Preparing your single family office for the “Great Wealth Transfer” 

Cerulli Associates projects that approximately $124 trillion will change hands globally through 2048, of which $106 trillion is expected to reach direct heirs and $18 trillion will flow to charitable organisations^[1].  When wealth does cross generations, Millennials^[2] are projected to receive approximately $45.6 trillion in aggregate, while Gen X^[3] stands to inherit $39 trillion. The transfer is not a finite event. It is a compounding one — and for single family offices, it raises an immediate and practical question: is your investment framework capable of serving the generation that follows?

Each family is distinct in its objectives, liquidity needs, risk appetite, time horizon and existing asset base, and a generational transition typically forces these differences into the open. There is no universal portfolio that fits all single family offices. What is required is a coherent investment philosophy, documented and understood across generations, that can adapt as the family’s circumstances evolve without losing its underlying discipline. That philosophy must address the balance between liquid and illiquid assets, the appropriate relationship between strategic and dynamic allocation decisions, the role of non-financial objectives including sustainability and impact, and how conflicting priorities between family members are resolved when they arise.

Our Investment Playbook for Single Family Offices quantifies what strong investment governance may contribute to portfolio outcomes. Our analysis, based on long-term capital market assumptions applied to a long-term reference portfolio, suggests strong investment governance may support a family office’s ability to access illiquid assets, diversify more effectively, and make disciplined allocation decisions over time^[4].  In the context of a typical family office target return, that is a material drag and compounded across a multi-generational horizon, the cumulative cost is substantial. Investment governance, which refers to the framework and processes that guide investment decision-making and oversight, in this context, is not an administrative concern. It is an investment decision.

We believe the three contributors to that “return on governance” are:

• an illiquidity budget, such as allocating meaningfully to private equity, private debt and private real assets
• regime-robust diversification across a broader range of asset classes and strategies, and
• dynamic asset allocation that allows disciplined shorter-term responses around a long-term strategic framework. 

The investment governance model - defining who holds which responsibilities, how the investment committee functions, and what role external advisers play - should be designed to deliver these outcomes, and reviewed regularly as the family evolves.

In portfolio construction, the composition of private markets exposure deserves careful thought. Many single family offices have long-standing allocations to private equity or venture capital, and the question is rarely whether to include private markets at all, but whether the existing allocation is sufficiently diversified across private equity, private debt, infrastructure and real estate, each of which behaves differently across economic cycles and serves a distinct portfolio function. A custom-built, multi-sleeve programme designed around the family’s total asset base may support more durable outcomes than concentration in a single strategy. Existing illiquid assets, such as a family business or property holdings, must also be factored in to support balance at the total portfolio level. Secondaries and co-investments are worth considering alongside primary allocations: secondaries can mitigate the J-curve effect and accelerate capital deployment, while co-investments allow targeted exposure to specific companies alongside a general partner’s due diligence.

We believe a total portfolio approach provides the framework for achieving this. Our total portfolio framework begins with defining investment objectives at the family level, proceeds through strategic asset allocation design, incorporates dynamic allocation capabilities and concludes with disciplined manager selection. In this way, every asset class earns its place through its contribution to the whole, which may give a total portfolio approach an advantage over a more siloed approach.