world of private clients 2020

NEWVALUES, LEGACY AND RISK FAMILY & GENERATIONAL WEALTH

With the economy under strain and social justice in the spotlight, social attitudes to wealth are changing. The next generation

Culturally divergent approaches to wealth have always been visible, to greater or lesser degrees, with one philanthropy expert observing that, traditionally,

owners may not know what an internet-less world looks like. The results are manifold but include a greater awareness of what is going on elsewhere in the world. For the wealthy, this can create both introspective thoughts about their own role in society as well as feelings of guilt about the wealth gap. “Next generation guilt draws them to beneficiary- led solutions,” says the social impact adviser. “They take an entrepreneurial approach and see wealth as a tool, not an identity.” This sentiment shift creates challenges for both current and future wealth owners, and impacts everything from investment portfolios and reputation, through to legacy and succession planning. “The wealthy are conscious of giving back and not just taking – they understand the social importance of that,” adds a wealth manager. There is a key balance to be struck involving reputation and perception management.

The media serves as a daily reminder of how quickly this can go off-kilter if it is not carefully managed. “You don’t want to be vilified by the press,” says one

there has been “an admiration of wealth creation in the US, where wealth is trumpeted more than in Europe, where things are more discreet”. We must add to this cultural nuance an acknowledgement that new generations today view, and react to, wealth in different ways.

UK lawyer, while a fintech data intelligence consultant identifies private clients’ top two concerns as governance and reputational risk. “A good reputation can take years to build but can be lost overnight,” they note.

is also more socially conscious and values- driven, so wealth creation must be handled more delicately than ever before, while environmental, social and governance (ESG) considerations form a key

“Millennials have an attitude towealth that borders on the uncomfortable.”

“A good reputation can take years to build but can be lost overnight.”

One social impact adviser describes millennial attitudes to wealth as “bordering on the uncomfortable” and there is increasingly a desire to engage with wealth in a different way. “Next gen wants to hold business and previous generations to a standard of embedding values into actions,” they explain. Authenticity of approach is vital, and the next generation wants people to “walk the walk in their for-profit decision-making”. A huge, standardising force in this generational shift is the combined impact of globalisation, technology and social media. The next generation of wealth

pillar of private client investment strategies. The traditional bar-bell approach, with philanthropy acting as a counterbalance for wealth creation activities, has evolved. The goal is now to align wealth creation with the same values that drive the family’s philanthropy. In many sectors we are seeing the onset of economic recession leading to the exacerbation of trends that were pre-existing. Economic ill-health simply serves to throw these issues into sharper contrast. So, too, with wealth.

WORLD OF PRIVATE CLIENTS | NOVEMBER 2020 17

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