What's In Store for Family Offices in 2025
Avestix recently released The State of Play for Family Offices, an eBook that looks at both the forthcoming “great wealth transfer” and why family offices might be best suited to provide post-Boomer investors — who stand to inherit an unprecedented amount of wealth — with financial guidance and advice.
We sat down with Avestix CEO Susan Lindeque, to get her thoughts on the coming transfer of wealth and what it means to investors and financial advisors.
Q: What is the "Great Wealth Transfer," and why is it considered such a pivotal moment for investors and the financial services industry?
Worldwide, baby boomers are retiring and passing on cash, property, investments and other assets that will be worth as much as $90 trillion, making their heirs the richest in history.
This isn’t news; banks, brokerage firms and other financial services organizations have been gearing up to receive and manage a portion of this “great wealth transfer” for years. These institutions recognize how monumental this transition will be and those firms that can convince consumers to allow them to help co-manage the assets will be the most successful.
Q: How do you foresee family offices playing a more significant role in the wealth transfer, especially compared to traditional financial institutions like banks and investment firms?
According to The New York Times, the wealthiest 10 percent of American households will benefit the most from the great wealth transfer. This is understandable because wealth begets wealth.
Because family offices cater to the ultra wealthy, it’s only natural that they will play a significant role in helping to manage post-Boomer investments.
Q: What are the key advantages of family offices in managing the assets and savings that will be passed down from Baby Boomers to younger generations?
Many traditional banks and investment companies adhere to legacy business models and are tied to legacy investments. These legacy models made sense for Baby Boomers.
But, over the last decade, the face of investing has changed. Newer generations with different values and priorities have emerged, and those values and priorities have shaped how next-gen investors want to manage their assets.
Q: In The State of Play for Family Offices, you mention that post-Boomer investors have specific needs when it comes to managing their inherited wealth. What are some of the most significant demands or preferences that family offices must cater to?
Many large banks and financial services organizations are overly bureaucratic and rely on outdated technologies and business models that lag behind the modern preferences and priorities of the new investor class.
Most family offices, on the other hand, are lean in comparison, meaning they can adapt to changing values and priorities. Consider impact investing: Surveys show that investing for impact — the greater good, if you will — is highly important to Gen X, Millennial, Gen Y and Gen Alpha investors. It’s no accident that in recent years, impact investing has accounted for a growing allocation of family office portfolios.
Q: What do family offices need to do to stand out in their industry?
Our research found that many family offices could benefit by placing a greater emphasis on cybersecurity, which appears to be a gap for many firms. We also advise family offices to include more women in their leadership teams, although this appears to be evolving. New data shows that 29 percent of family offices report having women in leadership positions, which may ultimately appeal to younger investors.
Q: Can you provide some insights into what current family offices are doing right (or wrong) as they prepare for the incoming wealth transfer?
One thing family offices are doing well is embracing alternative investments and cutting-edge technology. Where many Boomers look at opportunities in artificial intelligence, blockchain, cryptocurrencies and decentralized finance with some skepticism, post-Boomer investors — who grew up with these — take a different view. They look at alternative investments and see opportunities for growth and innovation. Plus, they recognize that these technologies are already reshaping today’s financial systems.
It’s worth noting that 44 percent of family offices already invest in alternative assets like crypto and blockchain projects, or they invest in VCs that invest in startups using these technologies. This is one more way family offices are bridging generational investing gaps.
Q: How are younger generations—such as Gen X, Millennials, Gen Y, and Gen Alpha — different in terms of their investment preferences compared to Baby Boomers?
As mentioned, younger investors are more interested than their parents in supporting impact investing. They are also eager to support companies using AI, quantum computing and other state-of-the-art technologies. They see the efficiencies that these technologies offer, and so do family offices. As we discuss in the eBook, in recent years, family offices have become major sources of investment capital for tech-focused startups — especially those using AI.
Q: What steps can accredited investors or financial advisors take today to prepare for the changes outlined in your book and make the most of the great wealth transfer?
As we explain in the eBook, almost half of millionaires believe their investment strategy could benefit from enhancements, and six-in-10 high-net-worth individuals prefer to work with a financial advisor. That tells us that even savvy, accredited investors want guidance, meaning there is a big opportunity out there.
That’s one reason we launched AVESTIX INTELL. It serves as a community, bringing together founders, funders, entrepreneurs, innovators, family office executives and financial advisors to work together, collaborate and share ideas to better serve their clients and investors.
Next Steps
The State of Play for Family Offices makes the case that agile, forward-thinking family offices — rather than big banks and investment companies — are the ideal partners to work with next-gen investors to help manage their assets.
The new eBook provides readers with:
Insights into the coming great wealth transfer
An overview of today’s family office industry
A look at what post-Boomer investors want in investment partners
Steps family offices can take to differentiate their services
All investments involve risk and some investments and investment sectors discussed may not be suitable for all investors. Please consult your financial advisor before making any investment decisions.