New economy, next generation: Seven trends for tomorrow’s family office

Life in the new economy is far from predictable. As the shockwaves from Covid-19 continue to reverberate, and as the global challenge of climate change becomes ever-more visible, the worst geopolitical crisis for a generation threatens global stability.

For those with wealth, the future may seem less certain than it once did. Some are taking a fresh look at their family offices and the governance structures that exist to preserve their wealth for the long term. In turn, the role of the family office is expanding, incorporating greater agility and dynamism than in the past. 

In this context, DBS Private Bank’s new research into family offices – which draws on in-depth discussions with 21 representatives of wealthy families, family offices and government bodies, as well as other experts in the field – shines a light on the priorities for the world’s most influential families.

Here is a selection of our key findings:

The next-gen influence

As families face the challenges of the new economy, the voice of the next generation is growing louder – especially when it comes to social and environmental issues – and is finding a receptive audience among the older generation. We hear how the younger generation’s growing influence is leading to discussions about the extent to which different family members should be involved in day-to-day decision making, and the best way to tackle questions around succession and the eventual transfer of responsibility.

New demands on the family office

Today’s wealthy families are increasingly looking for professionals in the family office who can provide up-to-date guidance on evolving regulation, emerging asset classes, and social and environmental trends, alongside traditional investment and concierge duties. Reputation management has also become critical.

The succession taboo

Succession is the one aspect of family governance, essential to younger and older generations alike, around which many families still struggle to hold productive, open conversations. Families believe it is time to challenge the taboo. Putting comprehensive plans in place can be liberating for family heads, allowing them to live more freely and avoid the disruption of a poorly arranged transfer of responsibility. 

Gift of giving

Philanthropy today is key to engaging younger family members, providing a natural gateway for them to enter governance and investment discussions. At times of change, it is one subject that has the potential to unite everybody, ensuring shared values and passions are carried through to future generations.

Investing for impact

As well as maintaining their long-term support for good causes through grants and endowments, wealthy families are increasingly prioritising ESG and impact investing. In so doing, they are upholding traditional family principles and believe they are setting a positive example for other families. This is another area where we often see a generational aspect, with younger family members keen to bridge the traditional divide between investment and giving back to society.

Conservative innovation

Sustainable investment strategies, including impact investing and social-impact bonds, present long-term practical advantages, with the potential for exceptional returns. Families believe these strategies make commercial sense, as the cost of passivity on environmental issues will exceed any short-term impact on returns.

A new home for wealth

Singapore’s strong rule of law, credible regulatory regime and business-friendly environment make it an attractive family office destination. As prosperous Asians establish family offices to facilitate intergenerational wealth transfer, Western families are increasingly looking to set up a secondary presence in the region to access new opportunities in private equity, venture capital and direct investments.