Family offices are continuing to evolve. Across investment strategy, talent, infrastructure, and portfolio construction, the message is consistent: operational sophistication is increasing as portfolios grow more complex.
Several themes stand out:
- AI is influencing investment opportunities beyond software
- Lean teams are managing increasingly complex portfolios
- Direct indexing strategies are becoming more engineered
- Tax and deduction strategies are gaining importance
- Operational infrastructure is becoming more intentional
AI’s Impact on Software Investing
One of the more investment-relevant sections of the report focuses on AI and software.
UBS notes that agentic AI has the potential to reshape software business models and competitive dynamics. Recent developments have already increased uncertainty, contributing to pressure on software equities and credit markets.
At the same time, UBS expects disruption to unfold gradually. Switching costs, regulatory requirements, and integration challenges may slow displacement of incumbent providers.
This creates a mixed environment for investors. Volatility may increase, but repricing could also create entry opportunities.
The report also highlights that AI-related investment opportunities may extend beyond software. Infrastructure buildout, semiconductors, industrial equipment, and energy solutions may benefit from broader AI adoption.
For family offices, this broadens where AI exposure may appear within a portfolio.
The Talent-Dense Family Office
UBS also highlights what it describes as a “talent-dense” structure.
A typical family office operates with roughly eight professionals managing approximately $1.1 billion in assets. Each individual often covers multiple functions, from investments to operations and reporting.
This structure can be efficient, but it also creates concentration risk. Hiring decisions carry significant weight, and gaps in expertise can affect the entire organization.
The report also notes a growing gap in AI-related expertise. While many teams are experimenting with AI tools, fewer professionals are focused on governance, implementation, and risk management.
In practice, this may increase reliance on external partners and specialized advisors, particularly as portfolios expand across asset classes and geographies.
Direct Indexing Gets More Sophisticated
Direct indexing is another area where UBS sees change.
The report notes that direct indexing has grown among ultra-high-net-worth investors, particularly for tax-aware portfolio construction. Strategies are now evolving from long-only approaches toward levered long-short structures designed to improve tax efficiency and potential pre-tax returns.
UBS also highlights that traditional tax-loss harvesting benefits can decline over time. As portfolios mature, opportunities to harvest losses diminish, leading to the development of new strategies designed to reinvigorate existing portfolios.
Where Direct Indexing Is Being Used
- Concentrated stock positions
- Post-liquidity event portfolios
- Legacy portfolios with declining tax benefits
These use cases reflect how direct indexing is being applied in more specific portfolio situations rather than as a general tax-management tool.
Deductions and Tax Planning
The report also highlights the role of deductions and broader tax planning.
As family office structures grow more complex, tax considerations increasingly influence how investments are structured. This includes coordinating across trusts and entities, evaluating deductions, and managing tax implications of liquidity events.
These decisions often extend beyond public markets and apply to private investments, operating businesses, and multi-entity structures.
For family offices, tax planning is becoming more integrated into investment decisions rather than handled separately.
Operational Design and Reporting
Operational infrastructure is another area addressed in the report, particularly accounting and reporting.
Family offices often accumulate multiple entities, trusts, and investment vehicles over time. This creates additional reporting requirements and data management challenges.
UBS notes that some family offices are designing accounting systems to support decision-making, not just reporting. This can improve visibility across entities and investments, particularly as portfolios expand across asset classes and jurisdictions.
What Stands Out
Across these themes, the report focuses less on market forecasts and more on how family offices are adapting their investment and operational processes.
AI is influencing software investing and creating opportunities beyond technology. Lean teams continue to manage large portfolios, increasing the importance of hiring and external expertise. Direct indexing is evolving into more specialized strategies. Tax planning and deductions are being incorporated into investment decisions. Operational systems are being built to handle multi-entity portfolios.
As portfolios expand, family offices are adjusting how they invest, structure portfolios, and manage operations.
Source:
UBS Family Office Quarterly, Second Quarter 2026. Family Office Solutions.
