Table of Contents

1.Introduction

2.How we did for 2023

3.The Year That Will Be 2024

4.Methodological Note

  • Looking Ahead to 2024: An Outlook For Family Offices

  • The Simple view is that 2024 will reveal a heightened ability to adapt and survive, an emerging resilience that will be coupled with some refreshing authenticity. Here’s our thoughts on several major themes that family offices should take into account going into the new year.

    Foresight
    Updated on April 29, 2024
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    1. Introduction

    As the aftermath of the pandemic feels less like a side-effect and more like an ongoing adjusted normality, it somewhat feels as if the world is suffering its own version of long-COVID. Add on the conflicts with Ukraine-Russia and now Israel-Gaza and the already heightened levels of geopolitical anxiety are feeling burdensome.

    Volatility is emerging as the theme of our current time, yet it doesn’t mean the unpredictable and rapid change being experienced across markets should call for observation over action; we instead see it as a loud call for resilience.

    If we’re not solving problems, they’re only getting worse: a reason to look intensely at things like integrated sustainability, the causes behind repeating regional conflicts, the unprecedented poverty gap and many more global challenges that we certainly haven’t solved yet.

    Over the last year we have seen growth in emerging markets and lower than expected unemployment despite the high inflation and interest rates, which does point to some positivity and a determination to not just see this as a phase to wait out, but rather confront it.

    The Simple view is that 2024 will likely see much of the same concerns and challenges as this year, some possibly more exacerbated, but it will also show our ability to adapt and survive. Face uncertainty for long enough and it starts to become normal, and we find ways to cope and eventually thrive in the face of it.

    If we had to mark a phrase for our outlook on the year ahead at Simple, it would be Optimistic Realism – the slight paradox itself being emblematic of these times.

    2. How we did for 2023

    A short look at some of what we highlighted in the buildup to this year and how things have panned out since.

    The volatile political landscape only became more so, as expected. Global conflict and tensions have increased, but at the same time moments of progress, including Xi Jinping’s visit to the US and potential for better relations between the two largest economies presented some optimism for the rest of the world.

    Economic uncertainty continued, but with less inflation and economic woes than expected, though the economy is still plagued with these issues and ongoing tight monetary policies. The global economy is by most economists’ perspective set to continue weakening, just at a lower rate.

    Our expectations for tech decentralisation haven’t quite been as rapid, and Big Tech still reigns, with governments continuing to flex their power at any potential institutional challengers. Microsoft investing in OpenAI shows a predictable response to emerging power players, while Binance and its $4 billion financial penalty shows how far the digital asset space needs to progress to find regulatory harmony. That noted, the pushback on cryptocurrencies and slowdown in this sector did materialise as was expected, and the push for regulation and controls is very much evident.

    From a climate urgency perspective, the theme continues to be an area of economic and political contest and as expected the amount of climate activism continues to rise, with disruption or attempts to disrupt major sporting events almost a given these days.

    An incoming new set of values is very much relevant and relates strongly to our outlook for the year ahead, with the increased focus on mental wellbeing and health industry overall set to gather further momentum.

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    3. The Year That Will Be 2024

    A focus on wellbeing

    While there has been a lot of negativity since the pandemic hit us 4 years ago, one of the positives is an increased focus on health and wellbeing, along with a more honest and open approach to acknowledge the challenges faced therein.

    This looks set to continue evolving in 2024 to become even more prevalent, both as an individual awareness around well-being and at an institutional level, as we realise the cost of healthcare that has historically not had a dominantly preventative approach.

    An increase in focus will gain further traction as the world’s population ages, the WHO expecting the global population over 60 years old to double from 12% to 22% in the period from 2015 to 2050. A major shift in demographics, and with it the need for governments to build robust health and social systems that can support change, and with a framework that builds in preventative care to increase quality of life at older ages and reduce the long-term costs for healthcare.

    Global health spending is already predicted to exceed 10% of the global GDP in 2024, which also includes the growth in expenditure on health care at home, distance diagnostics and home patient monitoring as well as home-administered drug delivery systems.

    The post-pandemic acceptance of telehealth (mental health telehealth visits in the United States increased 6,500% during the first year of the pandemic) provides an opportunity here, where progressive companies will embrace digital solutions to complement traditional medical support structures, a vital evolution considering the widespread effects of workplace burnout.

