How are next-gen leaders driving Wealth Management evolution in MENA?

By Puja Sharma

Around 62% of family offices now involve the next generation as MENA continues to strengthen wealth management structures

New data reveals the emerging dynamics of next-generation family members as wealth owners in the Middle East begin utilising single family offices to manage their capital.

Research from the Tharawat Family Business Forum and LGT Middle East reveals how single family offices are formalising the Middle East’s multi-generational wealth

• Intergenerational wealth transfer in the Middle East has begun at pace with 41% of next-generation family members making investment decisions and contributing at a strategic level
• This rapid growth has formalised the structures of family capital in the Middle East, where single family offices are being utilised as a vehicle to effectively manage wealth for the first time
• The rate and type of change brings other new trends to the fore, with 71% believing AI will alter how family offices operate, 88% underscoring the importance of social responsibility in investment decision-making, and a growing interest in alternative career paths

New data reveals the emerging dynamics of next-generation family members, as wealth owners in the Middle East begin utilising single family offices as a vehicle to manage their capital.

Wealth and Legacy: The Rise of Single Family Offices in MENA, the inaugural report by the Tharawat Family Business Forum and LGT Middle East, is the first to collect data directly from the most significant multi-generational family offices in the region.

It finds that nearly two-thirds (62%) of single family offices – the structures established by multi-generational business-owning families to manage their affairs – are now led by second generation family members. Moreover, 41% had next-gen family members making investment decisions and contributing at a strategic level.

The research showcases the profound shift that is underway as family heads begin to involve next-gen family members with the findings revealing that investment decision-making is already steered by third generation family members for more than one-in-three (35%) family offices. This focus on the future is reflected in the reason behind why these family office structures were first established, with 88% of respondents citing succession planning as a key factor, second only to centralising family investments and managing financial risk.

Whilst the report indicates high levels of next-generation engagement, these family members are also very interested in pursuing their own careers (63%) and starting their own businesses (67%), meaning families will need strong governance to support these ambitions, alongside ensuring sound management and stability of family affairs. Suggesting a preference for a level of autonomy, family office principals have to maintain familial engagement – identified as a major consideration by nearly one third (32%) of family offices.

Diversifying ambitions amongst the next generation indicates there will be a need for professionals to provide greater support, reinforced by the finding that attracting new talent emerged as a challenge for 82% of respondents. Addressing the role of next-generation family members and continuing the professionalisation of wealth management in the region will be key to safeguarding the smooth transfer of intergenerational wealth.

As the governance of family offices in the region evolves and the next generation becomes more heavily involved – in parallel, new strategic trends are cultivating conditions for change. The development of new technologies is part of this vanguard and for 71%, AI is set to change the way they operate. At the same time, the importance of social responsibility has been identified as a decisive investment factor in the region with 88% citing it as an important element of their decision-making.

Sebastian Goeres, CEO of LGT Middle East commented on the findings, “Contextualising the Middle East’s changing approach to managing capital within the rich legacy of its past is essential to properly understanding its future evolution. This research represents the first in-depth review of the region’s rapidly growing family office landscape, conveying that the immense generational transfer of wealth in the Middle East is well and truly underway. As family offices begin transitioning their assets to the next generation, establishing robust governance structures will prove the defining success factor. Implementing effective succession plans is not just a financial necessity but a stabilising force for both the family members involved and the region’s broader economy.”

Farida El Agamy, General Manager of the Tharawat Family Business Forum added, “This research has filled an important gap in our understanding of the region’s single family office landscape and forms a crucial part of the Tharawat Family Business Forum’s Future of Family Wealth initiative, which examines the impact of family-held wealth amidst societal, technological, and economic changes. This research reveals the relationship between the operating business and both embedded and standalone single family offices in the MENA, and shows that they look to strike a delicate balance between preserving important family legacies and adapting to the fast-paced complexities of the 21st-century marketplace.”