On 29th April 2025, Agreus, a global consultancy dedicated exclusively to the world of Family Offices, joined forces with Mercer, a leading force in investment consulting and part of a worldwide organisation with over 75 years of experience in helping clients navigate complex decisions, hosted an event to explore investment governance within Family Offices, addressing the critical shifts and strategies shaping their future.
We extend our sincere gratitude to all who joined us and actively contributed to the success of this event. Your insightful questions and engagement made for a truly enriching discussion. For those who were unable to attend, we hope this article serves as a valuable resource, offering key information and insights into the conversations that took place.
The panel session was moderated by Gregoire Imfeld, a member of Agreus's advisory board and the founder of ONE Family Governance. The discussion featured two key speakers: Tayyab Mohamed, Co-Founder of Agreus, and Michel Meert, the European Consulting Leader for Endowments, Foundations, and Family Offices at Mercer.
Key Trends to Note
Both speakers stated that Family Offices have demonstrated a clear shift towards more sophisticated and institutional-like investment strategies:
- Increased Diversification: Family Offices are increasingly moving beyond traditional asset classes, with a notable rise in allocations to alternative investments.
- Growing Professionalisation and Institutionalisation: There's a clear trend towards professionalisation, evidenced by the increased hiring of external investment professionals and a shift away from solely family-led management. Consequently, more structured decision-making processes and formal governance frameworks are becoming prevalent. Tayyab Mohamed highlighted the challenges in defining professionalisation in the Family Office space and introduced the concept of a Family Office Maturity Model, you can read more about this here.
- Enhanced Focus on Talent Management: As professionalisation increases, attracting and retaining top talent has become a key priority, as emphasised by Tayyab Mohamed. This involves developing competitive compensation packages and aligning the long-term goals of the investment team with the family's overarching objectives.
- Evolving Investment Philosophy: It is noted that there is a growing emphasis on impact investing and sustainability, as well as digital assets, often driven by the younger generations. This is coupled with a more long-term, strategic investment mindset and a trend to explore alternative and emerging asset classes.
During the Q&A session, there was some discussion about a potential shift in sentiment regarding ESG investments, particularly in the USA. However, both speakers noted that portfolio allocations had largely remained stable in recent months, despite evolving sentiment.
The Unique Aspects of Family Office
An audience interaction highlighted the contrasting decision-making process of Family Offices and financial institutions (non-Family Offices), which is a key distinction explored by the speakers regarding Family Office investment governance:
- Agile Decision-Making: The less complex structures of Family Offices enable faster decision-making, which is a significant advantage when capitalising on timely investment opportunities.
- Potential Governance Gaps: Michel Meert emphasised the challenge of many Family Offices lacking comprehensive strategic and dynamic asset allocation frameworks. These gaps often lead to limited adjustments in asset allocation, which can hinder long-term investment success.
- The Role of the CIO: A strong Chief Investment Officer (CIO) structure is critical for bridging the gap between the family’s broader wealth management goals and their investment strategies. The CIO should have direct access to key decision-makers and must be empowered to implement clear and structured investment strategies aligned with the family's long-term objectives.
People are Assets
As emphasised by Tayyab Mohamed, attracting and retaining top talent has become more critical than ever for Family Offices. Talent acquisition and management were a huge part of the discussion, this section will provide you with the key insights:
- The Role of Cultural Fit and Emotional Intelligence (EQ): Emotional intelligence (EQ) is particularly significant in Family Office environments, as it plays a crucial role in navigating the unique dynamics of working closely with a family. Both Tayyab Mohamed and Michel Meert highlighted the importance of hiring individuals who can handle delicate situations, particularly when they may need to disagree with family members but still proceed professionally. Failure to consider cultural fit and EQ can result in costly hiring mistakes.
