Family office: the next generation

How do millennials invest? Oscar Bartolomei, expert in private banking certifications (SAQ), explains the investment trends of the youngest
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From a Family office point of view, most of our clients are what we call “millennial” clients. On a long term perspective, we know the challenge will be to keep the next generation as clients. The so-called generation Z, born from the mid-1990s to mid-2000s. Based on the familiar use they have of the internet, they feel very comfortable with technology on their daily lives. Typically, they don’t want to go to the bank and want a smartphone application for banking, mortgages and asset investments.

Family Office

A true revolution for a traditional Family office client approach based on a personal contact. Working on the UHNW niche, this change of paradigm may be complicated as we really need to see the family in person. Will the new generation accept to deal with their parents’ Family office?

Globally speaking, we help to keep families’ wealth

Our role is to convince the young generation that client contact is mandatory. Simply because a smartphone application is unable to hold all the sophisticated issues of an entire family wealth: banking, real estate, family governance, inheritance, philanthropy, art. Today, more than ever, our added value is the personal contact. Far away from a robot advisor…as we have to remain traditional, even more, “classic” in our approach.

For instance, when the assets management is delegated to a bank, we also prefer the bank to have real assets managers. It is very difficult to talk to a machine…Then we perfectly understand that the asset manager is helped by modern technology. But not to interact with us. We are never going to delegate the client contact to a machine or to an application.

I have seen there is a kind of digital Family office

There are a few companies in Switzerland where they sent the client a virtual Family office you can download to your PC and your smartphone. So the client goes on his smartphone and the data shows his entire real estate valuation, for instance. From my point of view, this is not that accurate, at least with the virtual Family office business models I have seen. Coming back to the virtual real estate valuation example, the valuation is the end of a long process between the family and his Family office. Instead of isolated figures alone.

The main part of my job is to be with a family and reviewing their whole wealth. In terms of digitisation, for the time being, it’s totally impossible. Let’s also add a Family office is surrounded by some very specific expertise. Human expertise. We work with real people with real experience: lawyers, bankers, accountants, tax experts… and so on. It is extremely important we also preserve with all these players a one-to-one personal communication. Of course, as previously mentioned, they are totally free to use all the modern technology they need within their activity. But it is a technology to assist, not to replace.

The “one click” generation

I noticed the young generation is much more, from a family investment perspective, short term oriented than their parents. Normal…it is the “one click” generation. It’s difficult to make them understand that it takes time to preserve their family wealth and to generate profits. The main duty for a Family office is to implement a long term wealth preservation view. Not a day to day trading one. Digitisation is not helping because everything seems much faster and easier than a few years ago. Results are immediately needed. Sometimes the new generation believes they can manage family wealth issues only by themselves. No need of experts, just with a smartphone application. But that is not possible. No application is powerful enough to replace years of experience on the real world.

Maybe the most difficult part of my job is to preserve the family wealth not directly for the children, but for the children of the children. This transgenerational aspect is the DNA of any serious Family office. Not easy to explain to the young generation. In a world of instantaneity, talking about transgenerational wealth management is exactly the opposite.

I do believe Family offices will play a key role in the next coming years. Family wealth issues are more and more complicated. Sophisticated. They require a specific expertise only human beings have. Maybe one day a robot Family office advisor will do my job. But this day, machines will have replaced man on earth.

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Family office: the next generation