Family offices across the United Kingdom are tightening their belts and reassessing their strategies as a sustained period of high inflation drives up the cost of nearly every aspect of managing substantial private wealth. A new report reveals the significant financial pressures these entities face, from soaring energy bills to increased salaries for top talent.
The Rising Cost of Managing Wealth
The comprehensive study, conducted by Ocorian in partnership with Campden Wealth, surveyed 139 family office professionals globally, including a significant number from the UK and Europe. The findings paint a stark picture of an operating environment where expenses are climbing rapidly. Nearly all respondents (96%) reported that their costs had increased over the past year, with a majority describing the rise as significant.
The inflationary pressure is not confined to one area. Key operational costs that have surged include:
- Energy and utility bills, cited by 69% of participants.
- Salaries and staff costs, highlighted by 68%.
- Professional service fees from lawyers, accountants, and consultants, noted by 67%.
- Technology and cybersecurity expenditures, mentioned by 64%.
This broad-based increase is forcing a strategic rethink. "The price tag of almost everything a family office does has gone up," the report concludes, underscoring the universal nature of the challenge.
Strategic Shifts and Operational Responses
In response to this financial squeeze, family offices are not standing still. They are implementing a range of measures to control costs and maintain efficiency. The most common response has been a move towards greater outsourcing. Over half (55%) of the family offices surveyed are now outsourcing more functions than they were a year ago. This allows them to convert fixed internal costs into more variable external expenses and tap into specialised expertise without bearing the full burden of employment costs.
Other popular strategies include:
- Implementing new or upgraded technology to improve efficiency (pursued by 53%).
- Restructuring internal teams and workflows (adopted by 47%).
- Relocating certain operations or roles to lower-cost jurisdictions (considered by 29%).
Amidst these operational changes, the core mandate of preserving and growing wealth remains. The report indicates that family offices are adjusting their investment strategy to navigate the turbulent economic landscape. There is a marked trend towards seeking more secure, income-generating assets while some higher-risk areas see reduced appetite.
Looking Ahead: A Cautious Outlook
The outlook for the coming year remains one of cautious adaptation. The vast majority of family office leaders expect the high-cost environment to persist, with many predicting further increases in key expense areas. This is likely to cement the strategic shifts already underway, particularly the reliance on outsourcing and technology-driven efficiency.
The report serves as a clear indicator of how macroeconomic forces like inflation impact the most discreet echelons of the financial world. For UK-based family offices, which manage the fortunes of some of the country's wealthiest dynasties, the era of easy cost control is over. Their focus has sharpened on resilience, operational agility, and making every pound of expenditure count in the defence of family capital.
The ability to adapt to this new normal of higher costs may well define which family offices successfully steward wealth through the current economic cycle and beyond. The pinch is being felt, and the response is now firmly in motion.
