The Julius Baer Family Barometer is our yearly survey to gather the opinions of financial services experts who work with and advise wealthy clients and their families. For the 2022 edition, we asked more than 1000 internal and external experts. Here’s what they had to say:

Topics beyond investment

In 2022, the top-three discussion topics ‘beyond investments’ for families were unchanged from the previous year – family wealth, family governance, and health.

Health replaced regulation as a top-three priority last year after the pandemic caused families to focus on having access to jurisdictions with robust healthcare systems. This year’s survey suggests that although health has slipped slightly since last year, it remains a top priority. And the trend is set to continue, given the scope for Covid-19 to possibly cause further movement restrictions in certain parts of the world. This adds to the complex environment already facing global families and makes the coordination of healthcare needs critical.

Indeed, experts consulted for this year’s report suggest that the need for cross-border planning extends into every aspect of family life. The findings of our survey show that roughly 1 in 2 ultra-high-net worth (UHNW) families have relations and/or physical assets on more than three continents. With homes, and business and investment interests in multiple jurisdictions, families need more expert guidance than ever before to enjoy the freedom and benefits of an international lifestyle.

Wealth-related topics include succession planning, wealth structuring and responsible wealth management such as sustainability. Within this category, which is once again the highest-ranked topic beyond wealth in this year’s Family Barometer, we have seen attitudes evolve. Until recently, sustainability considerations were often confined to specific investments or philanthropy.

The experts surveyed report that families are starting to take a more holistic approach towards sustainability and want their values reflected more widely across investment portfolios. This in turn, reflects a growing trend for UHNW families to take a more purpose-driven approach overall.

Once again, family governance proved to be a top priority, and we expect it to remain an enduring topic of debate within global families for many years to come. We live during a time of tremendous global change, and families have the opportunity for unprecedented wealth creation by taking advantage of long-term secular trends.

But, if poorly managed, opportunities could become threats and families must overcome significant challenges to adapt to the growing complexity. Consider carbon-neutral investing: the younger generation may steer the family interests along more sustainable lines, although their values may not readily cross the generational divide.

Only families with robust governance are likely to successfully accommodate shifting priorities and opinions between individuals and across generations. Families lacking clear management structures may fall behind or suffer a fundamental breakdown in family relationships.

Yet despite this threat, the experts consulted for this survey see a formal governing body in only about one in ten UHNW families.

What investments are wealthy families most interested in?

Turning to investment topics, the experts reported a sharp increase in enquiries from families who want their assets to be more geographically diversified.

After a long spell of peace in Europe, the sudden outbreak of war in Ukraine provided a stark reminder of the risk of geographic concentration. Indeed, as Yves Bonzon, Julius Baer’s Chief Investment Officer, recently told clients, “financial markets are no longer immune to geopolitical affairs; the risk of capital confiscation has risen significantly since the start of the war in Ukraine”.

And for families with interests on multiple continents, the war has consequences far beyond the outright loss of local assets. On the one hand, higher oil and commodity prices have boosted the economies, currencies, and equities of countries rich in natural resources, although surging inflation is a concern for central banks globally.

On the other hand, food export bans and import tariffs complicate the outlook elsewhere, leading to what Diego Wuergler, Head of Investment Advisory at Julius Baer, has called “a global financial environment that is challenging to navigate”. The message is clear: war has multiplied the complexity that global families already contend with.

The experts we consulted for this report suggested that more geographic diversification is likely to be just one way for families and their advisors to respond to the difficult current climate.

Thoughtful asset allocation is critical to the survival and growth of investment portfolios when global events are fast-moving and unpredictable. Families who have not done so this year may benefit from scheduling a strategy review with their advisors to discuss their current allocations.