How wealth management firms can prepare for turbulent times [Farnoush Farsiar]

Generational changes. Global mobility. Technological change. Farnoush Farsiar writes for EU Today that these are only a few key changes that will affect family offices and pose a serious threat to their structures of operation.

In a growing number, family-owned businesses cater to the young technologically-savvy, mobile generation. The economic crisis and the democratisation of trading using online platforms have made all clients, irrespective of age and interests, more interested in their own investment portfolios and want to gain more knowledge and be more involved, and have lost the desire to have discretionary portfolios that are managed by distance.

These changes, which come at a time of unparalleled economic and political instability will bring the demise of the family office model that is based on fees. If tries to keep its old ways of doing business, they will find it abandoned by those they meant to advise. They need to change and become more innovative in their approach to managing investments and provide a genuine benefit proposition to UHNWIs.

Although family offices can vary in size and their scope, they should prioritise flexibility over the need to be an expert in all areas. Customers will appreciate a smaller group of advisors that can quickly implementing new technologies and bringing on board external specialists as needed. Since the lines between family and private banking are blurred The best banks will have a smaller team of advisors that can swiftly adopt new technologies and work with external experts when needed. This allows the firm to offer an enhanced service to their clients.

The ability to use traditional, reputation-based, and network-based methods for deal sourcing will lead to the success. But, you may also make use of online methods to find deals and opportunities. Wealth managers can make use of deal sourcing websites to discover deals and opportunities. They’re much more convenient than the large, cumbersome banks which are trapped in large-firm bureaucracy. Dealmakers have access to and can evaluate many deals at once, which is a significant savings in time and resources.

Another service online that is altering the way family offices communicate with clients is Wealthica. This dashboard service automatically collects investments from multiple sources and puts clients in daily communication. It’s a far cry of the days where wealth managers provided occasional updates about the progress of their clients’ funds.

These tools are merely that: they allow wealth managers to increase their effectiveness and speed. Their investment strategy is what matters the most. is to combine the old and the new. That means that you should continue looking for bargains in real estate, however, you should also look into investments in other areas such as the science of climate change or food security. Impact investing has definitely ‘arrived” in the world of family office – UBS Global Family Office Report 2018, which revealed that a third of family offices were engaged in impact investing. The majority of them expect to be more involved in future. There are definitely challenges with this particular field, for instance difficulty in monitoring impact and executing due diligence, the coming generation of HNWIs and UHNWIs will anticipate family offices to be able to find and secure these types of investments. Plato Capital is a boutique bank that offers investment advice. It is based on the experience of its founders who have worked in big banks, family offices and the technology industry to provide entrepreneurial investment advice. Our clients can make maximum returns and manage the risk through our personal network.

Through blending with the new, while adjusting to the needs of the young generation, and preparing to be risk-averse with their own methods and structures, wealth managers of all kinds can remain relevant and thrive in challenging times.