Family Offices Look to Next Generation of Investors

New research from Bank of America Private Bank offers a rare look at how the world’s wealthiest families are preparing for a major generational handover, as nearly 60% expect a leadership transition within the next decade, and how next-gen leaders are reshaping investing, philanthropy, and innovation. The Bank of America Family Office Study captures over 300 family office leaders’ perspectives into how their organizations are navigating complexity and preparing for this seismic change.

Elizabeth Thiessen is a Managing Director and the Head of Family Office Solutions with Bank of America Private Bank. She breaks down the figures with Carol Massar and Tim Stenovec on Bloomberg Businessweek Daily.

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Episode Transcript

Speaker 1 (00:02):
Bloomberg Audio Studios, podcasts, radio News.

Speaker 2 (00:08):
You're listening to Bloomberg Business Week with Carol Masser and
Tim Stenovek on Bloomberg Radio. Well.

Speaker 1 (00:15):
A recent study by Bank of America Family Office finds
that overall, family offices are optimistic about the outlook of
the U S stock market, private equity, and merger and acquisition activity,
with more than six and ten anticipating that the markets
will move higher over the next year. Now. The study
covers a lot everything from AI and alternatives, to wealth
across generations and wealth transfers of more than one hundred

(00:37):
trillion dollars more like one hundred and twenty four trillion
over the next decade, to airs and also to women.
It's something that we have talked about a lot in
our weekly discussion Women, Money and Power, where we look
at all the economic implications of the massive wealth transfer
that's underway, how is impacting tim the investing, saving and
also giving landscapes.

Speaker 2 (00:56):
With some thoughts on that we welcome. Elizabeth Beiesson had
a family offer solutions at Bank of America Private Bank.
It's got some four hundred and forty seven billion dollars
in assets under management. She joins us from Charlotte, North Carolina. Elizabeth,
how are you.

Speaker 3 (01:09):
I'm great, Tim, good to be with you both.

Speaker 2 (01:11):
It's good to have you with us. I just want
to set the scene a little bit, just to contextualize
the different families that you work with. What would be
like a typical family's net worth and size, Like what
are we talking here for family office clients for Bank
of America Private Bank.

Speaker 3 (01:25):
Well, it ranges. And in this study in particular, we
talked to over three hundred and thirty five family offices
and they ranged from twenty five million in assets that
they're managing to over five billion. So it really is
a wide spectrum of family offices that we spoke to
and we'll talk about here today.

Speaker 2 (01:46):
And the result, So, what did you find that was
top of mind for them? What acknowledging that, of course,
not everybody has the same priorities.

Speaker 3 (01:53):
Yeah, a few things really stood out to us. You know,
this was a very rich set of data that came
out of the study. I will highlight that of the
clients that we talked to, over sixty percent of them
had greater than five hundred million in asset. So to
your earlier question, but some of the themes that came through.

(02:15):
One i'd highlight, you know, you talked about the wealth
transfer that's underway, and that really came through and the
results as well. It was really underpinned. We could call
it the Great Family office Transfer. What's not surprising, eighty
seven percent of the families we spoke to haven't transitioned
yet to the next generation, and that's not surprising, you know,

(02:38):
So there's really been an increased velocity in formation of
family offices. But what they told us was six out
of ten expect to transition in the next ten years,
one out of three in the next five years. So
it's beginning to unfold. And you know, as we asked
family offices about the implications of that, you know, they're
definitely starting to think about a new generation of error

(03:02):
in investing, increase focus on philanthropy, and a definite increased
use of technology. So I think that that wealth transfer
that we're seeing holistically across the US is absolutely impacting
family offices and it's starting to happen. The second theme
I would highlight is the increased focus on alternatives. What

(03:24):
was interesting in the study is two thirds of the
family offices we spoke to referred to themselves as conservative investors,
but yet their allocation was pretty even between marketable securities
and alternatives thirty six percent marketable securities thirty four alts.
But they're leaning into alts. When we asked, you know,

(03:46):
what do you want? Where do you think you're going
to get the greatest return in the future. What's your
area of focus as you look forward? Private equity was
number one, followed by direct investments in companies, followed by
real estate. So we see that all alternative's focus, you know,
continuing to take center stage.

Speaker 1 (04:04):
And Elizabeth, can I just jump over a second. I
am curious to any of them think about in terms
of the wealth transfer what it means, like are they
going to also go spending money or like is it
all about, you know, ensuring that the wealth exists for
future generations. I'm just curious if there's a different take,
whether it's women or whether it's a younger generation.

Speaker 3 (04:25):
Well, it's both. I mean, there's definitely a desire, you
know what, when we talk to family offices, there's definitely
a desire to maintain the mission and purpose of that
family office and why it was created to begin with
and what came through in the research, which we found
really interesting. One of the things we asked family offices

(04:47):
is how involved is your principle in the management and
running of the family office. And they had a scale
either you know, not very less involved, moderately involved, very involved.
And the clients that have family offices that have less
involved principles, they expect seventy three percent of them expect
the mission and purpose of the family office to change

(05:09):
when handed to the next generation. So to us, as
we read that, it's a real, you know, call to
action that as we know this transfer is beginning to unfold,
having like early conversations around like what do you want
that next generation to do with it? Is it to
go spending? Is it to continue the purpose that the

(05:31):
first generation created? Having those conversations and that intention early
is paramount.

Speaker 2 (05:37):
I'm sure you caught this story in the Wall Street
Journal over the weekend, but it was about these these
so called trust reveals where the super wealthy families are
having these not necessarily parties, but like meetings with financial
advisors maybe family offices to really go through the numbers
for the next generation. Oftentimes, it sounds like some of

(05:57):
these families they grow up knowing they're wealthy, but the
kids don't know they're getting a one hundred million dollar
trust fund. What's the communication, Like, did that story resonate
with you?

Speaker 3 (06:07):
Yeah? I think well, I mean we see both ends
of the spectrum. Sometimes you see families where it is
there are you know, a reveal that happens. Others though,
I find if there's a really intentional process where that
is revealed with milestones and intention, I think that that

(06:27):
can have like better outcomes ultimately.

Speaker 1 (06:31):
Yeah, it's it's super interesting, right, Just what's going on.
You know, we've spent a lot of time, Elizabeth talking
about women specifically and the wealth transfer that is expected
to be in the hands of women specifically. You know,
I've gone through the report. I'm just curious what you
guys are seeing specifically, if you've seen any transfers already

(06:51):
to women and how they approach money perhaps differently.

Speaker 3 (06:55):
Yeah, we we absolutely do. There's a lot of the
transition that happens for for women in family office, and
I think you know their approach. We do regularly see
an increased focus on philanthropy that can play through many
times women in a family are getting involved early in

(07:18):
philanthropy and then that can play through. The study did
highlight that when these family offices transition, fifty one percent
expect an increased focus on philanthropy with the next gen.
So so we do see that. I think like the
other part of the study we found really interesting is

(07:39):
is sort of what we called the hidden complexity of
a family office. You know, as you mentioned, Carol, it
was broad ranging in terms of the topics that we
touched on, but one of the areas that we really
wanted to get, you know, more data around is what
you know, we call the hidden complexity, and we really

(07:59):
highlighted that, you know, these family offices, it's more than
just the investment philosophy that they're executing against, you know,
it's all the related operational work that comes with.

Speaker 1 (08:10):
That, Right Elizabeth, Elizabeth, we've got to run. Forgive us,
forgive us, but hopefully we can continue this conversation in
the future. Elizabeth Eson had of family office solutions at
Bank of America Private Bank,