BNY Mellon Wealth Management releases results from inaugural Global Family Office survey

Insights Into How Family Offices Are Responding to Rapid Economic and Social Change

New York, NY – February 24, 2022 – BNY Mellon Wealth Management Global Family Office today released “Shifting Horizons: Insights Into How Family Offices Are Responding to Rapid Economic and Social Change,” its inaugural Global Family Office Survey. The research paper examines how growing differences across generations and rising economic and social disruption are leading family office executives to adjust their approaches to investing, philanthropy management and succession planning, among other areas. While these generational tensions are leading to more creative investment innovation such as cryptocurrency, a majority of family offices surveyed revealed succession planning has become more challenging because the values of older and younger generations are hard to reconcile.

The study, created in conjunction with The Harris Poll and BNY Mellon Wealth Management, surveyed 200 key personnel at global family offices, of those 120+ respondents manage more than $500M+.

“The past few years have been unparalleled, marked by pandemic-driven economic turbulence and rising social and political debate which has brought discussions on the role of wealth to the forefront,” says Vincent Hayes, Global Head of Family Office at BNY Mellon Wealth Management. “This has led us to a tipping point – while great change is underway, the scope of what these organizations need to accomplish has also significantly expanded. This pace of change is naturally leading to challenges, and more importantly to opportunities within global family offices, regarding how to approach ESG and cryptocurrency in their portfolios, develop a unified philanthropic strategy and a comprehensive action plan.”

Reconciling values of older and younger generations are among the biggest obstacles to succession planning

Despite the large consensus among family offices on the importance of succession planning, more than two-thirds indicate that succession planning is either extremely or very important, and 42% indicate succession planning is a difficult topic by nature and the tendency is to avoid it.

According to more than half of family offices, succession planning is challenging because the values of older and younger generations are hard to reconcile, with 74% believing the next generation is more focused on ESG and responsible investments, and 75% saying the next generation is more willing to forgo some profit for the sake of social good. Among other obstacles, 45% of family offices believe that the next generation of family office leadership is generally more difficult to engage due to responsibilities of their own family and/or career, and 25% of family offices say they are not equipped to engage the next generation of leaders.

Many family offices also attribute succession planning challenges to lack of expertise and difficulty in obtaining trusted advice. Forty-two percent say that they need external help in developing an effective succession plan and 39% say that it is hard to find a trusted external partner to help with succession planning.

Family office executives surveyed are (almost) ready for cryptocurrencies, and those who have already dipped their toes in want more

According to the study, family offices are keenly attuned to cryptocurrencies. 72% of those actively investing in cryptocurrencies say they plan to increase their exposure. While 64% indicate cryptocurrency speaks to the aspirations of next gen investors.

With nearly half of family offices asserting that cryptocurrencies provide good investment opportunities, the study explored what motivates them to incorporate it into their portfolios. Among those exploring and investing in cryptocurrencies, 70% cite keeping up with new investment trends and 45% cite interest from the next generation of family office successors. Of those which have already invested in these assets, 61% reveal that cryptocurrencies provide good investment opportunities.

“Family offices have a long-term investment horizon and are in a unique position to consider investing in this emerging asset class,” says Rajesh Nakadi, head of Investments, Global Family Office at BNY Mellon Wealth Management. “The regulatory climate continues to evolve and digital assets are emerging as unique vehicles for families to store wealth, offering the potential for higher returns and further portfolio diversification.”

Despite rising momentum, family offices indicated that high volatility (67%), lack of well-defined regulations (61%) and concerns regarding risk of hacking and cybercrime (53%) are the top associated factors complicating cryptocurrency investment decisions.

It’s time to unite and give back: the top motivator for family offices’ involvement in philanthropy

Family offices recognize the significant responsibility that comes with wealth and that today, more so than ever, philanthropy can be a catalyst for change, with nearly three out of four reporting they are involved in philanthropy to some degree. Among offices involved in philanthropy, 21% oversee charitable grants of at least $25M, with direct donations utilized most (75%).

“Family offices have long recognized that philanthropy not only drives impact but is a powerful vehicle to unite generations,” says Crystal Thompkins, head of Philanthropic Solutions at BNY Mellon Wealth Management. “Helping families align on causes that are important to them and develop deliberate strategies are critical to driving impact and reaping tangible benefits. Through our findings on key philanthropic issues, such as climate change, we can see how specific causes are helping families stay close to one another on the issues that matter to them.”

A desire to give back is the top motivator by 69% of family offices’ involvement in philanthropy. Sixty-three percent are using philanthropy to advance climate change causes and 54% are actively supporting causes related to economic inequality. While most family offices are driven by altruistic reasons, they also expect some practical and tangible benefits, with 52% measuring impact and 47% realizing some tax advantage as two important elements to their giving approach.

Despite active philanthropic engagement, only 30% have documented strategies and 30% find it difficult to integrate philanthropy into broader wealth strategies, demonstrating a need in the family office space to optimize gift-giving and align strategic, financial and philanthropic goals.

The full 2022 Global Family Office Survey report, which includes additional findings on private banking and family office taxation and regulatory oversight, is available here.

About “Shifting Horizons: Insights Into How Family Offices Are Responding to Rapid Economic and Social Change” Global Family Office Survey Methodology

BNY Mellon Wealth Management’s “Shifting Horizons” Global Family Office Survey assesses how family offices are adapting to the past few years’ massive and rapid economic and social disruption. The report provides insight and analysis based on 200 online surveys completed by key personnel at global family offices managing at least $150M in assets, consisting of 56 single family offices and 144 multi-family offices with more than 100+ respondents had $500M or more in assets. Half of participants are from U.S. family offices, with the remainder from a mix of other markets, including: UK, Canada, Switzerland, Luxembourg, Hong Kong, Singapore, Germany, Italy, Brazil, Australia, India and South Africa. The margin of error is +/- 9.8 percent for the US sample and about +/- 9.8 percent for the oversample in the global market, reported at a 95 percent confidence level. The intention is to provide nuanced insights that help the global family office community chart its course in a fluid social and economic landscape. The survey was commissioned and conceived by BNY Mellon Wealth Management and the Harris Poll fielded the survey online from October 14 – November 8, 2021.

About BNY Mellon Wealth Management Global Family Office
Drawing on our breadth and depth of institutional capabilities, innovative technology and 50 years of family office expertise, BNY Mellon Global Family Office helps our clients meet the complex needs of the multi-generational families they serve. Our world-class investment management and custody solutions, sophisticated estate planning and fiduciary support, customized wealth planning and top-tier private banking have advanced the family office industry across geographies and generations. The firm works with over 300+ family office clients with an average relationship tenure of 15 years. For more information, visit https://www.bnymellonwealth.com/global-family-office.jsp.

About BNY Mellon Wealth Management
For more than two centuries, BNY Mellon Wealth Management has provided services to financially successful individuals and families, their family offices and business enterprises, planned giving programs, and endowments and foundations. It has $321 billion in total client assets, as of December 31, 2021, and an extensive network of offices in the U.S. and internationally. BNY Mellon Wealth Management, which delivers leading wealth advice across investments, banking, custody, and wealth and estate planning, conducts business through various operating subsidiaries of The Bank of New York Mellon Corporation. A line of business within Wealth Management, BNY Mellon Investor Solutions includes the firm’s institutional multi-asset solutions business. The Investor Solutions AUM/AUA is $31.3bn as of December 31, 2021. For more information, visit www.bnymellon.com or follow us on Twitter @BNYMellonWealth.