Across Luxembourg, family offices are preparing for change as younger generations begin to take more control. With new priorities like sustainability, digital tools and impact investing, wealth managers are adjusting how they support family clients.
In an interview with Investment Officer, Pascal Rapallino, chair of the Luxembourg association of family offices, LAFO, shares his perspective on this discreet yet rapidly evolving corner of the financial sector.
As single family offices (SFOs) continue to increase their footprint in Luxembourg, drawn by its regulatory stability and international reach, multifamily offices (MFOs) are under growing pressure to adapt. Digital tools, transparency standards, sustainability goals and philanthropic ambitions are reshaping client expectations, Rapallino makes clear. Positioned between generational wealth transfer and strategic reinvention, the family office is becoming an increasingly central player in long-term asset stewardship.
How are family offices distributed in Luxembourg, and how are they evolving?
“Single-family offices (SFOs), by their nature, are not regulated. It is therefore difficult to give an exact figure, but their number can be estimated at around a hundred, including the investment holdings of large families. Regarding multi-family offices (MFOs) regulated by the CSSF, their number is more limited (99 according to the CSSF website, a stable figure, but down over the last 10 years, editor’s note). If we add the actors who have obtained a complementary license, the number increases significantly.
“The trend for SFOs and similar structures is strong growth in Luxembourg, particularly in recent years. Many new structures, whether investment holdings or SFOs, or large families are establishing their investment structures here. This attraction of Luxembourg is due to legislative stability and flexibility, which contrasts with changes in other jurisdictions such as the capital gains tax in Belgium and the Netherlands, or the end of the Non-Dom regime in the United Kingdom (From 6 April 2025, the rules on taxing non-UK domiciled individuals ended. The concept of domicile was replaced by a system based on tax residence, editor’s note).
“For regulated MFOs, growth is more contained, but there is a definite attraction. We must also consider the numerous service providers who, without having full MFO approval, offer services to wealthy clients, sometimes as economic advisors or real estate brokers. We are also observing a trend of former private bankers creating their own structures to support their former clients.”
What are the main challenges facing family offices in Luxembourg?
“A major challenge is generational transition. We are reaching the end of the baby boomer era, and the transfer of wealth to the ‘Next Gen’ is a crucial issue. Multifamily offices have an important role to play in ensuring this transition is carried out effectively.
“The other big challenge is adapting to the expectations of this Next Gen. Their priorities differ: digital tools, reporting, CRM systems, flexibility, but also a strong interest in impact investing and green initiatives. MFOs must evolve to meet these new demands, including in terms of transparency and returns for these types of investments. Cryptocurrencies also attract interest from some in this new generation, and family offices must be able to support clients in this area, while also educating them about the risks.”
We’re seeing growing interest in private equity. Is this a trend you’re observing as well?
“Yes, absolutely. After an exceptional decade for private equity, favored by low interest rates, the context has changed with the rise in rates. Private equity funds are therefore increasingly turning to large families as investors, something that was not at all common ten years ago. We have observed a meteoric rise of private equity within family offices. We are also seeing an increase in ‘co-investment,’ where families can invest directly alongside the funds, becoming true partners.”
According to an Ocorian survey, nearly 70 percent of family offices expect a 15 percent increase in philanthropic spending over the next two years. Are you witnessing this trend as well?
“Philanthropy has always been part of the landscape, but it’s taking on growing importance, particularly with the rise of ESG criteria, which have become essential for investors. It’s a deep-rooted trend, linked to increasing wealth concentration and a greater sense of responsibility. Doing good, for the planet or for others, is clearly on the agenda for many large families. Philanthropy is an integral part of the DNA of the vast majority of them. The role of family offices is also to support this approach in a structured way.”
Is the current economic and geopolitical environment, with all its uncertainties, affecting family offices in Luxembourg?
“Global uncertainty is pushing for more diversification and anticipation in investment strategies. However, the direct impact on Luxembourg itself is limited. Luxembourg continues to be seen as a haven of stability and a ‘good student’ in Europe, thanks in particular to its regulatory framework and financial strength, with the AAA rating. If the Next Gen wants to invest ethically and sustainably in Europe, there’s no reason to leave Luxembourg. While geopolitical factors can influence families’ choices of residence, the investment structures themselves continue to benefit from Luxembourg’s stability.”
So it’s about keeping a cool head in your clients’ best interest?
“Our role is multi-faceted: ensuring the longevity of asset allocations with a long-term vision, guaranteeing adequate diversification (in assets and geographies), facilitating generational transfer in a coordinated way with strong governance, and making sure that family leadership endures.
“It’s about avoiding the old adage that ‘the third generation squanders the wealth.’ This is a crucial issue, and, of course, it’s in the family office’s own interest as well.”