    By the end of the decade, the World Health Organisation forecasts the largest health risk on the planet to be depression, not obesity, and problems such as burnout at the workplace only contribute to this mental health crisis.

    Workplaces can’t ignore this situation. As employer attitudes shift from pushing desperate productivity to rather helping teams flourish, the growing understanding of how much wellbeing plays a role suggests workplace health solutions that align better with advancements in health technology, and have an increased emphasis on education.

    The need for personalised solutions will likely drive the growth of wearables and enable further real-time connectivity to health monitoring, as part of the digitisation and customisation already underway within medical technologies overall.

    Ongoing throughout this growing focus, we will start to see notable HealthTech and MedTech innovations through the application of artificial intelligence, with beta projects coming to fruition during the next year.

    The Simple take:

    Growth in healthcare and the growing focus on wellbeing as part of modern culture presents an opportunity for family offices, not just to plan around the imminent increase in long-term demands from ageing wealth owners, but also to look at investment potential.

    Healthcare investments have grown to record levels with focus on areas like gene and cell therapies and vaccine development of late, but there are other areas of opportunity.

    Family offices looking to contribute in this space should consider biotech innovation and the faster commercialisation process a revolution they are well-suited to help fund, with the adoption of artificial intelligence into already-promising technologies likely to speed things up further.

    Wearables and connectivity solutions that support home care will improve our position to deal with the ageing global population and could provide valuable returns, financially and to families themselves. There is naturally much uncertainty with emerging technologies, but there will be life-changing innovation and the chance to make a positive difference.

    As part of the greater family office trend, expect the spend on wellness as a luxury to grow to new levels in 2024, as Ultra-High Net Worth Individuals search for more holistic health and relaxation activities and destinations.

    The search for business resilience

    The common expectation amongst the larger financial institutions for the year ahead could be summed up as ‘more of the same,’ with macroeconomic uncertainty ongoing and the slowdown in economic growth expected to continue despite the likelihood that inflation pressures are set to ease.

    Despite the fact that anything compared to the recession of 2008 now seems highly unlikely, what this forecast means is that building resilience to ongoing challenges is of paramount importance as opposed to sitting back and waiting for things to realign to previous norms. The shift from an era of ‘multi-crisis’ to that of the ‘perma-crisis’ has effectively taken place and businesses must shift their approach accordingly.

    This shift requires greater emphasis by investors on proactively ensuring portfolios are even more diversified to offset the uncertainties in the longer term, and for businesses to explore new ways to offset these challenges. Adjustments in operations, new partnerships and more regionalisation strategies will likely be at the forefront.

    The expectation is that private equity activities are set to rebound, seen as a means to offer value against high inflation rates, which if ongoing will provide other opportunities around private credit, while at the same time there is optimism that both M&A and IPO activity look set to increase.

    2024 will definitely face much of the challenges of the past year, but looking at how businesses are adapting there is a definite resolution towards finding resilience, emphatically searching for multiple routes to achieve positive outcomes regardless of what is thrown their way.

    Through shifting objectives, restructuring teams and exploring new ways to exploit technology, the essence is all the same and points to a greater need for diversity and flexibility in order to thrive.

    The Simple take:

    Resilience as a leading theme fits with how family offices have needed to adapt over the last few years. Apart from necessary investment diversification, with astute CIOs finding ways to offset market slowdowns, family offices often have small teams that control immense amounts of capital and therefore need to make continuity planning an integral part of their operations strategy.

    Resilience in the form of family office asset allocation is not just about shifting capital to real estate or buying gold, it’s about long-term planning to protect the operational structure of the company and its ability to manage both financial and non-financial needs regardless of what threats arise. A successful family office investment strategy should already take this approach, knowing that threats could come from many sources, from geopolitical uncertainty to cybersecurity to turbulent family dynamics, and that anticipation and preparation also needs to be complemented with alignment around values.

    The global talent shortage

    Coupled with the larger ongoing macroeconomic issues, a shortage of skilled workers globally doesn’t bode well for businesses and the need to fight their way through challenging times.

    Illustrated in a recent survey across over 30,000 employers from 41 countries that discovered a record high of 77% of employers found it difficult to fill roles, this skills shortage is already shaping how companies plan their growth and shifting influence to those that are in demand.

