opting to downplay their sustainability credentials, a trend Mr Saslow refers to as “black washing”.

Passing on the passion

Beyond managing capital efficiently, family offices are platforms for legacy and societal impact, he believes. His family office embodies this ethos, with a mission to scale social impact.

Mr Saslow’s approach is to maintain separation between philanthropic efforts, made through its family foundation, and market-driven investments. He hopes this dual focus will allow him to achieve his goals while also serving to “inspire and pass on the passion” for impact investing to the next generation.

“My goal is to make all investments across all asset classes both sustainable and capable of delivering market rate returns. I want to prove to not only myself but to other private investors that it’s possible to invest at market rate returns and do that in a sustainable fashion.”

Operating with a lean structure of three core team members, supported by external providers and a dedicated advisory board, Mr Saslow emphasises professionalisation as key.

His mindset shift, making the family office his primary focus, has been transformative.

After a 30-year career in startups and tech, he gradually became more involved in managing the family office. Yet, until about five years ago, it remained a part-time commitment.

“It was still evenings and weekends,” he recalls. “It wasn’t my main job. That wasn’t my identity, it wasn’t my mindset. I’ve now connected the two.”