Hybrid strategy for family assets

Modern family: managing wealth across generations

Managing family capital today is as much about coordination as it is about performance. “It’s impossible to know in advance who will be part of the family or how relationships might evolve,” says Honora Ducatillon, Head of Family Advisory at Pictet Wealth Management. “So, families have to design systems that are anchored not in specific individuals but instead in purpose, values and guiding criteria.”

As wealth structures diversify across jurisdictions, asset classes, and generations, families are moving toward more integrated models of oversight. Rather than choosing between doing everything in-house or relying solely on external partners, most now combine both. Deloitte reports that over a third of family offices are planning to boost third-party partnerships for hybridisation. Families are building internal capabilities where alignment matters most, and partnering with institutions for scale, governance and specialist expertise.

At the same time, the broader family wealth management field continues to professionalise. Deloitte projects that the number of family offices worldwide will grow by a third, reaching more than 10,700 by 2030, reflecting the growing institutionalisation of private capital. The family office, once a bespoke arrangement for a select few, is increasingly becoming a structured enterprise that blends entrepreneurship with governance, investment discipline and long-term stewardship.

Decision time: defining purpose and structure

The decision to create a family office rarely starts as a technical choice: it usually arises at pivotal moments, such as a business sale, exceptional dividends, or a generational transition. These key junctures prompt a reevaluation of how best to manage the family wealth and plan for the future. “The most important, and often underestimated, question is why,” Ducatillon says. “Setting up a family office demands clarity of purpose and agreement on what success means – whether that’s preserving capital, transmitting values, or supporting new ventures.”

Control is often a strong motivator. “When wealth is managed within the family, decisions can reflect shared values and long-term intentions,” says Professor Florin Vasvari of London Business School. “There’s also more room for personalisation; something large institutions can’t always offer.”

Yet, as Nicolas Campiche, CEO of Global Fiduciary Management at Pictet Wealth Management, observes, control alone is rarely enough. “There is ample scope for collaboration between wealth managers and family offices,” he says. The most resilient models are hybrid by design – combining family alignment with institutional depth and evolving as needs and generations change.

The realities of cost and scale

Ambition often meets reality when the first budgets are drawn up. Given that the median annual operating budget sits at $2mn, running a single family office requires infrastructure, governance and talent. By contrast, external managers typically charge a percentage of assets under management, which may be more cost-effective for families below certain thresholds.

“Families sometimes overlook the operational challenge,” notes Christina Wing, Senior Lecturer at Harvard Business School. “A family office is a business, just like the family’s other ventures, and this will require upfront investment and ongoing cost. Only the very largest offices have sufficient scale to do everything in-house,” she adds.

Many families begin with enthusiasm, driven by a desire for independence, before realising that a partnership can sometimes deliver better outcomes. “We often see families overestimating what they can build internally and undervaluing the value of institutional collaboration,” Campiche says. “The most effective approach usually combines both perspectives.”

Investment horizons: planning for the long term

While establishing a family office is costly, it can deliver long-term benefits. Beyond day-to-day management, a well-structured office enables families to think and act like institutional investors while remaining anchored in their own values and objectives. “Families are adopting a more professional approach to allocating capital, investing more broadly and planning for longer horizons,” according to Vasvari.

However, needs and goals are not static. The “great wealth transfer” is already reshaping the landscape with unprecedented sums moving between generations as new priorities emerge. “Pretty much all of our clients have succession in mind,” Campiche says. “Some create advisory boards where the next generation learns how wealth is managed.” Clients need to design structures that balance multi-generational wealth with varying attitudes toward asset classes and risk tolerance, he adds.

Governance and confidentiality: getting the balance right

Family offices often operate with a multigenerational contract. “Governance is in place to ensure smooth transitions and plan for an extended duration, for the benefit of future generations,” Wing says. Sound governance is fundamental, even more so in dedicated family offices. Families sometimes underestimate the extent to which a clear process can determine the quality of the outcome.

“Establishing a governance framework – in terms of decision-making rights, roles, and flow of information – between the family members and the professionals that support them is key,” says Ducatillon. “Without that clarity, tensions arise and professionals cannot do their jobs effectively.” When governance falters, professionals can find themselves paralysed – either facing principals who second-guess every decision or dealing with family members who disengage entirely.

Confidentiality also remains a frequent concern. While families rightly value privacy, becoming too inward-looking can lead to excessive insularity and missed opportunities. According to Denton’s survey data, 42% of family offices in Europe rate the ability to give strategic advice as the most important factor when selecting external partners. This suggests that families with regular forums for strategic input tend to thrive, as do those who engage externally through co-investment networks or philanthropy partnerships. Achieving the right balance of governance and openness is often what separates structures that endure from those that eventually weaken.

There is no single blueprint for managing family wealth. Each family must find its own equilibrium between control and collaboration, privacy and openness: an alignment that reflects its values, scale and level of maturity.

As the landscape continues to evolve, families who approach wealth management with clarity, flexibility and purpose will be best positioned to ensure their legacy endures and evolves.