How family offices are adapting to global changes: Family Matters

Hannes Hofmann, global head of family office group at Citi Wealth, discusses how family offices are navigating global shifts, from investment strategies to succession planning, and the trends shaping their future in an increasingly complex world.

Families are becoming more global, despite populist leaders including the US president pursuing a polarising political agenda of increasing isolationism.

As US president Donald Trump’s tariff war continues, fuelling his economic agenda of bolstering domestic manufacturing and employment, some experts have argued this phenomenon contributes to a deeper deglobalisation trend.

But wealthy families, controlling billions of dollars in assets, are moving in the opposite direction, with 80 per cent boasting a global footprint, according to Hannes Hofmann, global head of the family office group at Citi Wealth.

Only 20 per cent of wealthy families do not have a global linkage, he says. Citi defines this as investing assets in more than one continent, having family members in more than one continent, or holding passports for more than one country.

These global families are increasingly enquiring about insurance or “safety” strategies, says Mr Hofmann. “Should they have secondary office locations, secondary asset locations, second or third passport strategies in order to protect themselves against a world that could potentially make that global lifestyle, that global investing, more complicated than it’s been in the past?”

As investment strategies become global, families are also eyeing asset allocation and mobility strategies. “Should I have some investment assets in the US? In Asia? In the Middle East? So that if something happens, I can still rely on funds in other places,” he says.

Family favourites

While safety of assets is a number one priority for families, succession planning and family cohesion are also on their minds. “You need to make sure you slowly and thoughtfully expose family members to the true value of assets they’re going to inherit," he says.

When wealth is being passed on from one generation to the next, there is a 70 per cent likelihood that the next generation is going to change their advisers, points out Mr Hofmann. “We need to get to know the next generation well beforehand, so they don’t feel the need to change their adviser."

Geopolitical risk has emerged as a key concern for family offices, from the war in Ukraine to Mr Trump’s trade war. “Over the last two years, we’ve seen family offices become very risk-on,” says Mr Hofmann.

“Many families look at what’s going on in the world and they see the glass half full. They acknowledge US stocks feel highly valued, so we help them stay invested, but with protection strategies against tail-risk scenarios.”

Citi is among a handful of banks investing in accelerating family office growth, with the sector expected to be managing $5.4tn by 2030, according to consultancy Deloitte, eclipsing the powerful hedge funds industry.

Mr Hofmann cites “globalisation, professionalisation and handover to the next generation” as the three biggest trends set to shape the future of family offices, making it important for these growing entities to be “understood” and “well-serviced” by private banks. According to Citi’s global family office 2024 survey, 60 per cent of family offices have built an investment team led by a chief investment officer, boosted by investment committees and investment policy statements.

The handover to the next generation will be more important than ever, believes Mr Hofmann. “The next generation wants more transparency, more technology, and a lot more in the details,” he says. “They’ve worked for investment banks, private equity firms... and they come back, run their families' money with a much more transparent, professional mindset.”