How do porcupines mate?

Old joke, the answer is: very carefully. This may seem like an odd jumping off point for an article about family office communications but bear with me. 

Family offices occupy a unique position as the guardians of private, generational wealth, providing a layer of protection between the family (or individual) and the public. However, the traditional ultra-private approach of family offices may no longer be compatible with the times.    

Family offices are on the rise, according to a Prequin report, the number of family offices more than tripled between 2019 and 2023, with single-family offices representing 59% of the total. The form and function of family offices is also evolving. Newer generations (Millennials/Gen Z) often have very different priorities to previous generations. As a result, the strategies and types of investments family offices are making are more diverse, increasingly favouring direct, impact-related investments. 

This evolution has in turn seen the traditionally publicity shy family office, become the subject of increased regulatory scrutiny and public interest – not least because their economic power and impact is growing rapidly. The Economist Intelligence Unit estimates that family offices collectively manage around $5.9 trillion in assets, indicating a substantial concentration of the global wealth.

The reason for the traditional opacity of many family offices is fairly simple, the risks are much more personal. It is therefore easier and perhaps more intuitive to keep as low a profile as possible. In the digital age, more than ever, social media is blurring the lines between what is personal and private. High-net-worth individuals and family offices make obvious targets for fraudsters, bad actors, activists and even a potentially hostile and underinformed media.

There is also a multitude of new and very real threats to reputation such as AI and deepfakes. For example, in the absence of readily available public information online, the current generation of AI tools will hallucinate ‘facts’ and provide misinformation that can be highly damaging to reputations. 

Ironically, this makes the best case for a change in approach to family office communications most directly – if they are not telling their own stories, others (including AI) will.

Although notoriously difficult to measure, reputation is central to an organisation’s ability to attract high quality talent, partners, and investment. The deliberately opaque nature of many family offices with little to no online presence or media coverage (relating to any aspect of their operations or values), will work against them when it comes to reputation building outside of their inner circle. People and organisations are much more likely to transact with you if they know your values, beliefs and goals are aligned. 

For example, having a credible and authentic (employer) brand with strong, visible purpose and values is increasingly important for top talent acquisition and retention. A recent Deloitte survey of over 4,000 respondents found that over half of employees (62%) consider an organisation's purpose before deciding to join, with over a third (36%) saying that an organisation's purpose was just as important as their salary and benefits package. 

Brand-building goes beyond ‘owned’ content such as websites. Executives should consider engaging in thought leadership initiatives beyond the family office space. If family office executives would rather not raise their heads above the parapet directly, another way that they can tell their story and build a positive reputation is through their investments – a strategy that SEC Newgate has had much success with for other private investors such as PE firms and VCs.  

The reality is that reputations are hard to build and easy to lose. Organisations that do not invest in crisis communications planning and reputational risk assessment are more likely to be harmed by a crisis than those that do. Advisors that are brought in retrospectively to deal with a crisis are less able to manage a situation effectively and will spend their time firefighting rather than taking control of the narrative from the outset. Moreover, if an organisation has built up a carefully managed and positive public reputation over time, it acts as a layer of ‘goodwill insulation’ if a crisis hits. 

As family offices become more active investors, they also need to need to take a more active approach to communications. Those that increase the scope and sophistication of their communications will be rewarded but it needs to be done ‘very carefully’. It’s a balancing act that needs to weigh careful reputation building in key areas on the one hand, with the reputational and privacy risks faced by family offices on the other… like those porcupines it’s a necessity that requires the utmost care and finesse.