Passing on wealth is one challenge. Ensuring future generations preserve and manage it the same way is another. A new Bank of America survey of 335 family offices shows that ultra-wealthy families expect significant changes in how heirs will invest, govern and operate their firms as one of the largest generational transfers of wealth approaches.
The survey found that 87 percent of respondents have not yet transferred assets to the next generation. Among family offices whose principals remain deeply involved in daily decision-making, 35 percent expect heirs to alter the office’s mission or purpose. When principals are less involved, that number jumps to 73 percent, underscoring the role engagement plays in smoothing transitions.
Heirs expected to redefine strategy and governance
Elizabeth Thiessen, who leads family office solutions within Bank of America’s private bank, said generational change is likely to be transformative. Heirs may emphasize philanthropy over investing, restructure governance or even shut down the office entirely to simplify operations.
“It’s more than just passing down the wealth,” she said. “The next generation will usher in a new era of investing, of how they think about philanthropy, how they use technology.” Thiessen noted that heirs are far more willing to make these shifts if they have not been integrated into the family office’s long-term planning.
The timeline is accelerating. Fifty nine percent of respondents expect to transfer assets within the next decade. Nearly half of family offices with less involved principals anticipate more disputes during the transition, compared with 29 percent among those with highly engaged leaders.
AI and alternatives expected to play larger roles
The survey shows broad agreement that successors will lean more heavily on technology, with artificial intelligence playing a growing role in investment research and operations. More than half of all family offices reported experimenting with AI tools, and the largest firms are leading adoption. Seventy four percent of respondents with at least one billion dollars in assets have used AI, compared with 40 percent among offices with under 500 million dollars.
Family offices also expect heirs to raise allocations to alternative investments. A majority foresee increased exposure to private equity, direct company stakes and real estate, which respondents identified as the top opportunities for building future wealth. Offices already hold an average of 34.5 percent in alternatives, excluding cryptocurrencies, nearly matching their allocation to marketable securities.
Cryptocurrencies are also expected to become a larger piece of next-generation portfolios. Offices currently hold an average allocation of 6.4 percent, and a slight majority believe heirs will boost that share. Millennial and Gen X successors are also projected to maintain or increase sustainable and impact investments, even as ESG strategies face political and market pushback.
Wealth outlook remains broadly optimistic
Despite concerns over preserving generational wealth, family offices remain upbeat about the near-term economic environment. Sixty percent of respondents said they are optimistic about U.S. equities, private equity markets and merger and acquisition activity over the next year. More than half of firms with at least 500 million dollars in assets expect U.S. GDP to rise.
Growing and safeguarding wealth remains the top priority for 64 percent of respondents, but the findings suggest that family offices are preparing for a more technologically driven, more diversified and potentially more divided era. As the largest transfer of wealth in modern history unfolds, the structure and purpose of family offices may evolve as dramatically as the portfolios they oversee.
