Article by Russ Prince
Asia is producing a great number of new super-rich families (net worth = $500 million or more). At the same time, those families new and older are establishing single-family offices. With respect to established ultra-wealthy families, the children or grandchildren of the wealth creators, depending on when the family fortunes were initially founded, are the motivating force behind their families creating single-family offices.
According to Ellie Peters, business strategist at FFO and authority on wealthy inheritors, “The increased mobility of the super-rich as well as the fact that they are interacting with each other more and more results in a lot of sharing. Some of this is somewhat formalized such as the trend to ‘do lunch.’ Much of the connecting is pretty informal as when they attend international events such as the World Economic Forum. A pronounced outcome of this interaction is a strong belief in the single-family office.”
“NextGen is less likely to accept the approaches to wealth management used by their parents. The children and grandchildren are disinclined to see old well-worn relationships with their grandparent or parent’s advisors as particularly worthwhile unless they are providing exceptional services and products,” explains Angelo Robles, founder and CEO of the Family Office Association. “This usually results in discarding a percentage of the previous generation’s advisors in favor of more sophisticated and responsive professionals.”
Very importantly, in order to ensure commitment from advisors and control, the NextGen is finding the well-run single-family office to be a very effective structure. They are intent on creating single-family offices that benefit from effective governance and have high-caliber infrastructures. Moreover, they are very intent on creating high-functioning single-family offices by adopting proven behavioral best practices such as strategically outsourcing and maximizing their relationships with external experts.
All in all the world of single-family offices is dramatically expanding. There are many reasons for this including the transition of many Asian super-rich families embracing the model. Some of this is caused by NextGen looking to be more professional in their families’ approach to wealth management.
Originally posted on Forbes.com, November 8th, 2017. Original Article can be viewed here