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The high-net-worth (HNW) and multi-family office (MFO) markets are in a constant state of evolution, and the next 3-5 years will see a pace of change that will make Moore's Law proud.1 As a starting point for addressing the question of how to take advantage of this accelerating pace of change, it is worthwhile to examine some of the trends with HNW investors and MFOs since the financial collapse of 2008. At a "macro" level, one tectonic shift facing MFOs is that the growth and evolution of dis-intermediated information, social media, and "online advice" will be disruptive forces in the wealth management industry. The next generation of investors is technology savvy, more collaborative, less trusting of tradition, and more socially conscious. This translates into some interesting investment expectations. Investors increasingly:
* Want to be more involved in the decisionmaking;
* Are more cost/value/tax sensitive;
* Are more interested in risk management, transparency, and liquidity;
* Are less interested in traditional bond/ equity portfolios; and
* Are increasingly interested in/open to more non-traditional investment approaches and solutions. Specifically, future investors will care about performance, but will view that performance through the lens of the impact it has on personal objectives and perceived social needs (i.e., more goals-based/outcomeoriented investing and less benchmarkrelative investing).
What this means for wealth managers and MFO professionals, who frequently define themselves first and foremost as investors, is that they need to recognize that what future clients will want from them are simplicity in their interactions and solutions to their financial problems and concerns-and that those solutions will extend well beyond investment solutions alone. Issues like wealth transfer, tax optimization, philanthropy, impact investing, family governance, intergenerational cooperation, personal counseling, and estate planning will be of critical importance.
How, then, should advisers and MFO professionals serving investors and families sharing these characteristics build portfolios and run their businesses? How can they help clients achieve evolving goals and objectives and/or take advantage of industry trends? Are there "best practices" among successful, profitable, and fast-growing advisers that can be identified, analyzed, and adopted? Another way to ask these questions is to say, "1) If an established MFO wanted to 'pivot' to take advantage of the current powerful trends in wealth management, what steps might it...