Survey Reveals Family Office Demand for Tax-Managed Strategies, AI and More

A recently released survey by BNY Wealth, 2024 Investment Insights for Single Family Offices, sheds light on investment trends for single family offices. It also examines other issues, including family offices’ internal use of AI and concerns about safety and security.

BNY Wealth has been in the family office space for more than 50 years and has over 300 family office clients around the world. Christine Curtiss, head of Global Family Office at BNY Wealth, offers these insights into some of the survey findings:

On the demand for tax-managed strategies: “In light of the 2017 tax cuts that will expire at the end of 2025, there is more and more emphasis on being really tax efficient.

There is definitely a demand for tax-managed strategies. Family offices are focused on preserving wealth for their clients. They are trying to reduce the impact of taxes on their returns, so they’re taking advantage of tax management strategies like tax-managed equities and tax-managed fixed income so they can realize losses and offset the gains in their portfolios.

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They also see these strategies as a great way to fund their charitable contributions. Given how philanthropic these families are, this is a great way for them to identify the securities that have the highest appreciation and donate them to the charity of their choice.”

On investments in AI: “We saw that 80% of the family offices in our survey responded that AI is a top investment theme for them over the next five years. This is a result of the fact that spending on AI-related technology is expected to grow significantly, from $50 billion in 2021 to over $1 trillion in 2030. This is one of the swiftest technology adoption cycles that we’ve seen. It’s also expected that 85% of knowledge workers are going to be using AI on a daily basis. We believe it’s more transformative than the internet was.”

On family offices’ operational use of AI: “There’s tremendous interest. Everyone sees the potential of AI to streamline their operations and free up their individual employees to do value-added work. I think they’re seeing the opportunity within the family office environment — they typically have small numbers of employees, so any bit of efficiency that they can eke out is of interest.

Especially the larger family offices are using AI in their investment process. AI creates incredible efficiency in terms of sourcing data and synthesizing data about potential investments. That’s where we are seeing the majority of family offices using AI today.”

On private equity and direct investing: “Private equity is certainly a big focus for family offices, particularly because of the significant increase in the number of PE-owned companies. Since 1999 it has risen from 1,000 to more than 16,000 today. Conversely, the number of public companies declined from 8,000 to 4,000. So, in terms of looking for investment opportunities, you really have to be in the private markets to take advantage of those opportunities and those outsized returns.

What we learned from the family offices that we surveyed is that more than 70% expect to make at least six direct investments this year.”

On safety and security: “This is a top concern for family offices of all sizes: protecting their families against cyberattacks.

There are certain protocols they need to put in place, such as multifactor authentication, or periodic reminders about phishing attempts. It’s all about creating awareness and reminding everyone in the family office and in the family how important it is to leverage the security standards and technology that exists, such as secure email and password-protected portals, to protect against these potential attacks.”

About the Author

Margaret Steen

Margaret Steen is the editor of FO Pro, The Family Office Professional. Based in Silicon Valley, she has written for Family Business Magazine for more than 15 years.


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