Family Office Trends in 2022: 7 Things to Know
The ever-changing global and interconnected paradigm has created new challenges and opportunities for preserving wealth. The need for personalized financial wealth services is even more acute in years succeeding, especially in Inter-generational wealth services that provide an opportunity for the next generation to preserve and upturn the consolidated wealth.
A prototypical family office overcomes short-term and long-term regulatory challenges such as implications of new regulations, operational challenges, and technological issues. A specialized family office validates the procession for succession and boosts wealth generation.
Over the past 22 months, the world’s financial behavior has completely revolutionized and evolved due to widespread public awareness as well as the global pandemic.
7 Key Findings in Family Office Trends that will shape the Future of the Industry
Here are 7 key findings in family office trends that will shape the future of the industry:
1. Global Marketplace
Covid-19 pandemic and the subsequent variants – delta and omicron spread a widespread panic among people. Global businesses on the other hand have had to adapt and rethink mechanisms from product delivery to brand messaging and even the internal community work and engagement. As the global marketplace map is a direct outcome of people’s perceptions, driving growth in exemplary situations has conditioned businesses to wither. There will be a pressing need for more mature, effective, and successful financial strategies to enable growth.
2. ESG investing
The threat of climate change is looming on the planet and can not be ignored by institutions anymore. Family offices recognize opportunities in sustainability and the growing need for green investing. Aiding the global zero-net emission economy, business and wealth holders believe in environmental, social and governance metrics. Above all, environmental and social initiatives impel credibility and trust from people.
The future impact of ESG investing can be proved by the fact that 85% of limited partners polled by Private Equity International state that ESG has become a significant component of their decision-making process.
3. Artificial Intelligence
The fourth industrial revolution is paving the way for transformative changes in the way we live and radically disrupting almost every business sector. The digital revolution brought ashore opportunity for wealth creation. Family offices can benefit from technological advancement in terms of their use cases and investing. For instance, AI can be used to predict accurate trends and patterns in the market as well as fund revolutionary tech companies.
4. Preparing for Future Roles
The current scope of the family office lies in reaching people beyond the service. Throughout the lifecycle of the family business, identifying future roles and educating both family members and external professional management regarding these roles is essential. A family office takes on the role of educating the succession, making the intergenerational wealth transfer a smooth transition and also aids in the process of sustaining the generational wealth of people.
5. Succession Planning
Following on from the above point, succession planning in present scenarios is treated as a process rather than an event and executed in a manner where heirs can be prepared, educated, and trained for a smooth, smart transition.
6. Blockchain Technology
New-age digital technologies like NFTs and cryptocurrency have been a keen interest among investors. Especially for diversification in portfolios, cryptocurrency can become a non-traditional asset class choice among investors. A shift from traditional wealth like steel, real estate, oil, and fossil fuel to progressive wealth class has steadily descended over wealthy investors. Thus, benefiting from alternative structures to hold, manage, and enhance their wealth.
7. Philanthropy
Increasing social awareness and the desire to have an overall positive societal impact through more active giving is a strong trend. This shift resonates with investment strategies, where total impact is increasingly married with financial returns to varying degrees. At present, there has been a greater alignment of values and frameworks regarding philanthropy and investment objectives than before. Philanthropy is particularly popular among family offices in the US where the funds are allocated through DAF or family foundations.
In conclusion, the continuation of the epidemic, changes in investment strategies, use of technology, and increased social awareness are some of the most prominent family office trends in 2022.