The research reveals that family offices are significantly stepping up their focus on governance. In a study conducted amongst more than 300 family office professionals managing a combined $155bn in assets, 86% ranked “having the right governance in place” as their biggest challenge, as regulatory demands and multi-jurisdictional complexities continue to grow.

As family offices become more professionalised, the emphasis on governance has intensified, with a clear majority identifying it as a key concern. This focus is reflective of the broader industry trend toward enhanced scrutiny and regulatory oversight, as family offices — many of which operate across different jurisdictions — face diverse and increasingly stringent compliance obligations.

Michael Harman, commercial director – private client at Ocorian, said: “Governance has become a principal focus for family offices, and it is something that consistently comes up in conversations with my clients. They are increasingly reassured when a service provider, like Ocorian, connects them with leading regulatory and compliance professionals to guide them through this evolving landscape. Our strategic relationship with Bovill Newgate allows us to offer exactly that, helping family offices ensure their governance frameworks are both comprehensive and compliant.”

In response to the growing complexity of the regulatory environment, family offices are seeking independent, expert guidance to ensure compliance across multiple jurisdictions. Bovill Newgate, a regulatory consultancy and an Ocorian company, plays a critical role in providing such support.

Cilla Torode, head of Bovill Newgate Guernsey, added: “The findings of this study align closely with the challenges we’re seeing across the broader financial services sector. Whether it’s family offices or alternative fund managers, governance remains a central concern. In fact in a study we commissioned earlier this year in partnership with Ocorian, two thirds (65%) of alternative fund managers admit being subject to governance related fines or sanctions during the last two years and nine in ten (90%) see their organisation’s focus on governance increasing over the next 24 months.

“With regulatory frameworks continuing to evolve, particularly for family offices operating across different jurisdictions, the need for robust governance practices has never been more pressing. At Bovill Newgate, we recommend a three lines of defence approach to help family office professionals protect their businesses. This involves creating strong frontline processes, continuous monitoring, and ensuring rigorous independent audits of governance frameworks to mitigate risks effectively.”

Ocorian’s three lines of defence approach to tackle risk and compliance challenges:
· Line one: create clear and robust frontline processes and procedures, supplementing this with both online and face to face training programmes for staff.
· Line two: build and empower a comprehensive compliance oversight function which monitors and assesses the processes and procedures, as well as advising and supporting staff and senior managers to comply with the firm’s obligations.
· Line three: seek review and challenge of the firms AML framework via annual independent audits.

Bovill-Newgate is an Ocorian company and specialist financial services regulatory consultancy with a global offering across the UK, the Channel Islands, Singapore, Hong Kong, Mauritius, and the Americas.

The firm asked managers whether they anticipate increased, decreased or flat fund raising. It found 85% of alternatives managers it spoke to predicted an increase in capital raising in 2024 relative to 2023.

They also found nearly one in three forecasted a rise of 50% or more, as well as an increase in the number of fund launches across all alternative asset classes.

See also: What does 2024 hold in store for the wealth management industry?

The professionals surveyed pointed to investors’ desire to diversify more as the key reason to expect a ‘bumper 2024’ for these assets.

The study gathered responses from managers in Europe, Asia, the Middle East, North America and the UK.

Ocorian also found notable regional trends, with US-based and Asian managers expressing stronger positive sentiment than European managers.

The full results from the survey are in the table below:

Yegor Lanovenko, co-head of fund services at Ocorian, said: “There is a high level of confidence about the year ahead among alternative fund managers both for their own funds and for the sector as a whole, with different regional sentiments emerging

“This expected surge in capital raising and fund launches turns the spotlight on efficiency and operational excellence, and fund managers increasingly rely on expert support and trusted partners to handle their fund launches and operations at scale.”

See also: Mattioli Woods eyes ‘robust acquisition pipeline’ as assets inch down to £15.2bn

What is more, as James Pereira-Stubbs, chief client officer at Oxford Risk, asserts, this is not “a question for another day”. “The intergenerational transfer of wealth in the Middle East is happening now and we expect it to continue for the next 10 years or so,” he continues. “As you would expect, the younger generation is taking over the entire management of the family finances either because the older generation has retired or passed away.

“More and more commonly, however, we are seeing the older generation bringing their children into the relationship with their wealth manager or financial institution as a sort of apprenticeship, leading up to the complete transfer of responsibility. It is important that wealth managers recognise this trend and engage the next generation appropriately.”

One example of how this transition is manifesting is in a growing focus on impact investing and environmental, social and governance (ESG) considerations – as highlighted by Ocorian in its Family offices and the role of third-party service providers report, which resulted from canvassing more than 130 family office professionals responsible for some $62bn of assets under management, including 30 respondents based in the Middle East.

‘Exciting trends, new challenges’

“Younger family members are starting to take a different approach to parents and grandparents, with the switch to ESG investing the biggest change, along with a desire for family businesses to become advocates of ESG and sustainability in general,” says Lynda O’Mahoney, global head of business development – private client at the trust, administration and fiduciary services provider. “These new trends are very exciting but can also bring new challenges, such as ensuring investments are achieving target returns as well as the desired ESG credentials.”

According to Pereira-Stubbs, Middle East investors tend to be most interested in the environment aspect of ESG, with social elements second and the least amount of interest reserved for governance considerations. “To take this a level deeper we do not see a real differentiation in the United Nations’ sustainable development goals [SDGs],” he continues.

“Investors tend not to have a clear preference for any one SDG – rather individual investors express a variety of interests across all the SDGs. This makes the job of wealth managers and financial institutions more complicated as they need a robust assessment of what their investors care about, alongside the ability to match an investor to the right products within their portfolio.”

Domestic structuring

Another shift identified by Ocorian is a significant rise in the use of foundations for domestic structuring. Traditionally, family offices and high-net-worth individuals in the Middle East holding assets overseas have not structured these domestically but that is now changing, the firm argues, with more than 1,600 foundations set up in the UAE alone.

“The DIFC, ADGM and RAK ICC foundations regime allows for the transfer of the ownership of assets from ‘own name’, enabling the flow of wealth across generations and the continuity of family businesses,” says O’Mahoney. “This increase in domestic structuring highlights a growing awareness around the need for asset protection and financial security, as well as heightened sophistication around the governance of family offices.”

Overall, wealth managers are noticing important differences in the way younger generations wish to be served. Key among these include the idea that a digital offering is less a luxury than a necessity – with younger clients expecting to enjoy 24/7 access to their wealth management platform – and a greater focus on holistic wealth management.

“The parents have taught their children well, with the younger generation exposed to greater financial education opportunities,” says Pereira-Stubbs. “For wealth managers, this requires a much more robust portfolio construction covering all asset classes and a much better understanding of what the investors want, with more robust assessment tools.

“There is also more scepticism of active management and interest in private asset classes and, in general, the younger generation wants a greater alignment between their values and their investments. This places two requirements onto wealth managers – they need to really understand what their investors care about and they need to build out their product shelves to provide a much more robust ESG offering.”