Family Offices In A Post-Pandemic World – Wealth Management

Over the last ten years, it has become increasingly common for
families with significant wealth to use a business structure
(“the family office“) to centralise and
manage the family’s assets, employing staff to advise on
investment, tax, trusts, succession planning, philanthropic
activities and other legal matters.

The Covid-19 pandemic has proved a challenging time for family
offices, from volatile investment performance, threats to the
future of underlying businesses as trade pivoted online to survive;
the direct impact of Covid-19 on family members; and the desire for
families to put their personal affairs in order.

During the initial stages of the pandemic, many family offices
went into “crisis mode”, needing to take steps to
preserve family wealth and mitigate their capital risks. However,
the passage of time has bought with it a sense of resilience; that
business could be done and that life could continue, albeit
remotely.

It is perhaps less surprising against this backdrop that the
pandemic has proved to be a catalyst for what has been dubbed the
“great wealth transfer” (i.e. the succession of an
estimated $68 trillion of wealth from current wealth holders,
typically the Baby Boomer generation, to their children, typically
millennials (the so-called “next gen”) over the next 20
years).

The next gen are digital natives, growing up in the age of the
internet, and are more likely to have an increased awareness of
social inequality and environmental sustainability. For family
offices this has required them to increasingly look to the next gen
to drive forward businesses by embracing technology, focusing on
the social and environmental impact of investments and investing in
crypto-assets.

As governments around the world continue to grapple with the
financial fallout from the pandemic, the spotlight has been firmly
placed on the wealthy. Raising tax will, of course, go some way to
meeting these costs but big businesses have shown that they can do
their part through their own corporate social responsibility
(CSR). Family offices are drawing lessons from
this either through their underlying businesses demonstrating their
commitment to CSR or developing a good press around their
philanthropic endeavours.

In a post-pandemic world, harmonising family values; embracing
technology; building a reputation; and repurposing wealth have
never been more important to family offices.

The full version of this article features in our international
e-bulletin Globally Speaking which you can read here.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.