The Tharawat Family Business Forum and LGT Middle East have launched their inaugural Wealth and Legacy: The Rise of Single Family Offices in MENA report, which centres around a survey conducted with 34 leading single family offices from across the region and incorporates expert analysis and insights from family enterprises and academia.
According to the report, 62 per cent of single family offices are now led by second-generation family members, and 41 per cent have next-generation family members making investment decisions and contributing at a strategic level.
Further, it found investment decision-making is already steered by third-generation family members for more than one in three (35 per cent) family offices.
Moreover, it revealed that the top reasons for establishing a single family office were:
• Institutionalising and centralising the family investments (94.2 per cent)
• Managing financial risk (91.2 per cent)
• Succession planning (88.3 per cent)
• Improving the organisation of family assets (85.3 per cent ).
In addition to this, the report detailed that regarding the career aspirations of the next-generation family members, a total of 59.3 per cent expressed eagerness to enter the family business, and 55.6 per cent expressed interest in joining the single family office. That said, 66.7 per cent prefer to establish their own businesses, while 63 per cent are seeking to pursue alternative career pathways.
Indeed, according to the report, MENA single-family offices seem to perceive their main challenges to be around human capital, with 82.4 per cent of those surveyed identifying the challenge of attracting new talent to their organisations as paramount.
Further, keeping family members engaged is seen as “crucial” by 61.8 per cent of respondents, and retaining existing talent concerns 55.9 per cent.
Succession planning (47.1 per cent) and the establishment of robust family governance frameworks (44.1 per cent) were also identified as priorities.
For 47.1 per cent of respondents, ESG criteria do not play a role in shaping the governance policies of their family offices. However, 41.2 per cent acknowledge that while ESG standards are not currently implemented, they are “in the process of considering or developing them.”
The report noted that this split reflects a “polarisation” in the perception of the relevance of ESG principles in ensuring sound governance practices.
Further, it outlined that while some family offices remain unconvinced of the ESG merits, a significant portion is open to integrating these considerations in the future.
“Given the ongoing shifts in global regulatory frameworks and increasing emphasis on sustainability, it is plausible that the stance regarding ESG in family offices may evolve in the coming years,” the report said.
Read the full report here.
