Family Barometer 2023

Family wealth-related topics beyond investments and collaboration with advisors is a topic as old as time. Yet the turmoil of the past three years explains why it’s the main topic clients want to discuss once again this year. Over the past few decades, wealthy families have spread across the globe as they go to university, work and marry in different countries, making their affairs naturally complex. But then Covid-19 turned the world upside down in 2020, heightening that complexity. Since then, geopolitics have made constant challenges a normal state of affairs. As a result, wealthy families need more specialist advice, not only to cater for complexity, but also to manage inherent risks raised by exposure to a multitude of legislations. In our experience, they are turning to wealth managers with an international presence. Trust is key, however, whether that’s trust in a particular individual or an organisation.

Taxes and regulation is the second highest ranked topic, rising from fourth in 2022. This is a key area of expertise, especially following the trend towards greater transparency in tax affairs that has occurred across the world over the past 10 years, and has been accompanied by increased regulation. Ongoing political instability and pressure on public-sector finances mean that changes to tax and regulation are likely to continue. Yet these adjustments require an understanding of fine details in each country, making local specialist expertise essential.

Family governance is a perennial topic that has become more important as wealthy families have expanded to span several generations. After one generation has expended a tremendous effort accumulating wealth, good governance helps to preserve its legacy through the generations. Families discuss governance issues – spanning the family’s constitution, shared values, education, succession and even purpose – often using periodic assemblies to ensure open communication. Good communication translates into good governance. Achieving this takes planning and organisation, though, especially when cultural and generation gaps in families are wider than before.

Political stability is the fourth highest ranked topic for discussion this year on a global basis, a little higher than its position of fifth in 2022. Notably, it ranks highest in the Americas, where it’s second to taxes and regulations, and in Asia, where it ranks third. The wealthy families in these regions appear concerned about political instability within countries, typified by political polarisation and rising nationalism. The results show that wealthy families are taking political stability and geopolitics into account far more than before, not just in their investment decisions but also in how they structure their overall wealth. For many families, this means refraining from investing in places where they believe the geopolitical situation might lead to added complexity or, at worst, a loss of assets.

Philanthropy retains its place as the fifth most discussed topic, as it was in 2022. Many wealthy families view philanthropy as an important way to give back to society, creating a positive impact and providing the family members with a purpose that binds them and brings their values to life. Discussing how philanthropy aligns with family values can foster cohesion between an extended international family’s different branches and generations. What’s more, involving the next generation of a family at a young age can instil pride, responsibility and identification with the family values. This ongoing dialogue also fosters a long-term commitment to specific philanthropic activities.