By Steve Sokic, group head of private wealth at IQ-EQ
Sophistication, globalisation and technology are increasing in prominence for ultra-high net worth (UHNW) families, but so is their use of family offices, which must continue to evolve to match the growing demands of UHNWs.
At a time that the world is facing disruption from the Covid-19 pandemic, we are also witnessing fundamental changes to attitudes and behaviours throughout society. This is in turn leading to the need for family offices to adapt even more quickly through structural and operational changes if they are to meet their UHNW families’ evolving expectations.
Several trends have emerged over the last two decades for UHNWs and these have hastened recently, driving family office demand and growth. UHNW families have become increasingly global, with their investments cross-border and more complex than ever before.
Further, in what has been dubbed the ‘Great Global Wealth Transfer’, an unprecedented $15 trillion of family wealth is expected to transfer hands between generations over the next two decades. The children receiving this wealth often have very different investing interests than their parents; they are driving more money towards alternative assets such as private equity and venture capital, and are much more focused on the environmental, social and governance (ESG) criteria and on achieving greater impact with their investments.
They are tech-savvy and also keen to streamline complicated structures, and make family office processes as efficient as possible.
While these trends have been emerging gradually, the current pandemic has delivered a wake-up call for UHNW families by heightening awareness of the preciousness of life and their mortality. Families are keen to create wealth structures that are focused on succession, and are choosing family offices to provide stewardship to achieve this, fulfilling a role once dominated by private banks. This is forcing family o...