    Accounting is an area where the shortage is being felt across the scale of businesses. With fewer people choosing to study accounting, this reduced inflow is coupled with the large number of elderly professionals in the field hitting retirement age, causing a shortage in a field that is a core business function. More listed companies are having to disclose material weaknesses in part because of a lack of accounting staff, meaning they were unable to maintain adequate internal accounting responsibilities.

    The shortage is also creating a rising cost per employee as companies boost salary offers, something very evident across the technology sector, where this shift is affecting the traditional power balance between employers and employers. We’ll likely see further examples of employees leveraging their in-demand talents to exercise influence on company decision-making.

    Accounting and technology roles aren’t unique though, with global shortages notable across financial services, engineering, transport and in general management roles across industries. And the ageing population will have a dramatic effect across all of these and more. Looking at Japan and its ageing (and shrinking population) as a microcosm for what lies ahead for the rest of the world, it suggests a problematic shortage of workers in hospitality, medical and welfare lies ahead. At the same time, it’s worth noting that Africa’s young population, with 60% under the age of 25, might provide some balance over the long term, as remote solutions rise.

    Geographically dispersed teams can certainly provide relief to current industry shortages, with remote work also a means to retain top talent and something that is not set to decline, despite the best efforts of some major multinationals. And while there is consideration for AI advances and its ability to replace employees with automated solutions, some of these seem a few years away, and building these requires high-level talent that faces its own resource shortage.

    Employers aren’t winning at finding talent nor in keeping their teams satisfied either, with Gallup’s poll earlier this year showing that half of employees are looking to leave their roles and 59% are currently not engaged at work (we’re looking at you ‘quiet quitters’).

    This all suggests some problematic scenarios around employment making headlines in the year ahead. With stress and burnout affecting employees and a desperation to find skilled resources affecting employers, the combination is worrisome. It will also be interesting to see how countries deal with the paradox of needing larger workforces while also maintaining stricter controls on borders, where any adjustment comes with significant political ramifications.

    The Simple take:

    With the industry already facing its own challenges in terms of attracting top talent, proactive family office planning to deal with the growing global talent shortage is a priority. The shortage in financial services professionals will need to be offset by greater incentive, meaning family offices will need to provide value where they can’t match the brand prestige that multinational institutions offer candidates.

    Flexible compensation structures and ownership potential to help align employees to long-term goals will likely increase, with extending across teams further than previously.

    The impending need for a new generation of investment advisors should prompt family offices to ensure their existing providers are making sufficient plans, taking a proactive approach to modernise their service.

    The globalisation of family offices, with many looking at new jurisdictions for their tax benefits and investment potential, will also present opportunities to access more resources they may not have at their present location. The work to educate and grow professionals entering the family offices industry in places like Hong Kong and Singapore will likely be compounded as talent scarcity grows globally.

    The need for ongoing education across the industry is set to increase, with education technology likely to play a significant role and provide another opportunity for family offices to invest in their own future.

    Shifts in the global dynamic

    It’s hard to pin down when exactly global conflict became so fractious, but that’s arguably because it was never entirely the opposite. These days we are just closer to conflict through the endless flow of accessible content, meaning nobody with an internet connection could be naive to what’s happening in Ukraine or the more recent situation in Gaza, not to mention other ongoing global conflicts.

    While geopolitical disruption may be nothing new, current levels of volatility are heightened and that’s before we enter a year where China’s growth is expected to decline further and election campaigns get underway in the United States, with all the propaganda, paranoia and power struggles that can bring.

    The resurgence of right-wing politics, with recent victories in Argentina and more recently the Netherlands for the prominent candidates will likely fuel further cracks in the global community. This is at a time when the general distrust of established governments, businesses and NGOs that evolved as a direct result of COVID-19 still lingers.

    What does this hold for us in 2024? Effectively, the Reset button on globalisation is being pressed, and while the traditional powerhouse countries falter, emerging markets are finding an opportunity to show new influence.

    This reorientation is perhaps most noticeable in the shifting sentiment to the UAE and Saudi Arabia, while the Global South will also be a phrase we’re likely to hear a lot more of in the next 12 months.

    Dubai is already seen as a global financial center, the fossil fuel behemoth hosting the COP28 in a show of its newfound influence. While the rest of the world starts to seem less stable, its position as a neutral and stable financial hub and modern alternative to more traditional economic safe havens looks set to keep growing.

