The Key to Digitalizing the Future Family Office


The Greatest Wealth Transfer is an event coined by financial experts where wealth is gradually transferred to younger generations over the coming years. According to Coldwell Banker,  American millennials will soon be the wealthiest generation by 2030, inheriting about $68 trillion from their parents. However, this transfer has complications in store for family offices, leaving them to figure out millennial’s investment interests and technological preferences. Apart from this, it also presents opportunities for family offices to change how they manage, invest, use, and share money.

Millennials Have Different Needs

The parents or older generations of UHNW families are still adjusting to the age of technology, but millennials are quick to adapt and master digitalization with technology at their fingertips. Because of this mastery, they have different needs that require change, especially when it comes to family offices.

Family offices have been successful with their traditional methods that lack technology because their older client-base was more than happy with traditional office management. However, things have taken a turn because the newer generation demands transparency and digitalization. Everything is now online, and they want to manage their money and investments online too.

The most significant reason for the slow pace in family offices is primarily due to a lack of control from the investor’s end, which stems from inadequate visibility of funds. It can be improved by providing investors digital access to their funds, sufficient centralized information, exposure to the sector, and liquidity in an investor-manager relationship. Family offices need to provide transparency to their clients and change the way they communicate with them. Rather than offering paper reports and traditional in-office communication, family offices can opt for digitized shared platforms, which will help clients relay information and extend internal communication.

Millennials and Sustainability-driven Investments 

Digital change isn’t the only thing that millennials are leading and supporting. They are also impacting the means and products invested in by HNWIs. The growing population continues to become more socially aware and are opting for ESG or impact investing to make a significant change in their society. They are dedicated to sustainability and are pushing towards becoming sustainable trendsetters in their investment strategies, unlike older generations.

For successful ESG investment, investors need to have plenty of time on their hands, proactive resources, and they also need to monitor their choices. Being completely invested in the industry will allow them to choose the correct strategies to apply to their portfolio.

Choosing to invest in something new or different comes with a risk. ESG investments are innovative and disruptive, so they change not just the market, but our entire lives. To succeed, investors need to understand the current market while keeping in mind sustainability initiatives and considering the project’s chances of success.

ESG investments bring with it an added challenge.  There are inadequate ways to measure results or the social impact of ESG investments. However, family offices need to create their investment strategies around millennial interests, and there is a way around this. With the help of AI, investors can measure high-quality ESG data and evaluate the true potential of ESG investing.

Family Offices Begin The Process of Adapting to Millennial Needs

Inheriting wealth over the generations may not always be easy, but it can go over smoothly and successfully if done correctly.  Technology has provided digital tools that let clients make and manage their investments from anywhere. Family offices can provide assistance, support, and investment strategies through digital platforms at any time, from anywhere in the world.

Over the last few months, people have had to get used to socializing and working remotely. People adapt and accept digital platforms and channels to communicate, work remotely, and make their decisions. Since ESG and technology go hand in hand, if one succeeds, the other will soon follow.  It is the ideal choice for the new generation to handle and manage their wealth by themselves.

Digitalization can revolutionize family offices and take them to a whole new level if they are willing to make the change and adapt.  As technology and newer generations continue to change, people will have to adjust and change with them, lest they are left behind.

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