Citi Private Bank study reveals priorities for family offices

The evolving demands of wealthy families and the current investment landscape is changing the priorities of family offices.

The latest iteration of an annual report from Citi Private Bank mines the collective insights of a record number of sophisticated investors that make up its global family office clients to determine the key themes and trends for the coming year.

Following on from the equity market rally that began in 2023 but mindful of market volatility and geopolitical uncertainty, the report reveals that family offices are putting their cash to work in risk assets with the expectation of portfolio gains.

There are seven key themes for family offices that have emerged in the 2024 report:

1. The challenge of meeting families’ expectations regarding asset preservation and preparing the next generation for future responsibilities.
2. Significant portfolio shifts from liquid resources to fixed income, and public and private equity.
3. Optimism for the year ahead with 97% expecting positive returns and more than half expecting these to be at least 10%.
4. Top concerns including interest rate trajectory and geopolitics such as US-China relations and Middle East conflict.
5. More sophisticated investing with 60% having built a CIO-led investment team, investment committees and investment policy statements, and a strong commitment to alternative asset classes.
6. Growing exposure to AI from an investment point of view, but slow adoption of this technology within family offices.
7. Collaboration with external partners while most family offices retain investment management and reporting in-house.

One significant element missing from the top concerns of family offices, the first time since 2021, is inflation.

Family offices are more optimistic about direct private equity, private equity via funds and global developed equities. However, sentiment around global developed investment grade fixed income decreased from 45% to 34%.

Public equities and fixed income both saw weightings rise compared to 2023 and this was most significant among North American respondents.

“Our family office clients are increasingly becoming more global as they seek to create and preserve wealth amidst new market challenges and opportunities,” says Ida Liu, head of Citi Private Bank. “As interest rates evolve and geopolitical challenges persist, ultra-high net worth investors and their families are putting cash to work and shifting their portfolios toward public and private equity. Family offices are focused on the future as they navigate evolving markets worldwide.”

Earlier this year, Deloitte published its report on the concerns and opportunities for family offices.