Technology and Succession Drive: Family Offices and HNW Next-Gen

Matthew Carroll St. Louis Cardinals

January 31, 2023

HNW Next-Gen

HNW Next-Gen are bringing a variety of behaviours and priorities to the family office table, as well as new investment paradigms. They’re also influencing the way family offices approach governance and strategy.

They are also disrupting traditional banking and investment modalities to achieve socially responsible, impact and sustainable outcomes. These new investment strategies come with unique structuring requirements and are challenging for family offices to manage.

Communication-HNW Next-Gen

With over 70 million baby boomers preparing to pass $15 trillion in wealth to the next generation, it’s no surprise that succession is high on the family agenda. But new research has revealed a divergence between how prepared HNW Next Gens feel for taking over and how well-prepared family offices believe they are for the transition.

The key to a successful succession drive lies in communication. A recent BNY Mellon and Campden Wealth poll found that 85% of the next generation believed they were ready to take over the family business. Still, only 39% of family offices thought they were adequately prepared for the role.

Defining roles, navigating family dynamics, and developing leadership are major hurdles. While strong communication can help overcome these, developing the rising generation’s softer, qualitative skills is also critical.

Education-HNW Next-Gen

Education aims to help individuals and society achieve mastery in whichever areas of knowledge and information they have a particular interest in. It also aims to teach people how to relate to others in a civilized manner and to exercise creative and loving dominion over their environment.

Many theories of education aim to define this elusive concept, which can differ greatly from person to person and is often inflected by their background and circumstances. Yet there is an overarching sense that education aims to facilitate the development of young people’s reflective thinking and feeling abilities so they can carve out how they wish to exist.

While technology has helped bring automation to the process, family offices must actively educate the next generation. This way, advisors can ensure that their next-gen advisors are properly prepared and equipped for a successful succession drive.

Risk Management

Risk management is a critical element of any business. It helps companies identify potential risks, create solutions for them, and mitigate them if possible.

A strong risk management process allows businesses to minimize the effects of risks so that they can grow and thrive. It also allows businesses to show their leadership and investors that they have a solid plan for dealing with problems.

One way that companies are implementing this is by conducting workshops to help employees understand their risks and how they affect the company’s overall success. This can be helpful because it gives people a chance to voice their opinion and help the company find better ways of reducing the risk they face.

Another way that risk management is gaining popularity is by embedding risk managers within the business lines, where they can monitor and influence strategic decisions. This is especially important for firms that deal with volatile asset markets and high levels of uncertainty.

Technology-HNW Next-Gen

Technology is the use of a variety of tools and processes to improve efficiency. Different forms of technology can be applied in various fields, including manufacturing, communications, energy, medicine and transportation.

The technological revolution has significantly impacted human society and can bring benefits or harm. Some technologies, such as improved medicine and transportation, have been used for good. While others can disrupt social hierarchies or cause pollution.

With this in mind, it’s important for family offices to engage with the next generation to preserve wealth and ensure the business can thrive in the future. Having a leadership team that mirrors the younger generation’s age and experience is also vital.

With families transferring wealth to a new generation. Family offices must have professionals who can guide evolving regulation. Emerging asset classes and social and environmental trends. They should be ESG savvy and stay up to date with technological innovations. That could affect family wealth, from digital currencies to blockchain products.