Redefining the Family Office: Balancing Legacy, Leadership, and Growth

It wasn’t long ago that most family offices felt like an extension of the dining room table. 

Legacy decisions were made by legacy hands, and operations followed intuition more than structure. That world is fading.

Today, a quieter transformation is taking place—one that doesn’t make headlines but is changing how family wealth is managed behind closed doors. Family offices are hiring differently. Investing differently. Planning differently. And in doing so, they’re beginning to resemble the institutions they once sought to avoid.

But there’s a catch to all this institutional mimicry: the more family offices act like hedge funds and private equity shops, the less they look like family offices. What made them appealing in the first place—the personal touch, the long-term view, the alignment with family values—gets harder to maintain when you’re chasing Wall Street returns with Wall Street methods.

Leadership Looks Different Now

The clearest sign of this institutional drift is who’s running these offices. The idea of a family office being run entirely by family is becoming less common, especially as wealth grows and complexity sets in. While just over a third of family offices are currently led by non-family professionals, that figure is expected to rise to nearly half after the next generation steps in.

This isn’t necessarily about family members stepping back. In nearly 90% of offices, family members remain deeply involved in investment calls, and in many cases—especially in the U.S.—the family principal still makes the final decision. Rather, it reflects a recognition that operational complexity now demands institutional-grade expertise.

Portfolios Get Bolder

This institutional mindset shows up most clearly in investment strategy. Private equity now tops the list, with allocations rising from 22% in 2021 to 30% in 2023, while public equities dropped from 34% to 25%.

The average office now targets an 11% return—ambitious by institutional standards—and nearly half the portfolio is allocated to alternative assets like private equity, real estate, and venture capital. These aren’t the cautious, wealth-preservation strategies that once defined family investing. They’re the aggressive, return-maximizing approaches borrowed directly from institutional playbooks.

Yet families haven’t abandoned all prudence. Most still hold around 20% in cash and fixed income, suggesting they’re trying to have it both ways—institutional returns with family-office stability.

Smaller Teams, Bigger Expectations

The operational model reflects the same tension between family intimacy and institutional capability. Most family offices operate with lean teams: the average headcount is 11, and half report having just five or fewer staff.

That constraint is pushing more offices toward hybrid models, combining core in-house capabilities with flexible outsourced support. It’s not about cutting corners, but rather it’s about accessing institutional-grade services without institutional-grade bureaucracy.

But this efficiency comes at a price. The average operating cost of a large office has crossed $6 million, and a quarter now spend more than $10 million a year. Family offices are discovering that institutional-quality outcomes require institutional-level investment.

Sustainability, Split by Region

Even values-driven investing reflects this institutional influence, though unevenly. In Europe, sustainable investing continues climbing—from 45% to 57% adoption. In North America, adoption has slipped to just 26%.

This geographic split shows how family offices are wrestling with competing pressures: family values versus return optimization, regional cultural expectations versus global investment standards. Yet the direction seems clear. Over the next five years, sustainable investments are expected to grow from 17% to 29% of portfolios worldwide.

Tech Infrastructure Still Lags

For all their institutional aspirations, family offices remain surprisingly behind on operational infrastructure. Nearly half are working on or implementing a tech strategy this year, but that still leaves many operating with outdated systems.

Three-quarters admit they’re either underinvested or only moderately invested in technology, and 17% see it as a material risk to operations. This gap is particularly striking given their investment sophistication elsewhere.

The cybersecurity picture is especially concerning. Roughly one-quarter of family offices have experienced a breach or financial fraud, yet more than one in five still don’t have cybersecurity protections in place. It’s as if they’ve adopted institutional risk appetites without institutional risk management.

Compensation Grows Up

The clearest evidence of institutional convergence may be compensation. Family office CEOs now earn like their institutional counterparts. Mid-sized offices often pay $500,000 to $900,000 a year in total compensation, while CEOs of billion-dollar family offices in the U.S. now average $3.2 million annually when all compensation is included.

This isn’t just about talent acquisition—it’s about signaling. High compensation announces that these are serious institutional players, not family sidelines. But it also raises questions about whether family offices are losing their unique value proposition in the race to compete with Wall Street.

Leadership Matters More Than Ever

This shift toward institutional sophistication makes one thing clear: leadership has become the defining factor in whether family offices succeed or simply become expensive disappointments. The data on succession planning failures isn’t just concerning—it’s a crisis waiting to happen.

While 70% of current leaders feel confident about their readiness, that confidence drops when they look at who’s coming next. With 41% lacking any succession plan and 29% having no formal approach to next-generation preparation, many offices are building sophisticated operations that nobody is prepared to inherit.

The margin for error has shrunk. When family offices were simpler operations, leadership transitions could happen through osmosis and observation. But today’s institutional-grade operations require institutional-grade capabilities. The next generation needs to understand private equity structuring, alternative investment due diligence, cybersecurity protocols, and regulatory compliance—not just the family’s values and investment philosophy.

This creates three urgent needs: formal succession planning that goes beyond wishful thinking, structured programs to develop next-generation capabilities, and strategic recruitment of outside professional leaders who can connect family values with institutional requirements.

The families getting this right aren’t leaving leadership development to chance. They’re investing in it with the same discipline they bring to their portfolios. Because as family offices increasingly compete with institutions, having amateur leadership isn’t just inefficient—it’s dangerous.

The professionalization of family offices isn’t reversible. But whether it leads to better outcomes or just higher costs depends entirely on whether families can build the leadership capabilities to match their institutional ambitions. That’s where the real work begins.

About the Authors

Cathy Logue, FCPA, FCA is a founding Managing Director at Stanton Chase Toronto and Global Leader of Stanton Chase’s CFO Practice Group. She has over 30 years of executive search and financial leadership experience, working with clients across North America. Prior to her career in executive search, Cathy obtained her Chartered Accountant designation with Ernst & Young, and was awarded the Fellow (FCPA, FCA) designation in 2017. In 2021, she was recognized by the WXN Top 100: Most Powerful Women in Canada for her efforts in advancing women in leadership. Cathy sits on the Board of the Association of Executive Search and Leadership Consultants (AESC) and is former Vice Chair, Finance on the Stanton Chase Board of Directors.   

Mikael Stelander, a leading Nordic executive search consultant, founded Stanton Chase Helsinki in 2005 and serves as its Managing Partner. He also currently serves as the Global Functional Leader for Private Equity. Mikael’s tenure includes roles as Stanton Chase’s Vice President EMEA (2012-2017) and Global Practice Leader for Technology (2007-2011). He specializes in global C-level searches for the technology and private equity industries. His expertise also encompasses management assessments, culture assessments, and board services.