“Interesting” is one word to describe the experience of witnessing the changes in Government policy and personnel since the Mini Budget. The last few weeks have certainly demonstrated the importance of long-term planning, particularly for investment strategies.
The importance of long-term investment strategies for Family Offices was discussed in the Credit Suisse 2022 Single Family Office report, which surveyed 116 Single Family Offices (SFOs) from 50 countries.
When asked how they expect their investment strategy to change with the next generation, 64% expect it to remain constant with the existing strategies and values put in place by the family. Conversely, only 28% expect it to change to align with the values and risk appetite of the next generation. Perhaps as a consequence of this long-term outlook, the report also uncovered the greatest challenge for SFOs as being the younger generation’s involvement in investment decisions and/or generational transition.
Could ESG be an answer to this challenge? The Credit Suisse report states “SFOs that involve the next generation in decision-making, are more likely to have invested in ESG” - yet only 45% of respondents have not allocated any funds to sustainable investments. Could the growth of sustainable investments (and wider ESG opportunities), ease the integration of the next generation into investment decisions? The report noted larger SFOs are investing more of their portfolio sustainably – will others follow this lead? The markets’ volatility is having an effect on this trend, perhaps delaying such decisions.
A long-term outlook is paramount for protecting family wealth. However, Family Offices need to be flexible and need to achieve the right balance of protecting their long-term investment strategies while being adaptable to changes in market conditions and invest in new opportunities.