By Joseph Aquilina, Senior Director, MENA and Strategic Partnerships

Over lunch at the ME Family Office Summit, a Family Office CEO shared a worry that stuck with me long after we met — that of continuity. After all, we're on the cusp of a generational shift in Family Offices.

Concerns that the next generation is set up for success are matched with anxieties about young leaders' investment interests that differ from the status quo. In short, we discussed how Family Offices in the region are rethinking their strategy. How can they fold VC practices and climate & sustainability into their long-term plans as leadership changes?

It’s an acute and critical issue. Family Offices in the Middle East have been gaining visibility quickly. Assets Under Management (AUM) are expected to grow by 46% by 2025, hitting a whopping $500 billion. Venture capital plays a big role in this upward trend, signalling a move from traditional wealth safeguarding towards spotting growth opportunities, particularly in the digital and fintech sectors.

As these offices evolve, leadership handover and succession are hot topics for strategic discussions.

The upcoming generation of leaders, armed with top-notch degrees from renowned institutions and tech-savvy skills, is transforming the Family Offices scene in the Middle East. Their education in areas like technology, international relations, and public policy, coupled with global exposure and a strong bias towards disruptive growth, entrepreneurship, and sustainability, uniquely prepares them to steer these offices into the future.

These potential leaders are forward-thinkers who excel at adaptability and resilience, and they bring an inclusive leadership style. Their focus will probably include economic diversification, digital makeover, regional stability and integration, education, skill enhancement, and social reforms.

However, one question lingers: how will Family Offices, especially those in the Middle East, adapt to this new leadership style?

Policy and regulation aside, here are three ways I see Family Offices shifting, as they prepare for their future leaders

Family Offices are refocusing on sustainability and ESG. Environmental, Social, and Governance (ESG) considerations are already having a growing impact on how Family Offices arrange their investments. The next generation of leaders, with their clear focus on sustainability, could herald a new age of responsible investing and sustainable business methods for Family Offices in the Middle East. We are seeing Family Offices setting up new companies in sectors like green energy, water conservation, and waste management, aligning with regional government strategies like the UAE’s Net Zero 2050.

Family Offices are creating new ventures from scratch. Often in sectors like technology, renewable energy, and fintech. By building ventures in a corporate setting, Family offices can make optimal use of their capital and network to incubate companies. These startups grow into new revenue streams and align with diversification strategies.

Family offices are increasingly investing in high-growth startups. Either through direct investments or venture capital funds. They especially favor sectors like AI, biotech, and clean energy. These investments help diversify their portfolios and tap into new technologies that could reshape traditional industries.

While these shifts are vast, they play directly into what younger heirs to Family Offices crave.

They’re often more interested in investing in startups and disruptive sectors, so Family Offices that allocate part of their portfolios to venture investments are riding the wave of the future. It’s a smart strategy. With wealth transition set to happen over the next decade, the time's right.

Family offices that successfully bridge the generational divide will be in the best position for continuity and sustained success.