What with global sabre-rattling, “vibecession,” a divisive U.S. election and severe weather events, 2024 was a stormy year.
Let’s look at the major forces at play in the family-office sector today—some positive, others less so—and see how 2025 is shaping up.
The taxman cometh
June’s capital-gains changes were unquestionably a key theme, not only because of their direct impact on high-net-worth families but because they appear to be a bellwether pointing the way toward higher rates and new taxes in other areas.
Rising taxes have been the trend over the past few years in Europe, Canada and perhaps the U.S., says Richard Leon, partner and portfolio manager with Richter in Montreal. He also cites “more political acceptance of a wealth tax, which is something that we’ve really not seen and which will affect our clients if it appears.”
Canadian Family Offices’ own recent survey of multi-family offices reveals taxation to be the most common area of concern for these firms. (You can get access to the survey results by signing up for our free newsletter here.)
“We have no clients who object to being taxed fairly, but people are not happy with the uncertainty around it,” says Tim Cestnick, CEO and co-founder of Our Family Office Inc. in Toronto. He points out that Canada’s tax system has seen no comprehensive overhaul since Kenneth Carter’s Royal Commission on Taxation, which took place between 1962 and 1966.
“Our clients would all say we need a review of what’s going on, and if the government does put together a Royal Commission, I’m going to make sure we’re involved,” he says.
Unrest on the international stage
The Canadian Family Offices survey also indicates that geopolitical unrest ranks third among the top concerns of multi-family offices.
Leon says anxiety over global unrest has affected investment policies, with families pulling back from China and Russia, for instance. He sees this retrenchment as part of a move away from the globalization that has been driving investment for the past 30 or 40 years.
“There is a geopolitical threat to the world, and that will have an impact on many, many factors,” Leon adds. “I don’t think it’s been fully understood by the business communities, but I think it will be more front-of-mind going forward.”
“There’s no question that challenges lie ahead,” says Patrick O’Connor, founder and CEO of Blackwood Family Enterprise Services in Winnipeg, which offers advisory services across the country.
“With the political situation, the changes coming in the U.S., and 25-per-cent tariffs coming our way, there’s got to be great concern about the combination of high tariffs, high wealth and the businesses that families own,” O’Connor adds.
Rising demand for family offices
On the brighter side, more families are recognizing that the family office model holds a lot of value.
“Clients are seeing who can give them an integrated family-office service,” Leon says. “They don’t want to go to four or five places to satisfy all their family-office needs. Succession, issues with wealth planning, education of the next generation—all of those things are made more simple with an integrated office.”
O’Connor says there’s a huge need to help families talk about family dynamics and family governance issues. “There’s a greater awareness that this work is important and that families seem to be more willing to reach out to a peer family or to advisors.”
He predicts that more family offices will be opening to meet the growing demand and serve a wider range of families.
He notes that in the U.S., which has traditionally led Canada in the field, family offices were initially conceived for multi-billion-dollar clients. However, “what we’re finding now is that these services can be provided to families with a much lower level of wealth.”
For example, Canadian wealth has been accumulating among small-business owners and farm corporations, O’Connor says, and “there’s a real opportunity for multi-family offices to reach out to folks who otherwise would not have been on their radar—families with $10 million or $20 million of wealth and a bit of complexity or a unique need for investing opportunities.”
Family offices seem to be gearing up to meet new demands. An international study of more than 300 family advisors by Ocorian, a service provider to high-net-worth individuals and the firms serving them, found that 85 per cent say their family office has become more professional in its operations and structure over the past five years.
However, some firms may be struggling to grow. In a September report, Campden Wealth, in partnership with Royal Bank, cited recruitment, engagement and retention of qualified staff as significant concerns, with 37 per cent of survey respondents reporting a limited pool of candidates with appropriate professional skills and 27 per cent saying that those with appropriate interpersonal skills are in short supply.
The great wealth transfer
As trillions of dollars worldwide move from the hands of older generations to their children (of which about $1 trillion is being handed down in Canada alone), the transition of wealth is on everyone’s mind.
“Affluent families are very concerned about wealth transfer, especially of assets that are not easily divisible,” says Cestnick. “How do you make that transfer efficiently? It’s not only about taxation, but about how you divide something like real estate or private businesses.”
This leads naturally into the question of governance, he says. Which members of the next generation should be given decision-making authority? Should spouses have a say? Closely related is the question of how to maintain wealth through generational transfers into the future.
Cestnick says, “When you go through a liquidity event, the number of family members can grow at a faster rate than the wealth. Sometimes there’s no easy answer to that unless you have an entrepreneur in the next generation who can create a new business.
“Typically, the wealth per capita begins to diminish over the generations. It’s a hard thing to tell a child that they’re not going to have the same lifestyle as their parents or grandparents.”
Tech transformations
The mixed blessing of digital transformation continues to give with one hand and take away with the other. Generative AI, which has burst onto the scene so forcefully over the past year or so, threatens to disrupt and possibly dismantle numerous industries while it puts an end to tedious bureaucratic processes for many.
Family offices are approaching it with caution. For instance, at Richter, Leon says, “we’re certainly invested in it, but we haven’t been heavy adopters to date.”
Our Family Office is investigating its potential to combat scope creep.
“We’re really interested in it,” says Cestnick. AI-driven efficiencies can allow a family office to do more in less time, so “we’re exploring ways to use it for everything from research to bookkeeping.
“But we’re being careful because we’re not yet confident about the security of information with some of the technology that’s out there. Where does that data end up, and how exposed is it to people outside our firm?”
Concern about cybersecurity is hardly misplaced; about 15 per cent of respondents to the aforementioned Canadian Family Offices’ survey of multi-family offices said their firm had been the target of a cybersecurity attack over the past year.
For 2025, then, taxes, politics and the economy will continue to loom large.
Overall, “I would say this is a healthy environment,” says Leon, “but with some dark clouds on the horizon.”
The Canadian Family Offices newsletter comes out on Sundays and Wednesdays. If you are interested in stories about Canadian enterprising families, family offices and the professionals who work with them, but like your content aggregated, you can sign up for our free newsletter here.
Please visit here to see information about our standards of journalistic excellence.