Two significant changes are on the horizon for first-generation family offices: The predicted Great Wealth Transfer to Gen X and Millennials from Baby Boomers will happen just as family office founders are beginning to make succession plans.
Cerulli Associates estimates nearly $124 trillion in assets are set to change hands through 2048, and according to the Bank of America Family Office Study, one-third of family offices are expected to transfer control to the next generation within five years.
These trends will change how asset managers connect with family offices and how family offices invest.
Increased Need to Institutionalize
The BofA survey noted the complexity of family office finances, with one-third managing at least 50 bank accounts and 40% managing at least 50 investment accounts, underscoring the need for formalizing processes and procedures within the organization. While founders may have managed the finances themselves, transitioning to a second generation likely involves more family members and the need to professionalize.
Molly Baumgarten, a senior wealth manager at Eton Advisors, says much of family offices’ new business comes from already-established relationships and networks of professional referrals.
“This particular wealth space is a vast ecosystem of multidisciplined advisers who all lean on one another for different expertise and introductions,” Baumgarten says, adding that families expect their teams to have established networks upon whose expertise they can rely.
Mel Lagomasino, the CEO of WE Family Offices, who has worked with family offices for 40 years, says her firm’s flexibility is a selling point.
“We will adapt ourselves around that family to basically be an outsourced family office. Sometimes we’re an outsourced family office in the full extent. Sometimes we’re outsourced for a piece of what they’re doing,” Lagomasino says. “For example, they may have a family office that’s working with them on investments, but they need someone to help them put together the family governance piece … or create an investment committee.”
Family offices may become more professional as a second generation onboards, but family dynamics add a layer of complexity beyond money management. UBS’ Global Family Office Report 2026” showed only 35% of these investors have a defined succession plan for their family office.
Eton Advisors’ Baumgarten says one way her company gains and maintains new clients is by demonstrating the ability to operate as a lead relationship manager or a chief operating officer. As a relationship manager at Eton, she works alongside investment managers, helping families create formal frameworks and governance plans, as well as smoothing intergenerational communications.
“Founders [need] to understand that the next generation are learners and they’re stepping into something new, and it doesn’t happen overnight,” she says. “It is a process.”
Investments May Become Riskier
Bill Smith, a senior wealth adviser at Trust Company of the South, says a lot of the multigenerational families he works with still have an asset allocation of 70% equities and 30% fixed income. Interest in alternatives is rising as family offices practice using the endowment model, but that also brings challenges to ensure that portfolios include enough liquidity to make other commitments.
Howard Weiss, a private bank family office consultant for Bank of America, says when it comes to alternatives, many of his clients are heavily focused on real estate, which can be as much as half of some families’ assets. Others may have diversified into alternatives such as private equity or venture capital, and these illiquid assets may be up to 35% of a family’s assets.
Jim Besaw, the chief investment officer at GenTrust, says one of the biggest shifts he sees in wealthy families is an increase in risk appetite of the younger generations. Considering the global financial crisis was nearly 20 years ago, younger family members have not experienced a bear market.
Besaw says when GenTrust does basic financial educational presentations to second and third generations of family office clients, “at the end of the first hour, they will be like, ‘Are we going to talk about crypto?’” he says. “[I was] like, ‘That’s in Session 8 if you want to keep going with the program.’ … It’s just a different mentality.”
Technology is affecting all family offices, from operations to investment choices, Lagomasino says. Younger generations are more interested in venture capital and technology startups, believing if they wait to participate until companies go public, it’s too late.
Younger generations are also using artificial intelligence to double-check or question the family’s asset allocation or to find out if there are opportunities they are missing, she says, adding that AI might also change how and in what they invest.
Philanthropic Giving Trends May Change
Of the $124 trillion set to transfer from Baby Boomers, Cerulli’s research found that the next generations are likely to inherit about $106 trillion of that, with the rest going to charities. Weiss says some of his family office clients give significant amounts to family members and to charity, but he is watching to see if those charitable donations increase, particularly from people who made their wealth in technology.
Yet charitable giving programs may take a hit. Besaw says some families have slowed down aggressive giving campaigns due to fears that AI could reduce employment among younger family members. This may be shaping long-term family office plans for wealth preservation. He says some families are worried that those in younger generations maymay not find work.
“If AI really becomes what people said, … [some clients have said,] ‘I want to kind of hoard my money today, because I don’t know what the future is going to look like,’” Besaw says. “It’s kind of interesting. There’s no other time period in history where we could say something like that.”
Tags: Family Offices