    The Simple take:

    Geopolitical uncertainty is always a complex issue, and one that features prominently on the list of family office concerns for good reason. There are varying approaches to offset the challenges, with some taking a route that focuses their family office wealth management activity around where they’re most familiar, keeping things close to home or in the most stable jurisdictions where they trust the economic and political structures.

    But the opportunity to take advantage of growth in emerging markets during this time, and the incentives that new family office-focused locations offer, make a broader perspective essential.

    Singapore and Dubai have found traction as new centers of private wealth management, and while some family offices already make use of the address rather than an actual office to reap the benefits, this will shift and the growth in these new centers seem set to continue. Looked at purely as a means to hedge against geopolitical frictions and provide a place for the global family office community to do business, they’re already showing real value.

    Understanding Artificial General Intelligence

    We are effectively living through the latest human revolution in real time by witnessing the adoption of artificial intelligence into everyday life. The AI revolution is unlike those that came before it though, in that it will spread quicker and grow in capability exponentially, affecting the entire world’s population significantly as it does so.

    AI has already been different from other technology advances in its accessibility, that it’s already available to everyone through the easy (and free) availability of Artificial General Intelligence applications. AGI is just one iteration of what its capable of and 2024 will see the results of the previous year’s efforts to integrate it into every single industry and application possible.

    It’s also set to increase its influence through reaching us in new ways, with the proliferation of Internet of Things devices in our lives impossible to ignore. Encompassing everything from smart televisions to wearables, this is soon to reach an unprecedented 30 billion devices. Each of these is expected to be enhanced through AI, meaning the “everything AI” age is just beginning.

    2024 will see AGI’s influence increase, but simultaneously to that, our ability to differentiate from authentic and inauthentic content will increase, as will our ability to understand it, which is necessary considering its omnipresence. Based on the extremely rapid adoption and rollout, it’s forgivable that most consumers likely don’t yet understand the details around how AGI works.

    While debate continues around regulation (as well as ethical issues around ownership and data used for training) it seems many already consider AGI as a sentient form of intelligence when in reality it is a tool, something that utilises the existing work of humans rather than creates from a deep intelligence level.

    Jaron Lanier, who carries the unique title of Prime Unifying Scientist at Microsoft, describes it best when he recently called for us to stop mythologising AI, saying, “A program like OpenAI’s GPT-4, which can write sentences to order, is something like a version of Wikipedia that includes much more data, mashed together using statistics.”

    It will be interesting and exciting to see just how we adjust to AGI as the global population starts to understand it more over the year ahead.

    The Simple take:

    One of the biggest challenges family offices face in their need to adopt modern technology solutions is the gap between new tech and old perspectives around integration. Many family offices persist with outdated systems not because the solutions aren’t there, but because the action to implement them requires skills they believe are not found in-house.

    AGI and its ability to allow interaction through human language may be the means for smoother digital transition, and with an existing focus on integrating it across family office technology solutions coupled with the arrival of mainstream quantum computing, 2024 is likely to deliver some groundbreaking solutions.

    Trust issues persist (generative AI hallucinations certainly haven’t helped this), but through our better understanding of how AGI works, with checks and controls put in place to eliminate errors, we will likely see this reduced. Similarly to the wellness focus, this growing influence will provide opportunities for family offices to not just benefit from the solutions but invest in companies at the forefront of this technology wave.

    Solving the great succession

    We are already in the midst of the largest transfer of wealth in history. The baby boomer generation holds half of the United States’ $140 trillion in wealth and the oldest within that group are already hitting 80 years old, yet most families have yet to put in place structured succession plans and there is still no benchmark process for the family office industry to follow.

    It’s important to note that this is not just about an exchange of wealth after the elderly pass away, since much of this exchange is now taking place before that point, so mapping out the best way to manage this exchange and finding effective solutions to the challenges it brings is imperative as this capital affects all markets.

    The next generation is already making its presence felt, and the year 2024 will see further effect through movement of capital into more diversified investments, a shift in lifestyle choices and living locations, consumer patterns and likely further emphasis on innovation.

    The transfer presents a conundrum to the wealth management industry in finding solutions that fit younger wealth owners while maintaining existing relationships and the structures that currently exist.

