Private wealth and family office trend forecasting is a complex and fascinating discipline that provokes interesting and often intense discussion. To identify trends, forecasters must differentiate between change catalysts and reactionary events, analyze the impact these will have on various industries, sectors and society at large, and interpret how to prepare.
In the age of acceleration and this increasingly volatile, uncertain, complex and ambiguous (VUCA) era, strategic foresight and futurism provide a rigorous, structured methodology that affords private wealth owners and family offices a better understanding of the possible, plausible and probable futures. This strengthens their capacity to be resilient, minimize risk and leverage opportunity.
The third annual Simple Family Office & Private Wealth trend review, led by foresight experts Nicolas Arroyo and Rune Toldam, explores the ten most influential trends on the private wealth space – from the increasing distrust of ‘big tech’ to the rise of political geographies. These are the key outtakes for 2021:
1. From 2020 onwards, everything is a political statement
In 2020 global political discussions came to the fore and armchair activism took hold under lockdown constraints. This is expected to continue in 2021.
In light of these unfolding events, all actions and statements, or lack thereof, are interpreted as political statements in their own right. Staying silent is no longer an option.
Private wealth owners, family offices and the businesses they invest in must understand the pressing need to tune into broader societal conversations and move from reactive compliance to proactive commitment. Doing so will better position them to win the hearts and minds of their target audiences.
2. Cause-washing becomes the new green-washing
The eco-friendly and sustainable movement and “green-washing” campaigns of years gone by are taking a back seat as cause-washing takes its place on the world’s stage. Global corporations are experiencing unprecedented calls to become actively involved in mitigating crises and are being measured on their responses.
By virtue of their institutional setup, individuals within family-owned or privately-owned businesses are uniquely positioned to humanize opinion sharing and public policy development, making meaningful contributions to critical debates. How this is done will make all the difference.
3. Distrust of technology and the tech-giants continues to grow
As dependency on technology increases daily, so too does awareness of the consequences – intended or otherwise. Cyber-security has been a growing concern for family offices even before the pandemic, but in 2020 cyber-attacks accelerated rapidly, with increasing numbers of family offices falling victim to targeted data breaches.
Tech platforms and tools will thus be under increasing scrutiny moving forward. Software providers in the private wealth space are presented with a unique opportunity to shape discussions on trust and technology and encourage others to bring the same level of rigor and integrity into the mainstream. Those who can provide privacy products that meet family offices’ security and protection needs will benefit from significant growth.
4. Privacy becomes the new “gold” in the face of data breaches
Privacy is fast becoming a defining element in our interactions with technology. Concerns over data protection, monitoring, and surveillance are forcing technology companies to redefine business models and place privacy at the core.
While the private wealth space has a history of caution regarding privacy, they can nonetheless take advantage by upgrading their tech stack to incorporate the latest solutions.
5. Investment in tech surges as the world goes digital
In the age of pandemic, digital is here to stay. Though big tech is coming under increased scrutiny, it is clear that business models of the future must have digital at the core.
From an impact and investment perspective, technology and digital are undeniably a fundamental part of the business landscape. For the private wealth sector, digital has to be both an investment strategy and operational setup moving forward.
6. The rise of locality changes the real-estate game
The pandemic has clarified the importance of locality as our local surroundings, businesses, and institutions experience renewed interest and focus.
While real estate has been traditionally viewed as purely a strategic asset class and means of wealth preservation, there are increasing demands for investors to play their part in boosting urban wellbeing post-pandemic. Planning for this as part of sustainable investment initiatives will form part of many portfolios in 2021 and beyond. At the same time, there is so much uncertainty in especially high street retail, office and hotel real estate that it will be interesting to see how this asset class finds renewed relevance.
7. Activism becomes mainstream through ESG and impact investing
ESG and family office impact investing have garnered significant traction in the investment world in recent years as next-generation wealth owners leveraged their capital to increase social and environmental returns. However, as conscious consumerism becomes the norm, corporate activism is no longer just a matter of altruism and good intention.
Notions of what success looks like are being radically transformed by the intensification of recent world events and the climate crisis. Businesses are now as incentivized by competitive gains as reputational ones. Opportunities will increase dramatically post-pandemic for privately-owned and family-owned companies who, with their focus on long-term time horizons, are uniquely positioned to lead the charge in building back better.
8. More dramatic changes to asset-class definitions and allocations
Traditionally asset-class definitions and allocations change annually within the private wealth sector. However, as attitudes towards real-estate shift and ESG investments garner heightened attention, allocations are experiencing rapid and dramatic changes as investors navigate opportunities and risks in the global economy.
Certain asset classes like real estate will be managed very differently in the future. With their longer-term strategic viewpoints, family offices should be at the forefront of exploring new use cases in a post-pandemic world.
9. Cultural values are leveraged to drive behavioral change
Perhaps for the first time in history, the global population has been impacted by a singular, shared event. Yet, reactions to the pandemic and behavioral compliance have differed across the globe, primarily driven by cultural values.
Family businesses that recognize the power of cultural values and can successfully operationalize cultural insights will successfully navigate these nuanced waters and leverage the many opportunities they present.
10. The rise of political geographies
The sun is setting on the utopian ideal of globalization as it becomes evident that shared prosperity is not a reality for all. As a new era dawns, renewed attention is being paid to not only global events but national and regional politics. Developing businesses that generate value globally and locally will play an integral role in sustaining a peaceful and productive society in the future.
For family offices and the private wealth sector, this presents an opportunity to foster connections with like-minded individuals and build global alliances – while still allowing for political diversity.
The effects of 2020’s various social, technological, political, and environmental events have profoundly shaped future trends. Yet, even in what has often seemed like chaos, there is opportunity for those who will seize it.
This article originally appeared on Forbes.
