• Looking forward to 2021: Family office trends

    Family Office Signals – 2021 – Q2 Update
  • 2020 has been a year of monumental change, as everything from daily routines and long term ambitions have been disrupted beyond recognition. As people around the globe strive to press on in an uncertain future, we explore the top 10 trends that family offices and privately-owned businesses should be aware of as they move into 2021 and beyond.

    Foresight
    Updated on April 29, 2024
    By Nicolas Arroyo , Rune Toldam , Freya Williams
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    Introduction

    2020 has been a year of monumental change, as everything from daily routines and long term ambitions have been disrupted beyond recognition. In the face of an accelerating climate crisis, global health pandemic, and rising civil rights movements, people have been forced to grapple with a changing set of realities, norms, and values. The new normal has arrived – and it’s here to stay. As people around the globe press on towards an uncertain future, we explore the top 10 trends that family offices and privately-owned businesses should be aware of as they move into 2021 and beyond.

    About the Authors

    Nicolas Arroyo

    Nicolas Arroyo

    Strategic foresight & experience design

    Nicolas is Co-Founder & Foresight Director at a Futures Studies and Experience Design firm. Nicolas uses the power of foresight and design to help family businesses gain insight into future scenarios and their strategic landscape.

    Connect with Nicolas Arroyo
    Rune Toldam

    Rune Toldam

    Strategic foresight & experience design

    Rune is Co-Founder, Partner & Creative Director of a Futures Studies and Experience Design firm. His expertise lies in translating those future scenarios into new meaningful products, services, and cultures for family businesses.

    Connect with Rune Toldam
    Freya Williams

    Freya Williams

    External Advisor: Business Anthropology

    Freya is a business anthropologist specialising in qualitative insights and user-driven innovation. With a background in NGO’s and consultancy in London and Copenhagen, she works with Simple to co-create insights with our network of experts

    Connect with Freya Williams

    1. From 2020 onwards, everything is a political statement

    In a year of multiple crises and heightened media attention, politics has become the lingua franca. The global population has been forced to face the deep cracks emerging in the status quo, and to re-assess what’s important as they grapple with an uncertain future. Amid the constraints of lockdown, ‘armchair activism’ has increasingly taken hold.

    Despite restrictions, however, online action has further taken to the streets with protests occurring in the US, France, Hong Kong, Chile, and Poland. As a result, political discussions – both offline and online – have become a defining feature of 2020 and can only be expected to continue into 2021. In an age where stock prices are hashtag-sensitive, businesses should understand that proactive commitment is more effective than reactive compliance.

    Businesses have to tune in to the bigger conversations happening in our society. They need to understand that no matter what they say or do, it will be interpreted as a political statement. Staying silent is no longer an option.

    Family Office Trends

    2. Cause-washing becomes the new green-washing

    With 3.9 billion people in lockdown across the globe, social media has shifted focus to the role the private sector is playing in the mitigation of crises. Corporations everywhere are being measured on the delta of what they say and what they do. Brand purpose, as a result, has moved up a gear with businesses everywhere increasingly sharing their opinions and engaging in the public policy arena.

    Authenticity has been the key to navigating this minefield and avoid the criticisms of cause-washing. By virtue of their institutional setup, individuals within family-owned or privately-owned businesses are more visible to the public eye. As a result, they have a unique opportunity to humanise these discussions and make meaningful contributions to critical debates.

    Today consumers are more informed than ever. They’re able to see through the smoke and mirrors and ask the right questions. Whichever cause, purpose, or movement you subscribe to, it needs to be done in a genuine and authentic manner.

    Family Office Trends - Corporate

    3. Distrust of technology and the tech-giants continues to grow

    Though the phrase ‘Tech-lash’ been circulating since late 2018 – triggered in part by Facebook’s involvement in the Cambridge Analytica scandal – we have seen increasing distrust in ‘big tech’ in 2020. As reliance on digital technologies has increased ten-fold due to lock-down, so too have the concerns on how data is being gathered, stored, and utilized.

    Trust and transparency have always been primary concerns for privately-owned businesses, with approximately a third of all family offices already being victims of cyber-attacks. Simple currently estimates the UHNWI software market at $8billion. This segment will see above- industry average (13% CAGR) growth as new privacy products come online. Software providers in private wealth therefore have a unique opportunity to shape this discussion on trust and technology and encourage others to bring the same level of rigour into the mainstream.

    As our dependency on technology increases by the day, so too does our awareness of its consequences – intended or otherwise. Tech platforms and tools will be under increasing scrutiny moving forward. Those which are trustworthy and reliable will rise to the top.

    family office trends - technology, investment

    4. Privacy becomes the new gold in the face of data breaches

    With this increasing concern around the security practices of big tech companies, the importance of privacy has re-emerged in public discussions. Companies such as Zoom experienced serious data breaches just as virtual meetings exploded, signaling our increased vulnerability to cybersecurity under lockdown.

    As a result, privacy-enhancing computation has accelerated over the course of the year, with encryption and decentralization technologies providing peace of mind. Whilst the private wealth space has a history of caution when it comes to privacy, they can nonetheless take advantage by upgrading their tech stack to incorporate the latest solutions.

