Bank of America says next generation will reshape family offices

Bank of America’s latest Family Office Study found that family offices are preparing for generational transitions as next-generation principals drive greater allocations to alternatives, evolving philanthropy, stronger governance and wider technology adoption.

The study, Building for Generations, found that 79% of family offices with a potential next-generation principal expect alternatives to account for a larger share of portfolios, while 77% expect philanthropic priorities to evolve.

“Today’s family offices are building for the future while balancing continuity and changes today,” said Elizabeth Thiessen, Head of Family Office at Bank of America Private Bank. “The families best positioned in this transition recognise that preparation goes well beyond identifying the next leader. It requires strong governance, a shared vision and the ability to adapt to changing opportunities and priorities across generations.”

Alternative assets shape diversification in future family office portfolios

Private equity remains a cornerstone of alternative allocations, representing 27% of family office alternative portfolios, while 59% of offices plan to increase exposure over the next three years.
Direct investments continue to attract family offices seeking long-term value creation, with 38% citing ownership stakes as a top wealth-generation opportunity. Private equity is number one (51%).

For most family offices, capital growth is the investment priority, outranking income generation and balanced positions.

Sports ownership is gaining traction. Four in 10 family offices hold sports investments today. Offices with at least one Gen Z or Millennial principal are most likely to own sports teams or sports-related assets.

Art can represent a significant store of wealth. Three in 10 family offices with art holdings say that the family’s collection is valued at more than $25 million.

Family offices focus on closing readiness gaps as leadership transition nears

Most family offices have identified a successor (83%), but only 27% of offices have a trust distribution policy or guiding principles in place.

Governance and family education remain central to successful transitions. Nearly all (91%) agree they help keep families aligned on priorities, yet fewer than half (40%) of offices have a formal family education programme.

Nearly nine in 10 agree governance structures help reduce family disagreements, and 73% plan to adopt additional governance structures in the next three years.

Family dynamics remain the top governance challenge (45%), followed by the complexity of shared assets (37%) and undefined family expectations (36%).

Credit emerges as a strategic wealth tool for the next generation

While credit use is nearly universal among family offices (92%), only 27% use leverage consistently as part of a long-term wealth strategy.

Today, family offices primarily use credit to support real estate investments (45%), remain invested through market cycles (42%) and bridge short-term liquidity needs (38%).

Future principals may take a more strategic approach to borrowing. Nearly eight in 10 family offices (77%) believe the next generation will be more interested in using credit to build wealth.

Business-owning families are more likely to embrace credit as a wealth-building tool, with more than twice as many using leverage as part of a long-term wealth strategy compared to families without a wealth-generating business (32% vs.14%).

AI becomes a competitive advantage for modern family offices

AI adoption is common across family offices, with 42% of family offices reporting regular employee use, primarily for data analysis (64%), meeting summaries (57%) and automation (49%).

Demand for technology continues to grow, and 83% of family members expect their family office to implement new technology solutions.
Family offices view AI as a strategic advantage, not just an operational tool. Eight in 10 believe AI has the potential to improve investment returns, rising to 88% among family offices with next-generation involvement.

 Re-disseminated by Wealth and Society