Millennials are next in line to inherit the world as well as their parents’ wealth. The generation that grew up with the advent of social media and mobile phones approaches wealth entirely differently from their predecessors. Having witnessed this transition, working in fintech for over 15 years, Ken Gamskjaer, CEO and Co-founder at Aleta, discusses with Simple some differences between the generations and how family offices can help build a bridge between them.
Higher expectations
As the industry saying goes, “Once you’ve seen one family office, you’ve seen one family office,” because each family is unique. However, having said that, all wealthy families share universal traits. One of them is the generational differences between the parents, children, and grandparents. As Ken puts it, “next-gens have a more holistic perspective” on wealth management. He continues to note how they have much higher expectations for technology and a greater desire to be involved. And, as they didn’t create the wealth themselves, they’re very focused on creating their own legacy: they don’t want to simply replicate their parents’ approaches.
“Next-gens are more aware of the impact of their wealth on the world.” – Ken Gamskjaer, CEO and Co-founder at Aleta.
One of the biggest challenges facing family offices serving multigenerational family offices is finding tech infrastructure that meets the demands of both generations. Recent research shows that more than half (52%) of wealthy clients are dissatisfied with their wealth manager’s digital maturity and the wealth platform they offer. So, while legacy systems and Excel might have served their purpose well in previous generations, they are not quite hitting the mark with this current generation.
Shifting priorities
As the next generation ushers in a new era in wealth management, their influence can be felt in the notable shift towards a focus on impact and sustainability. They seek a wealth management experience that not only simplifies their lives but also reflects their values. In other words, while traditional family offices have maintained separate philanthropic and financial divisions, these are becoming increasingly intertwined today.
“I believe we’re approaching a tipping point and that profit and purpose will go hand in hand in the future. – Ken Gamskjaer, CEO and Co-founder at Aleta.
Millennials and Gen Zs place a high priority on sustainability in their investment decisions. And while topics such as ESG can be controversial at the moment, it doesn’t mean forward-thinking wealth managers cannot plan ahead. For example, while Aleta doesn’t offer a proprietary ESG data set, the company partners with trusted institutions to offer reliable information to family offices on a single platform for a holistic overview of their wealth; “Sustainability is embedded at the core of our financial framework, unlike on many platforms where ESG considerations are an afterthought. By showing sustainability metrics alongside traditional financial metrics, we ensure that our clients can pursue a more sustainable investment path without compromising profitability,” Ken elaborates.
Gearing up for next-gen
So, how does a family office go about ensuring that its digital offering meets the needs of next-gen clients? Firstly, instead of clinging to outdated legacy systems that haven’t evolved in decades, they can start by adopting tech solutions that speak to the entire family. In this regard, Ken insists that “It’s essential to partner with software developers who not only have a deep understanding of the unique needs of this segment but also commit to designing purpose-driven tools.”
Secondly, regarding investment strategies, family offices and advisors should look beyond the traditional focus on financial risk and returns. Engaging with partners who are invested in thinking about the long term and who concentrate on proactive development can help ensure that the investment approaches are adaptable to changing needs. This means selecting partners who are not just reactive but are actively involved in ensuring that their strategies can evolve, thus aligning more closely with the broader, ever-changing objectives of their clients.
Conclusion
Next-gens have entirely different expectations, which places new demands on wealth managers and family offices. They are focused on investments that bring societal and environmental impact, plus they want to be constantly kept in the loop via user-friendly mobile apps. To bridge the gap, family offices should revamp their technological infrastructure and collaborate with forward-thinking developers to craft functional and meaningful tools to align with these new expectations set by the upcoming generation. Ken summarises it well by saying that there are many “solutions of yesterday”; however, we need to offer the solutions of tomorrow.
About Aleta
A next-generation wealth platform that automates your data management and allows you to leverage the full value of your data. You’ll be able to analyse your wealth from all angles with powerful features in an intuitive and elegant platform. And you can drill down to the transaction level to illuminate every nook and corner of your wealth.
As frontrunners, we want to inspire you to look beyond the bottom line, which is why you get sustainability insights alongside traditional risk and return metrics. With a holistic wealth overview in Aleta, you can preserve and build a family legacy with confidence.
