Family Office

What’s Top Of Mind For Some Of The World’s Leading Family Offices? 

Hannes Hofmann 20 July 2023

What’s Top Of Mind For Some Of The World’s Leading Family Offices? 

Citi Private Bank gathered leading family offices from around the world – representing $434 billion in wealth – to hear cutting-edge insights, share experiences and build connections. Here is an article with a selection of key takeaways from their discussions with family office executives.

The author is Hannes Hofmann, global head of the global family office group, Citi Private Bank, Citigroup. The usual disclaimers apply to comments from outside contributors.

As a partner to many affluent families around the world, we gain privileged insights into the unique practices and cultures of each family, their family office, foundation or private investment company. 

But while they vary in size, structure and needs, the most successful and longstanding entities have one thing in common – a constant desire to learn best practices, make connections with their peers and keep abreast of transformational trends. 

That is why in 2016 we established our Family Office Leadership Program, an annual event bringing together prominent family office executives, industry experts and thought leaders for a comprehensive exploration of challenges, opportunities, and best practices.

The 2023 program saw 140 participants from 24 countries – some traveling from as far as Australia – gather over three days in Ossining, New York. Attendees had an average net worth of $3 billion and collectively represented over $420 billion in wealth (1). 

The program featured 17 sessions with 25 prominent practitioners, founders and experts sharing their insider insights. Topics included opportunities in public and private investments, state of credit markets, macroeconomic and geopolitical trends as well as family and family office management and governance. 

What follows below is a summary of the key takeaways and actionable insights from a few select sessions of our program:

Will tech recover lost ground? What should family offices consider before investing?

Artificial intelligence could add up to $7 trillion of market value creation over the next few years and will be one of the key drivers of the technology sector rebound that we are already witnessing. Consider the 3Ts before seeking to invest in the tech sector: 

Team: Talent and capability of the founders and of the operating team; 

TAM: Total addressable market size and proven ability to scale; and 

Traction: Demonstrated support of the staying power and growth of the business

Have private market valuations bottomed?  
Private valuations will likely continue to decline in the near term and the degree of stress will be substantiated by transaction comparables (vs mark to market) as companies that have been holding out will need to raise capital. There will likely be substantial challenges and risks of default for many venture/growth businesses which are unable to secure additional capital to survive. At the same time, opportunities to take advantage of market stress, capital dislocations and asset repricing are very prevalent.

Are there potential opportunities in dislocated credit markets?
On the back of a robust due diligence process, family offices can seek to capitalize on the secondary debt market, near- to medium-term debt maturities on favorable terms and conditions across the board, premium double-digit yields, capital structure seniority, contractual cash flows, downside protection and favorable covenants, reasonable pro forma leverage profiles, and equity upside in certain situations. Alternatively, seek out fund managers with a proven track record in high yield and distressed markets to potentially enhance portfolio returns.

With unprecedented rate hikes, sluggish return to office stats and the impending loan maturities, are we looking at a brewing crisis in the commercial real estate sector? 
There is no doubt that the commercial real estate sector is enduring a trio of challenges with rates hikes, high vacancy rates and upcoming maturities. Despite these, there are bright spots within the travel and hospitality sector that has benefited from ”revenge travel” and the industrial sector with the focus on revival of manufacturing capability, especially in the US. Selective opportunities within global luxury real estate, and event multifamily and office space are available for capital deployment if investors were to focus in on quality versus quantity. The ability of large financial Institutions with solid balance sheets to offer optimized debt restructuring options, will be key to crest over the rate challenges in the short term. 

How can family offices effectively balance risk and return in the current environment?
Elevated inflation and recession fears have made for challenging conditions while monetary tightening has created painful losses in bond portfolios. 

Notwithstanding the uncertainty, there are potential opportunities in high quality fixed income, such as in US investment grade fixed income and short-duration index-linked bonds that could be useful against further inflationary surges. A weakening US dollar over the coming years could also increase the returns on EM and other assets.

How is estate planning evolving in the modern family with reproductive advancements, adult adoptions, and longevity?
Advancements in reproductive technology – from in vitro fertilization (IVF) to embryo freezing to surrogate pregnancies – has introduced complexity in determining legal parentage and inheritance rights. Individuals using or considering using these methods should clarify inheritance rights in their estate plans. Similarly frozen genetic material and disposition of these materials should be clear in estate plans regarding their intended use, donation or disposal. While less common, adult adoptions can affect beneficiary designations and guardianship and decision-making authority for healthcare and financial matters.

Finally, increased life expectancy implies that individuals must ensure that their assets are managed and preserved for an extended period, which requires a well-thought-out strategy for establishing trusts, healthcare directives and insurance.

What are the best practices to navigate family and family office leadership succession?
Seasoned family office executives highlighted below the seven vital lessons for navigating the complexity of family and family office leadership succession:  

1. Have the courage to start a conversation about succession; 
2. Develop a succession plan early and make it a continuous process; 
3. Seize the opportunity to redefine the family’s vision for their future; 
4. Communicate, communicate, communicate!
5. Set the new leader up for success; 
6. Support the transitioning leader; and 
7. It is never too early to start planning.

What are the options and key considerations for families seeking capital or even an exit?
Family owned and closely held businesses may seek outside capital for acquisitions and/or other growth initiatives, buying out existing family shareholders or outside shareholders, and deleveraging balance sheets with equity solutions to provide more operational flexibility. Having a robust governance framework, a well-thought-out succession plan and long-term vision and alignment within the stakeholders and family members is critical. Sovereign wealth funds can be a source of long-term, patient capital that is better aligned with the family’s vision of longevity while a partnership with a like-minded private equity firm can be a fruitful and frictionless experience. 

Explore more insights from our Family Office Leadership Program and our range of services for family offices.


1, Citi Private Bank, June 2023

Views, opinions and estimates expressed herein may differ from the opinions expressed by other Citi businesses or affiliates. The information contained herein is not intended to be an exhaustive discussion of the concepts mentioned herein or tax or legal advice. Readers interested in the concepts should consult their tax, legal, or other advisors. You can read our full disclaimer here.

About the author
Hannes Hofmann is a Managing Director at Citi Private Bank and Global Head of the Global Family Office Group. Hannes has an extensive global institutional wealth background. He joined Citi from JP Morgan where he spent over 20 years in numerous roles globally.

About Citi Private Bank

Citi Private Bank’s Global Family Office Group serves over 1600 single family offices, private investment companies and private holding companies, including family-owned enterprises and foundations, around the world. 

We leverage the global network and resources of Citi to deliver customized private banking, investment banking and commercial banking services and access to global opportunities. Our advisory teams provide insights and best practices on creating, structuring and operating family offices, wealth planning, philanthropy, art, and more. Through our renowned events program, we connect like-minded family office executives, principals and family members to exchange ideas, build relationships and hear from top thought leaders.

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