Family Offices Brace for Leadership Transition as Next Generation Eyes Alternatives

A quarter of family offices underwent succession in the past decade, but only 37% said the incoming principal arrived very prepared, a Bank of America study found.

By the Family Office Real Estate Daily Desk·Thursday, October 22, 2026·2 min read

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The answer · checked against Bank of America

How prepared is the next generation to lead family offices, and how will they change investment strategy?

The 2026 Bank of America Family Office Study, which surveyed 355 family office decision makers, found that a quarter of family offices underwent leadership transition in the past decade, yet only 37% said the incoming principal arrived very prepared. Among offices with a potential next-generation principal, 79% predict alternative investments will represent a larger portfolio share going forward, signaling a broad reshaping of allocation strategy and governance priorities.

Key facts

The 2026 Bank of America Family Office Study surveyed 355 family office decision makers in the U.S., with the survey fielded in January and February of 2026 by research firm Escalent.
Among family offices that experienced a leadership transition in the past decade, only 37% said their incoming principal was very prepared, according to the Bank of America Family Office Study.
Private equity represents 27% of family office alternative portfolios, and 59% of offices plan to increase private equity exposure over the next three years, according to the Bank of America Family Office Study.
Four in 10 family offices hold sports investments today, and offices with at least one Gen Z or Millennial principal are most likely to own sports teams or sports-related assets, according to the Bank of America Family Office Study.
Only 27% of family offices have a trust distribution policy or guiding principles in place, and fewer than half — 40% — have a formal family education program, the Bank of America Family Office Study found.
Nearly eight in 10 family offices — 77% — believe the next generation will be more interested in using credit to build wealth, according to the Bank of America Family Office Study.

Family Offices Brace for Leadership Transition as Next Generation Eyes Alternatives — Image: editorial illustration · Story sourced from Bank of America

Family offices are entering a period of leadership transition that will reshape how wealth is invested and managed, according to a study released by Bank of America in October 2026. A quarter of family offices have seen a transition within the last decade. Among those offices, only 37% said their incoming principal was very prepared.

The Bank of America Family Office Study, titled Building for Generations, surveyed family offices on succession readiness, investment priorities and governance structures. Among family offices with a potential next-generation principal, 79% predict alternative investments will represent a larger portion of portfolios going forward. Seventy-seven percent expect philanthropic priorities to evolve with the next generation.

Elizabeth Thiessen, head of family office at Bank of America Private Bank, said the families best positioned in the transition recognise that preparation goes beyond identifying the next leader. It requires strong governance, a shared vision and the ability to adapt to changing opportunities and priorities across generations, she said.

Private equity remains a cornerstone of alternative allocations, representing 27% of family office alternative portfolios. Fifty-nine percent of offices plan to increase exposure over the next three years. Direct investments continue to attract family offices seeking long-term value creation, with 38% citing ownership stakes as a top wealth-generation opportunity. Private equity ranked first, at 51%.

Sports ownership is gaining traction. Four in 10 family offices hold sports investments today. Offices with at least one Gen Z or Millennial principal are most likely to own sports teams or sports-related assets. Art represents a significant store of wealth for some families. Three in 10 family offices with art holdings said the collection is valued at more than $25 million.

Most family offices have identified a successor — 83% — but only 27% have a trust distribution policy or guiding principles in place. Nearly all offices, 91%, agree that governance and family education help keep families aligned on priorities. Fewer than half, 40%, have a formal family education program.

Nearly nine in 10 agree governance structures help reduce family disagreements. Seventy-three percent plan to adopt additional governance structures in the next three years. Family dynamics remain the top governance challenge, cited by 45% of offices, followed by the complexity of shared assets at 37% and undefined family expectations at 36%.

Credit use is nearly universal among family offices, at 92%, but only 27% use leverage consistently as part of a long-term wealth strategy. Family offices primarily use credit to support real estate investments, at 45%, remain invested through market cycles, at 42%, and bridge short-term liquidity needs, at 38%. Nearly eight in 10 family offices, 77%, believe the next generation will be more interested in using credit to build wealth.

Business-owning families are more likely to embrace credit as a wealth-building tool. More than twice as many use leverage as part of a long-term wealth strategy compared to families without a wealth-generating business — 32% versus 14%. AI adoption is common across family offices, with 42% reporting regular employee use, primarily for data analysis at 64%, meeting summaries at 57% and automation at 49%. Eighty-three percent of family members expect their family office to implement new technology solutions. Eight in 10 believe AI has the potential to improve investment returns, rising to 88% among family offices with next-generation involvement.

The Deployment Angle

Family Office Real Estate Daily Desk · our analysis, not the source's

The succession gap is a pricing opportunity for patient co-investors. Offices with weak governance or unprepared heirs may liquidate core positions prematurely or accept unfavourable terms in a restructuring. Family offices looking to deploy capital alongside sponsors should ask whether the GP's other LPs face transition risk in the next 36 months — if so, secondary stakes may become available at a discount to net asset value.

The study shows 59% of offices plan to increase private equity exposure over the next three years, but only 27% use leverage consistently as part of a long-term strategy. That combination points to equity-heavy deal structures and lower returns on capital. Co-GPs willing to underwrite prudent leverage — particularly in real estate direct deals, where 45% of offices already use credit — can extract higher levered returns while absorbing downside through sponsor equity and completion guarantees.

On governance, the 27% figure for trust distribution policies is a red flag for any office considering a programmatic joint venture with another family. If a counterparty has no formal framework for distributions, they may be forced to exit an illiquid investment early to meet unanticipated family liquidity needs. Require visibility into succession planning and a copy of the family's investment policy statement before signing any multi-year capital commitment. If they cannot produce one, structure the deal with an earlier redemption window or a liquidity put.

Questions this story answers

01How prepared are incoming family office principals for leadership transitions?

Among family offices that experienced a succession in the past decade, only 37% said their incoming principal was very prepared, according to the Bank of America Family Office Study. Elizabeth Thiessen, Head of Family Office at Bank of America Private Bank, said preparation requires strong governance, a shared vision and the ability to adapt to changing opportunities and priorities across generations.

02Are next-generation family office principals shifting toward alternative investments?

Among family offices with a potential next-generation principal, 79% predict alternative investments will represent a larger portion of portfolios going forward, according to the Bank of America Family Office Study. Private equity is the top wealth-generation opportunity cited by 51% of offices, and 59% plan to increase private equity exposure over the next three years.

03How are family offices using real estate and credit together?

According to the Bank of America Family Office Study, 45% of family offices primarily use credit to support real estate investments, making it the top use of credit. However, only 27% use leverage consistently as part of a long-term wealth strategy, and 77% believe the next generation will take a more strategic approach to borrowing to build wealth.

04What governance gaps do family offices face heading into succession?

The Bank of America Family Office Study found that 83% of family offices have identified a successor, but only 27% have a trust distribution policy or guiding principles in place. Family dynamics are the top governance challenge for 45% of offices, and 73% plan to adopt additional governance structures in the next three years.

05How are family offices adopting AI and what do they expect from it?

The Bank of America Family Office Study found that 42% of family offices report regular employee use of AI, primarily for data analysis at 64%, meeting summaries at 57% and automation at 49%. Eight in 10 believe AI has the potential to improve investment returns, rising to 88% among family offices with next-generation involvement.

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