    Privacy is fast becoming a defining element in our interactions with technology. Concerns over data protection, monitoring, and surveillance are forcing technology companies to redefine business models and place privacy at the core.

    family office trends - technology, privacy

    5. Investment in tech surges as the world goes digital

    Tech giants such as Amazon, Google, and Facebook have added $163bn to market values over the course of 2020, with no signs of slowing down. COVID-19 and the realities of a remote connection have meant that investment in tech companies has surged  – with internet and media business expected to add almost $375B in growth dollars on a global level by 2024.

    From an impact and investment perspective, technology and digital are undeniably a fundamental part of the business landscape. For the private wealth sector, digital has to be both investment strategy and operational setup moving forward.

    In the age of pandemic, digital is here to stay. Though big tech is coming under increased scrutiny, it is clear that business models of the future must have digital at the core.

    family office investment allocation, technology

    6. The rise of locality changes the real-estate game

    As 3.9 billion people across the world have been confined to the homes and forbidden from traveling, relationships with places have been redefined. Concepts such as the 15-minute city have gained increasing traction, where all amenities can be found within a stone’s throw of one’s home.

    This renewed interest in micro-mobility and engagement with local communities is having significant implications on real estate. Whilst it has been traditionally viewed by some as purely a strategic asset class and means of wealth preservation, there are increasing demands for investors to play their part in boosting urban wellbeing post-pandemic.

    The pandemic has made clear the importance of locality as our local surroundings, businesses, and institutions experience renewed interest and focus. This can’t be replaced – no matter how hyperconnected and digital our world becomes.

    Family Office Trends - Locality

    7. Activism becomes mainstream through ESG and impact investing

    As corporate activism has gone mainstream with the likes of Mcdonald’s announcing plant-based menu ‘McPlant’ for 2021’, ESG and impact investing have likewise gained significant traction in the investment world. Pre-pandemic the next-generation of investors were fuelling the impact-zeitgeist with a desire to leverage their capital to increase social and environmental returns.

    Post-pandemic the wealth space at large has been experiencing its own ‘pandemoment’ – where the crisis is turned into an opportunity to build back better. Privately-owned and family-owned businesses are uniquely positioned to lead this charge with their focus on long-term time horizons.

    As conscious consumerism moves from niche to mainstream, corporate activism is no longer a matter of altruism and good intention. Our idea of what success looks like have been radically transformed with the intensification of the climate crisis. Businesses are now as incentivized by competitive gains, as much as they are reputational.

    Family Office Trends - Impact

    8. More dramatic changes to asset-class definitions and allocations

    Asset-class definitions and allocations have traditionally changed on a year-to-year basis within the private wealth sector. But as attitudes towards real-estate change and ESG investments attract increasing attention, allocations are experiencing more drastic changes as investors navigate opportunities and risks in the global economy.

    Beyond these top-level changes, we may too see a shift in focus to more progressive forms of capital such as cryptocurrencies which are able to avoid inflationary pressures and retain value over time. As investments like commercial office space see a drop in demand, family offices should be at the forefront of exploring new use cases in a post-pandemic world.

    With most big cities closing down retail spaces and many organisations transitioning to a permanent work-from-home setup, the landscape of real estate is rapidly changing. Real estate as an asset class will be handled drastically differently in the future. What new categories will emerge as we inevitably move from bricks to clicks?

    Family Office Trends - Cryptocurrency

    9. Cultural values are leveraged to drive behavioural change

    In spite of living in an ever more connected and globalised society, cultural differences and values continue to play a fundamental role in business. COVID-19 has posed an exceptional challenge for shared humanity, with the public bearing the brunt for curbing the pandemic in the early stages of the pandemic.

    Cultural values have been fundamental in driving behavioural change – or in the case of the pandemic behavioural compliance. Navigating these can prove challenging, especially when differences are more nuanced than overt. Family businesses today should recognise the influence cultural values play on everyday business decisions. Opportunity is abundant for those who are able to operationalise these cultural insights.

    Perhaps for the very first time in history, the global population has been impacted by a singular and shared event – where changes in human behaviour are fundamental to the continued success of humanity. What does this shared experience mean for our collective sense of belonging? And what new global values across cultures and geographies will emerge?

    Family Office Trends

    10. A rise of political geographies fuelled by the global pandemic

    Though COVID-19 has forced governments around the world to operate in a context of radical uncertainty, the regional and local impact has been highly heterogeneous. Where countries like New Zealand have received international praise for their response to the crisis, other countries such as the United States have experienced growing political tensions concerning state response.

    This uneven geographical impact has posed a serious challenge to the belief of a unified global business landscape, with investors paying renewed attention to national and regional politics. For families and private wealth, there is an opportunity to foster connections with like-minded individuals and build global alliances – whilst still allowing for political diversity.

    The utopian promise of globalisation is over, as it becomes clear that prosperity has not been brought to all. The recent rise of radical nationalist movements is a clear symptom of this effect. Creating businesses that not only create value in global terms – but also local – will be key to sustain a peaceful and thriving society.

    Family Office Trends - Globalization

    Towards 2021

    The implications of 2020 on our social, technological, political, environmental values have been far-reaching. It is a year that will clearly help define generations to come, as a global pandemic has upended lives, and the civil rights movement have brought about a profound and overdue reckoning. Whilst this whirlwind of a year has been strange – and at times isolating and depressing – we hope that by exploring top trends we have too highlighted what has been galvanizing and inspiring.

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