Private wealth management has always been a competitive space where advisors have to play the game according to the latest industry standards or risk being left out completely. This is especially true now that industry leaders project a massive generational wealth transfer near the sum of trillions of dollars to millennial investors in the next two decades. This new generation of ultra-high-net-worth individuals will undoubtedly have very different expectations as compared to their parents. This often creates conflict between clients and their wealth advisors as confirmed by recent survey reports. Expert family office advisory is vital to ensure a smooth generational transition, and so resolving any conflicts should be a top priority.
There tend to be three main reasons for this clash:
Lack of Interpersonal Engagement
One of the glaring revelations from the 2015 Investment News report was that over 18% of the surveyed advisors never met with their clients’ children and over 50% only met them once per year. This lack of engagement creates a gap in digital capabilities and empathy around the needs and expectations of the next generation of investors leading to a failure to build trust and relevance.
One of the best ways for advisors to address this issue is to assert the importance of generational wealth transfer to existing clients and to have their children present in these meetings whenever possible. Such a personal engagement is a great opportunity to learn more about which areas of the business they are interested in and a general idea about their values and possible business objectives. Including them in the family office’s wealth management strategies can aid in a seamless wealth transfer when the time comes.
It is also imperative that advisors have a strong and relevant digital and social media presence. These are powerful tools that can be leveraged to offer the new generation of clients information about their wealth succession, inheritable asset classes, and portfolio management.
Failure to Meet Modern Expectations
Developing comprehensive yet adaptive strategies has become a prerequisite amongst modern family offices. This is perhaps due to the globalisation of modern companies requiring family offices to hire teams that can work at an international level. Therefore, family office advisors must be ready to go above and beyond their fundamental responsibilities to develop agile, end-to-end strategies as well as complement their core services by consulting with specialists from relevant disciplines.
New-age UNHWIs also have different expectations from family offices in terms of their investment strategies. They often have longer investment horizons, higher risk tolerance than their parents, and a higher appetite for ESG and crypto investing. Advisors that are ready to adapt their strategies to align with a family’s evolving values and vision will certainly continue to remain valuable assets to their business.
Failure to Expand Service Horizons
External consultants can add a new dimension to the existing array of services that a family office provides. However, family office practices differ greatly according to the region when it comes to pulling in external specialists. For example, in the US, such assets are filtered in terms of skill and experience while in Europe, they are mostly chosen from familiar and existing networks. Family office advisors must understand this to better position clients according to the market.
It might also be a good idea for advisors to update themselves with the knowledge of the up-and-coming areas of investing that might be of interest to the next generation like digital healthcare, crypto, and biotechnology. A well-rounded idea of the current happenings in finance will allow them to better advise their clients on how to structure their wealth in a dynamic fashion that would suit the needs of both the current and the next generation of a family’s wealth creators. This also reassures the incoming generation that their family office advisory team is tuning into what matters to them, and not just that of their parents or grandparents.