A new global report has lifted the lid on what’s keeping the world’s wealthiest family offices awake at night – with a trade war being the number one concern.
UBS released its sixth Global Family Office Report, which shared the views of 317 of its family office clients that manage an average of US$1.1bn each.
Geopolitical conflict came a close second in terms of worries, and the report indicated that UBS’s client base was “increasingly concerned” about what was to come over the next five years, whether that be “major geopolitical conflict, a global recession or a debt crisis”.
Despite tariffs, market volatility and economic uncertainty embedding itself into the report’s findings, when asked whether family offices were particularly vulnerable to current events, Yves-Alain Sommerhalder, Head of GWM Solutions at UBS, said they weren’t any “more or less” at risk.
“In discussions with clients, diversification has become a lot more prominent,” he added. “Going into this situation, many clients have been overweighted in certain markets so are now rebalancing their portfolios, somewhat.”
Benjamin Cavalli, Head of Strategic Clients at UBS, attributed this to some family offices “shifting their strategic asset allocations”.
“They are pivoting towards more liquid public equity and bond markets, perhaps because there are more opportunities to invest in cyclical growth companies and capture yield in an unstable time for trade and the global economy.”
This hadn’t diminished the appetite for risk among family offices, however, Mr Cavalli pointed out.
“Almost 60% of family offices plan to take the same amount of portfolio risk this year as they did in 2024. They have already likely factored those elements and components into it.”
The report suggested that sustainability is becoming more important to family offices, with 46% of those surveyed taking sustainability into account within investments – up from 42%.
“Businesses are increasingly seeing sustainability as a source of opportunity as opposed to a way of managing risk,” added Mr Cavalli.
Additionally, interest has been shown in emerging technologies. Twenty-seven per cent of family offices have a “clear investment strategy” in generative AI and the energy transition, while 64% are “familiar” with generative AI but don’t have a clear investment strategy or are “unfamiliar and looking to find out more”.
All this considered, succession planning does not seem to be a priority for many family office clients.
Globally, 53% of high-net-worth families have a succession plan in place, a figure that concerns wealth managers about the risk it exposes their clients to.
“We are probably going witness one of the most gigantic wealth transfers that we’ve ever seen over the next ten, 20 years,” said Mr Cavalli.
Though it was “encouraging” that this year’s figure rose from 47%, transferring wealth in a tax-efficient manner (71%) working with the next generation (43%) and preparing them to take on wealth responsibly (53%) were challenges in this area noted by families.
“Thriving in this environment requires a long-term mindset and a steady hand, rather than reactive moves in response to short-term market volatility,” said Victoria Hagmann, Head of Wealth Management for UK, Jersey, and Guernsey at UBS Global Wealth Management.
“Each family office faces its own unique set of challenges, and effective wealth management should reflect that with a personalised approach.
“A big part of this is understanding how decisions made today could shape the financial future of the next generation in the context of the great wealth transfer currently underway.”