For families with international considerations, the picture over the last two decades has been one of increasing complexity. Regulation, predominantly through residency and citizenship law has created difficult crossroads for families to navigate when choosing homes for themselves and their businesses.
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Tax policy has also stayed top of mind, particularly new international rules covering tax exposure and the recent changes to non-domicile tax in the UK which has moved to a residency-based system with shortened timeframes before worldwide taxation is applied through HMRC. The rise in employer national insurance contributions in the UK are also a concern for business owners. Understandably, the top concerns for family members living outside of their primary office jurisdiction, currently revolve around tax planning (74%), investment (71%) and estate planning (68%)[i].
Fortunately, professional service provider capabilities have risen to match these cross-border complexities. What might have begun as smaller boutique investment houses looking after one UHNW family, have now evolved into multifamily offices, pursuing growth for clients through increasingly diverse routes – from commercial property lets to first round private equity. This service take off is timely given the current trajectory of wealth growth for family offices, with their asset pools now estimated to be $4.67 trillion[ii]. This figure though is expected to rise to $5.4 trillion[iii] by 2030 – for context, the entire GDP of the UK in 2024 was estimated to be £2.9 trillion[iv].
Technological advances mean offices are now able to manage and monitor wealth more efficiently. Today, family offices are able to utilise the benefits of a global presence and suitably agile asset management, while simultaneously navigating the contours of regulation and legal requirements; especially against the uncertain and ever-moving backdrop of tariffs and sanctions. President Trump’s policies are not the only example of protectionism that have affected global ultra-high networths: Switzerland’s requirement for private client professionals to appear on an approved persons list has weighed operations within their banking system to domestic employees. Unsurprisingly, governance concerns repeatedly lead the list of family office priorities, though we know preparedness is also lacking[v].
How families are expressing their wealth is changing too. From the property standpoint alone, they are becoming ever more global. Today 44% of global family offices are looking to increase their direct real estate investments, while high end real estate tops the luxury asset list for the next generation[vi]. Twenty years ago, international families might have had their main home in London with a holiday hide-away on the Mediterranean. Property portfolio criteria for the internationally wealthy has now expanded to typically encompass homes in the South of France, the Alps, the US, Dubai and the Caribbean – as well as a London.
Destination Britain
Prime London property does remain a stalwart of international family wealth. The setting of desirable, value holding, homes within a well serviced, cultural capital, consistently lands the UK capital at the top of the list for global families[vii]. However, we have seen a degree of flux as families look to restructure their asset base in response to Westminster’s redrawing of tax treatments and incentives. Family offices with international operations can have agility here and we may see an increase in outflows of family wealth from the UK in the short to medium term[viii].
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However, in parallel, multiple practical factors support Britain as the hub around which the spokes of international wealth revolve. Regulation and a clear political will are in place to encourage funding and investment within the UK. This is in tandem with a sympathetic visa regime for highly skilled professionals, financial experts and entrepreneurs. Fittingly, the UK is consistently seen as good place to set up a business, arguably a leader in Europe in this regard and boasting an extensive private client services talent pool. Externally, the political uncertainty we’ve seen in certain countries has seen families, especially those with historical ties to Britain, either wholly relocate to the UK, or bring their wealth into the relative sanctuary of rule of law and regulation.
The international business
Understandably, business conditions and opportunities are paramount for global families. Family offices do have a certain flexibility due to their capital allocation powers, though with this comes the appropriate prerogative of investing for future generations. We are now seeing that focus through the business incubation family offices are able to afford their investments, notably through internal ‘venture studios’ or funding for the next generation to launch their own companies externally. This reflects on family offices as investors with global reach who can act with increasing dynamism – guided by strategic convictions rather than institutional obligations and with the liquidity to move quickly and directly, with adjustable time frames.
It's too easy however, to look at the investment spectrum of private equity and traditional funds that international family offices sit across as solely served by an asset management outlook. Given our experience, we know families often prefer a hands-on approach that understands their personal concerns and business ambitions first, before assuming to know what is best for their investments over time. That is built on a very strong banking relationship that supports fixed returns, trust funds and special project vehicles but which also has real personal understanding of the family’s presence behind their ventures.
The global and personal exchange
Our model is the curation of a suite of services designed for each client family. This should be extensive – we seek to personally bank family office CFOs and core staff in order to maintain a level of service the whole office can be familiar with and expect.
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Aspects of personal service are myriad, though clearly, foreign exchange is a perennial consideration for international families. Here we seek to serve family offices on an institutional level, using NatWest Markets to match market prices and utilise our extensive global trading network to grow with clients for the long-term. This allows their international money streams to be just that – protecting them from FX exposures and benefitting them from currency movements where possible.
Liquidity is also imperative. We’re aware third generation members often experience a need for liquidity, be that to take advantage of an investment opportunity, start a business or fund something closer to the family’s direct needs such as security costs or the running of a worldwide household. We’ll therefore work closely to offer them bespoke lending which can be leveraged from their portfolio and potentially support further long-term income streams, for example through property purchases.
Schools and universities now have an international footprint as Ivy League colleges and Oxbridge operate organisations around the world, supported externally by networks of tutors, internships and graduate programmes. Wherever families are based, the reality of an international life will typically mean children seeking their education in foreign countries. We’ve seen that getting this right is one of the core next generational concerns for family leaders – alongside their children’s marriage and spending behaviour. We therefore work with our established global networks to advise families on their options and align the future generations with the best possible education in every regard.
Solving a complex future
Looking ahead, we can already see family offices embracing the new chapters of the ongoing digital revolution. Within two years we believe AI will be firmly present in their operations, from data comprehension, to insurance, investment performance and risk assessment. In house technology will allow families to further enhance the ability of their internal teams and give them ever more agility across their international portfolios. Families will also be able to better gauge their impact across environmental, societal and governance (ESG) vectors – serving the clear rise in interest we’re seeing here from younger generations.
This does support a more fluid experience for international families, however, it by no means implies less exposure. As we’ve seen, complexity will remain a constant – as will the clear value of a personal service to support and enhance the international family journey, taking that complexity in hand and enabling families to continue to flourish around the world.
Read more about how we could support international clients, or speak to your Private Banker.
This article is taken from Your family and their future our guidance for wealthy families marking 20 years of Coutts family office services.
Neil Woodrow-Clark also contributed to this article.
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