Family Offices Increasingly Looking to Next Generation

Bank of America Private Bank Head of Family Office Solutions Elizabeth Thiessen believes that the widespread wealth transfer that is occurring across the US is also affecting family offices, as a majority are beginning to think about a new generation and era of investing with an "increased focus on philanthropy and a definite increase use of technology." She joined Carol Massar and Tim Stenovec on 'Bloomberg Businessweek Daily' to break down the evolution of family office investing.

In the chaos that followed the Communist takeover of China in 1949, 24-year-old Frank Tsao stood before a contemptuous British ship broker and asked to buy a coal-fueled clunker. The eldest son of a once-wealthy Shanghainese family, his clan had lost everything except the gold they could stitch into their clothes. Now he was expected to lead the non-existent business.

From that first ship used to trade smuggled goods (the Ebonol was later sunk by a sea mine while running a blockade),1 Tsao became one of Asia’s best-known shipping tycoons by the 1970s. Toward the end of his life, he struggled with the perennial questions of the super-rich: How would he leave his wealth behind? And how could he prevent his heirs from destroying themselves over it?

The solution Tsao and his clan eventually reached — establishing their own family office, a firm dedicated to managing everything from a family’s investments and charity to its household staff — has become one of the hottest sectors of global finance. In most jurisdictions, a family office faces the same licensing requirements as an individual with a checking account, making them one of the most idiosyncratic and least regulated groups of investors in the world. In 2024, consultancy firm Deloitte estimated there were 8,030 single family offices managing $3.1 trillion, a 31% rise in just five years.

As post-colonial super-wealth in the Middle East and Asia prepares to shift to a new generation, trillions of dollars are set to flow into these vehicles. But new riches bring new problems. With the rise of family office scammers, the proliferation of biased service providers and the general air of mystery on the subject, it can be hard to know how one actually operates and what the best practices are.

Speaking to the most established families and top experts on the subject, what emerges is a picture less about ticking boxes and more about refereeing the fragile alliances, rivalries, values and egos that come with great fortunes.

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