Living in the Shadows: Age, the Economy, and Trends in Wealth Management
Wealthy families, single family offices, and wealth advisors continue to live in the long shadows of economic and political uncertainty, as well as generational transitions. If economic uncertainty has been a persistent concern since at least 2008, other macro trends are more dynamic in nature. Political uncertainty—from the fiscal cliff, to taxes, to compliance, and to regulations—characterized much of 2012 and is unlikely to dissipate in 2013. Economic concerns, too, are similarly dynamic in nature. This year, the eyes of wealthy investors remain closely trained on Europe.
- Despite strong investment returns, pessimism characterizes client sentiment and affects clients’ goals and behaviors.
- Wealth preservation, a perennial top concern, is crowding out most other key priorities.
- If the client decision-making window was open early in 2012, it is narrowing if not shut altogether. Many clients are delaying or deferring key investment decisions, lengthening advisor sales cycles.
- Advice-seeking families continue to place a high premium on transparency, alignment of interests, and risk management.
- The timing seems inopportune given persistent uncertainty, but families and advisors must also contend with personal and professional transitions.
It is this last trend that is perhaps the most pressing and potentially industry altering. Procrastination is simply not an option; as many as three in four wealthy families are working on leadership transitions. Up to half of these transitions are complicated in some fashion by a lack of planning or tricky family dynamics.
Transitions are not solely the concern of families—generational changes are impacting the advisory community, from both the inside and out. For example, advisors are trying to adapt everything from their communication strategies to theirs services (and even to their attire!) to the needs of the next generation. In the meantime, new technologies are also beginning to reshape the wealth management client experience.
We'll take a closer look at all of these trends in the coming weeks.
Related Links
Family Leadership Succession: Developing a Roadmap for Successful Leadership Transition