Morgan Stanley Identifies 6 Key Focus Areas for the Future-Ready Family Office

Morgan Stanley Wealth Management today released a comprehensive report identifying essential focus areas and recommended steps for family offices to target growth more effectively.

With the number of family offices projected to expand 75% by 2030,¹ trends indicate growing urgency and demand for adaptable structures that help families express values, protect legacies, educate the next generation and leverage technology to navigate cybersecurity challenges and change amid complex markets. Additionally, offices are now facing a faster pace of intergenerational wealth transfers, underscoring the need to remain relevant for future generations.

To that end, the report identifies six essential pillars family offices will need to embrace to keep pace. Key takeaways include:²

• Allow governance to evolve: The governance structure of a family office is crucial for its long-term sustainability. It should balance flexibility with clear priorities, allowing for changes both within and outside the family—for example, including mechanisms for a graceful exit to allow family members to pursue separate interests. Regular reviews of governance rules should be conducted, involving younger generations to consider shifting objectives and priorities.
• Staff like an institution: Family offices should establish a healthy pipeline to invite, train, and promote fresh talent that can support current and evolving needs. It's essential to plan for succession and delegate responsibilities to younger staff members to ensure continuity, mitigate key-person risk, and help smooth generational divides. One of the most important decisions will be to identify which roles to keep in-house and then build supplemental external partnerships.
• Data matters: To stay at the forefront of market trends and maximize investment capabilities, Family offices require robust, reliable data sources and the capability to build or access a consolidated reporting platform. A rigorous approach to deal sourcing and due diligence is also necessary, defining investment parameters and adhering to a strict process for sourcing and vetting new deals.
• Fill the financial education gap: Family offices are prioritizing effective financial education programs for younger generations, which means meeting students where they are and recognizing generational differences. It’s essential for trainers to find the right balance of technical knowledge, interpersonal skills and experience. Additionally, as academic organizations de-emphasize financial literacy, family offices have an opportunity to fill this gap and help prepare younger generations to carry the torch. This may be an important area where external resources can help supplement or build new financial education programs for families.
• Anticipate the cyber threat: Family offices are increasingly targeted by cyberattacks that threaten long-term stability. However, there are simple yet effective steps that can help mitigate common threats such as identity theft, online scams, malware and fraud. These recommended measures include automatic updates, unique strong passwords, multi-factor authentication and careful handling of links and attachments.
• AI is a balancing act: Family offices are also under pressure to stay current with advancements in technology, particularly artificial intelligence (AI). AI can help family offices operate more efficiently, particularly in client communications and reporting. However, it’s key to fully understand potential security implications and ensure a secure perimeter for family information.

“Family Offices are pivotal in managing wealth and preserving legacies, and as families and environments evolve, so must the industry,” said Liz Dennis, Head of Private Wealth Management. “This guidance is designed to support family offices of all shapes and sizes as they work to ensure continuity across generations. Even with technology's potential, human expertise remains irreplaceable—and forward-thinking family offices must define clear strategies and infrastructure to continue adding value as indispensable partners for generations to come.”

Morgan Stanley Wealth Management is committed to helping family offices understand the shifting dynamics they face and the practices that will allow them to navigate changes and fulfill the family’s mission across generations. For more information, please visit Morgan Stanley Family Office.

Full report available here.

1. Deloitte Private’s latest report in its Family Office Insights Series - Global Edition explores the rapid expansion of family offices and offers a vision of the future landscape | Deloitte Global
2. Morgan Stanley Family Office: The Future-Ready Family Office: Evolving with Purpose

About Morgan Stanley Wealth Management
Morgan Stanley Wealth Management, a global leader, provides access to a wide range of products and services to individuals, businesses and institutions, including brokerage and investment advisory services, financial and wealth planning, cash management and lending products and services, annuities and insurance, retirement and trust services.

About Morgan Stanley
Morgan Stanley (NYSE: MS) is a leading global financial services firm providing a wide range of investment banking, securities, wealth management and investment management services. With offices in 42 countries, the Firm’s employees serve clients worldwide including corporations, governments, institutions and individuals. For further information about Morgan Stanley, please visit www.morganstanley.com.

This has been prepared for informational purposes only and is not a solicitation of any offer to buy or sell any security or other financial instrument, or to participate in any trading strategy. This material does not provide individually tailored investment advice. It has been prepared without regard to the individual financial circumstances and objectives of persons who receive it. Morgan Stanley recommends that investors independently evaluate particular investments and strategies and encourages investors to seek the advice of a Financial Advisor.

Past performance is not a guarantee or indicative of future performance. Historical data shown represents past performance and does not guarantee comparable future results.

This material contains forward-looking statements and there can be no guarantee that they will come to pass. Diversification and asset allocation do not guarantee a profit or protect against loss in a declining financial market.

This material should not be viewed as investment advice or recommendations with respect to asset allocation or any particular investment.

Artificial intelligence (AI) is subject to limitations, and you should be aware that any output from an AI-supported tool or service made available by the Firm for your use is subject to such limitations, including but not limited to inaccuracy, incompleteness, or embedded bias. You should always verify the results of any AI-generated output.

This article is provided for educational and informational purposes only and no representation of any kind is intended with respect to the practices described. Nothing in this article should be construed as a cybersecurity evaluation. Morgan Stanley is not responsible for determining what cybersecurity best practices are most appropriate for your needs. While efforts have been made to assure the completeness and accuracy of the information as of the date of the presentation, no representation is made that such information is accurate or complete, and Morgan Stanley undertakes no obligation to update the information as its practices change. Reproduction, transmission, dissemination, or other use without authorization or attribution is prohibited.

Morgan Stanley Wealth Management is the trade name of Morgan Stanley Smith Barney LLC, a registered broker-dealer in the United States.

© 2024 Morgan Stanley Smith Barney LLC. Member SIPC.

View source version on businesswire.com: https://www.businesswire.com/news/home/20241120595991/en/