    While there are ongoing reports on the next gen need for more digestible information, general digitisation, real-time connectivity and reevaluated fee structures, there is also a need for reliability and trusted advisors.

    The likelihood that the services of current wealth advisors will be maintained by next generation wealth owners is small, especially when one considers the ageing RIA population isn’t necessarily a good fit to their needs, and is unlikely to deliver effectively on the emerging digital solutions that will become standard.

    Advisors that engage in multi-generational estate planning and have fostered relationships with the next generation will be at an advantage, though we will likely start to see a new type of advisor come to the fore, with better technology understanding and more relatable to younger wealth owners and their differing values and social norms.

    The challenge of delivering wealth solutions and financial planning to a changing demographic needs to find proven and structured solutions sooner rather than later. It is also an opportunity for the private wealth industry to look at what role it can play in reducing the widening wealth gap. Rather than an ongoing fight around taxes, there is a need to explore profitable and innovative ways to increase general living standards, something to consider for the younger generation gaining access to capital and decision-making.

    The Simple take:

    We firmly believe that there are enough commonalities across family offices that benchmark processes and structured solutions can be relevant and valuable. Of course these need to be flexible for nuances that each family brings, but the frameworks will be applicable to the majority.

    Governance and communication complement each other and with the right structured plan to work from, more family offices can take steps towards succession strategies that bridge generational gaps.

    Part of this is also managing perspectives around ownership, which differs greatly based on source, cultural and generational differences. This is a crucial part of a succession plan along with education, aligning values, purpose and actual governance structures.

    2024 will likely see the emergence of more accessible and practical frameworks that use technology to empower family offices in this process and ensure their key advisors and service providers meet clearer industry-level expectations.

    A turning point for climate investment

    In case the sense of duty isn’t clear, a reminder that the 1992 United Nations framework convention on climate change bound every country together to avoid dangerous climate change. We head into a new year though with 2023 having set the record for the highest average global temperature ever recorded – four days in a row.

    COP28 did make progress upfront though, with agreement on a fund to help the world’s poorest countries that are most vulnerable to climate disasters, though the total amount allocated is tiny compared to what’s required. And while the Sustainable Finance Disclosure Regulation (SFDR) guidelines on ESG reporting requirements became mandatory earlier this year, 2024 will see the end of the phasing in process and companies will need to include year-on-year comparisons in their annual disclosures going forward to track any progress – hopefully resulting in further commitments to change.

    There is a lot of hope placed in innovation, and while impact investing and funds dedicated towards environmental and social improvement technologies can be attractive to investors seeking returns that are both financial and beyond, companies looking to provide climate technology solutions need to deliver.

    While an appealing industry for investors, so many of the promising climate tech ventures in the last two decades haven’t delivered, whether during the ‘clean tech’ phase or more recently. This could be partly due to disparity between long-term minded tech companies being folded into the rapid timeline of returns the venture capital world demands, but whatever the cause, there is a pressing need for milestone progress advancements in the year ahead.

    New regulations and a tightening of reporting on climate and ESG related risks in the year ahead will bring sharper focus to existing and new climate tech projects, and emphasise on their need to deliver on the goal of reducing greenhouse gas emissions and increasing energy efficiencies now more than ever.

    The Simple take:

    A lot of climate technology startups raised money during the VC boom just a couple years ago and will probably meet their ending during the next year or find themselves in a scramble to raise more. This shouldn’t send the wrong message to family offices that are considering deploying capital to this segment, which has matured in its growth and focus over the last decade.

    This is the time for family offices to find investment opportunities with companies that seek to solve climate challenges through sustainable energy, more circular economies and carbon reduction innovation – not just because of the need for this from a humanitarian perspective, but because the objective of a modern, net-zero economy will continue to improve growth rates and create further business opportunities.

    4. Methodological Note

    We use a heuristic process throughout the year to organise distinct data points that will help us make sense of the currents with the most staying power and potential to create lasting change. Some information appears as front page headlines, while other data materialise as inconsistent blips of a faint pulse. The STEEPV – social, technological, economic, environmental, political, and values – gives us intellectual bins to store signal events and transformative ideas that we identify for further analysis, and then consider how they relate to specific family office trends that we identify. The results of this process are the themes discussed in this article.

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