When the history of our time is written, the beginning of the 2020s will be seen as an era of mounting complexity. Just as the world was returning to normal after the disruption of Covid-19, conflict has ignited in Europe, inflation has surged and families once again face uncertain times.
Life has never been very simple for ultra-high-net-worth (UHNW) families, who tend to have assets and relatives across several continents, own multiple assets and might have families spanning several generations. Yet current events have seemingly amplified that complexity.
Against that backdrop, Julius Baer’s 2022 Family Barometer is especially interesting, showing not just families’ top concerns, but also suggesting they have a greater need than ever for expert advice. As my colleague Guy Simonius, Head of Family Office Services at Julius Baer, notes: “In over 30 years of helping families, I have never witnessed a greater need to engage in open, honest dialogue – both within families and with external experts who can be trusted and relied upon.”
Published in November, the 2022 edition of this annual survey canvassed the views of internal and external financial services experts. It asked about what’s most important to UHNW families, and in what fields they tend to look for external advice. Indicating quite how international many of these families are, our survey respondents told us that roughly one in two UHNW families have relations and/or physical assets on three or more continents.
Topics they care about
Focusing first on topics outside investment, the experts taking part ranked wealth-related topics, such as wealth planning, that clients care about most. Most notably, also given our experience, it can be assumed that families’ views of sustainability are shifting. They are taking a more holistic approach, wanting their values reflected broadly across their interests rather than being confined to specific investments or philanthropy.
Family governance was ranked as similarly important. Although major long-term secular trends are creating opportunities for wealth creation, how to approach those opportunities can stoke tension. What one generation sees as an opportunity, another might view as a challenge. With this rising risk of disagreement between generations, structured family governance is the best way to accommodate differing opinions. Yet, only about one in ten UHNW families has a formal governing body to address these types of questions.
Health, too, is a concern for families, although to a lesser extent than in 2021 when the pandemic seemed a greater threat. While the 2021 survey found that families wanted to have access to leading healthcare jurisdictions, this is not such a concern in 2022. That said, health adds to the complexity facing global families, making coordination of healthcare needs critical.
Turning to investment topics, the experts reported a sharp increase in enquiries about portfolio diversification. Indeed, the experts anticipated that the top three investment topics that might increase most in importance over the coming three to five years will be direct private investments, geopolitical diversification of assets and sustainable / impact investing.
Expert help
As complexity rises, even the most trusted, long-standing advisors may not have all the answers. That means more families are seeking specialist outside help to complement their existing advice networks.
The survey found that legal and tax advice, wealth planning and family governance were among the most common areas where families seek external advice. What’s more, it discovered that some families are seeking help to guide them through a variety of broader challenges, including education, healthcare and even lifestyle decisions.
“Helping globalised families navigate the growing complexity has become a team approach,” explains Guy. “We observe that the best-performing advisors tend to be the ones that know their limits, excel in the field of their expertise, and work hand in hand with leading experts in others in order to deliver the best possible results and mitigate risks where needed.”
In conclusion, the Family Barometer’s message is clear: pandemic, war and inflation have amplified the complexity that global families have to contend with. This is where intermediaries can truly add value, in order to protect and develop their clients’ families’ wealth.