Family offices need to work with a range of external partners as it is unlikely they will have the internal capabilities to cover all areas of investing, accounting and tax, estate planning, legal services and other functions. The research shows that over 80% of family offices have in-house investment capabilities, while the functions most likely to be outsourced are legal services (77%) and accounting and tax compliance (62%). On a regional basis, North American (68%) and Middle Eastern (70%) family offices are more likely to provide philanthropy and charitable activities in-house, showing that they place more importance on this as a function of a family office.

As would be expected, larger family offices are more likely to have more in-house capabilities. For instance, 95% of SFOs and FEs with over $1 billion in AUM manage direct investments internally and 76% manage philanthropy and charitable activities internally. Nonetheless, it is notable that while larger SFOs and FEs are more likely to have internal capabilities for IT and cybersecurity, 40% still outsource this either fully or partially. This shows that along with legal services, there are areas where even the largest SFOs and FEs need external providers.

When selecting external partners, 65% of respondents said the most important criteria for family offices is deep expertise in specialist areas. After this factor, family offices give a range of criteria, such as recommendation by trusted contacts and experience servicing similar family offices (both 39%), or the ability to give strategic advice (34%). Alignment of values and culture (32%) and fees (31%) are among the other criteria used.

For North American family offices, a recommendation by trusted contacts (46%) is relatively more important than elsewhere. In Europe, the ability to give strategic advice (42%) is important, while in the Middle East, deep expertise in specialist areas (75%) stands out. For Middle Eastern family offices, experience servicing similar family offices (53%) and recommendation by trusted contacts (46%) are important criteria.

By size, SFOs and FEs with less than $250 million are more fee-conscious; 52% cite this as an important criterion. Family members are also more likely to note fees as a key factor (50%) and recommendations by trusted contacts (47%). For the largest SFOs and FEs, with over $1 billion in assets, 37% report that having a dedicated point of contact is an essential element.