- Aligning Talent with Strategy: One of the challenges discussed was how Family Offices should align their investment strategies with their internal capabilities. Initially, Family Offices often build portfolios based on available opportunities or the principal's existing knowledge. As the Family Office grows, however, it's critical to assess the team’s skills and resources. Deciding which assets to manage in-house versus those to outsource depends on the team's expertise and capacity. Michel Meert advised that a strategic approach to outsourcing, particularly in the early stages, helps manage risks while gradually building internal capabilities. On the other hand, Tayyab Mohamed referred to this challenge as the "Chicken and Egg" dilemma. He believes that both aspects need to grow together. A well-thought-out strategy involves understanding internal capabilities before expanding the portfolio's complexity. Over time, as the team’s expertise grows, more investments can be brought in-house. Referring to the Maturity Model, Tayyab Mohamed advised families to tailor their hiring strategies based on their maturity level, prioritising cultural fit and adaptability in early stages and specific technical expertise in later stages of professionalisation.
Endowment Model
The application of an “endowment model” is a significant part of the discussion. The endowment model, recognised for its success in institutional investing, is increasingly being considered by Family Offices seeking to replicate its success and strategies. Characterised by a long investment horizon, patient capital, and a highly diversified portfolio spanning multiple asset classes, including significant allocations to alternatives, the endowment model can be a very appealing framework to the Family Offices. However, Michel and Gregoire cautioned against a simple replication, stating that it is important to “tweak” it for the Family Office environment, as the complexity and resource intensity often exceed typical Family Office capabilities.
Key recommendations included understanding the family's unique liquidity needs, aligning investment strategy with their values and long-term objectives, and building a strategic asset allocation over time rather than a wholesale adoption.
Key Elements for Long-Term Investment Success
Several elements are crucial for building and maintaining successful long-term investment portfolios in Family Offices:
- Diversification Beyond Asset Classes: While diversification across asset classes is essential, it is also crucial to diversify against different types of risk, not just equity-type risk. A Family Office must diversify across a spectrum of risks to ensure long-term stability.
- Inflation Protection: Inflation protection is vital for long-term investors to safeguard their capital from erosion over time. Family Office should consider incorporating inflation-protecting assets in portfolios.
The Foundational Role of Robust Governance Frameworks
The speakers stated that a strong governance framework is essential for establishing credibility, attracting top talent, and ensuring long-term success:
- Establishing Clear Structures: Family Offices that implement formal governance frameworks are better positioned to attract investment professionals accustomed to structured environments. A transparent, systematic approach to decision-making fosters trust and stability, which are crucial for long-term success.
- Building Trust: Transparent communication about investment strategies—particularly in terms of objectives, asset allocation, and performance metrics—is vital for maintaining alignment and trust with family members, external advisors, and other stakeholders. This transparency also helps foster stronger relationships with external partners such as banks, advisors, and service providers.
- Independent Oversight: Engaging external advisors and board members to provide independent oversight is a key component of strong governance. This oversight helps reduce biases and enhances the overall decision-making process, ensuring that family wealth is managed effectively and in line with long-term objectives.
Final Thoughts and Looking Ahead
Michel Meert emphasised the importance of "strong beliefs and prudent oversight" as essential drivers for sound investment decisions. He also stressed the importance of aligning investment decisions with the objective of family governance and adhering to this once the objective has been clearly defined.
Tayyab Mohamed echoed this sentiment, underscoring the crucial role of "discipline" in the context of long-term investing. He highlighted the risk of Family Offices being swayed by short-term market volatility and gains, urging them to maintain a long-term perspective and focus on their overarching goals.
The insights shared during this event were very relevant to the Family Office space, highlighting the dynamic evolution of investment governance within Family Offices. As the industry continues to grow, the principles of professionalisation, strategic agility, talent management, and robust governance will become even more important for achieving long-term success and ensuring the preservation and growth of multi-generational wealth.
If you would like to speak to us about Family Office recruitment and governance, please do not hesitate to reach out, we are happy to take questions. Last but not least, we would like to express our sincere gratitude again to those who attended the event, it was great seeing our clients and meeting new faces. We are looking forward to seeing everyone again at our future events.