Mobility will be a big theme for the US family offices sector in 2021, with the vast majority of respondents of a new survey contemplating shifting their operations. Taxes are among the factors.

The lion’s share of family office professionals are thinking of moving to a different and often less heavily taxed part of the US, shedding light on how a new US presidency and COVID-19 have altered the landscape, a report said.

Agreus, a resourcing and recruitment consultancy based in New York, has launched its 2021 report into US family offices. It showed that 87 per cent of family office professionals are thinking of a move. Within that figure, 55 per cent are considering moving to another state. More than a third of these executives said local taxes motivated them to make a change. (The report was based on respondents to questions sent out to more than 10,000 family office professionals in the US.)

The findings chime with reports of how corporations in different sectors, such as Oracle and Hewlett Packard, for example, have moved out of higher-tax US states to places such as Texas. With a new President in the White House and Democrats in charge of Congress, speculation has grown on possible tax hikes at some point to pay off debt made worse by lockdowns.

Some 66 per cent of family office principals are even considering moving their organization if it allows for a better quality of life and lower living costs. 52 per cent of FO principals are focusing on intergenerational wealth transfers and succession planning in 2021 with two-thirds citing proposed changes to taxation policy and COVID-19 as the key factors. Some 51 per cent of offices in the US are hiring the next generation, with more doing so in 2021.

Bringing in Next-Gen family members into an office isn’t always wise, Agreus, a recruitment consultancy, said. 

“We have seen this first hand with family offices approaching us to find their next-generation leader, and it is becoming an increasingly popular talent solution across America with more than half of US family offices being run by non-family-members today, and only set to rise as tomorrow’s leaders focus on purpose and philanthropy,” Tayyab Mohamed, founder and president of Agreus USA, said.

The report contains comments on three steps family offices should take to diversify investment portfolios.

“Portfolio diversification will continue to offer more opportunity, a global talent pool will make those opportunities more accessible and a focus on ESG will make those opportunities mean a whole lot more to family offices, their operating businesses and the community they both sit in,” Mohamed said.

The study said 67 per cent of FOs have discussed diversifying portfolios because of the impact of pandemic. Some 44 per cent of principals think virtual technology will generate the most wealth in 2021, 28 per cent think it will be biotech and 24 per cent thought it would be clean energy, commodities and real estate.