In the evolving landscape of wealth management, the distinction between “old money” and “new money” family offices is becoming increasingly nuanced. While each brings unique strengths and challenges, multi-family offices (MFOs) are emerging as pivotal platforms that harmonize these differences, fostering collaboration and mutual growth..
Legacy and Tradition: The Old Money Perspective
Established over generations, old money family offices often possess:
- Vast Networks: Long-standing relationships with financial institutions, advisors, and industry leaders.
- Conservative Investment Approaches: A focus on wealth preservation through traditional assets.
- Institutional Memory: Deep-rooted governance structures and family values guiding decision-making.
However, this legacy can sometimes lead to inertia. A reluctance to divest from legacy assets or adapt to emerging sectors like AI, blockchain, and robotics may hinder growth. Additionally, entrenched relationships might resist change, potentially limiting exposure to innovative opportunities.
Innovation and Agility: The New Money Approach
New money family offices, often founded by first-generation wealth creators, are characterized by:
- Technological Proficiency: Embracing advanced reporting systems and digital platforms.
- Risk Appetite: Willingness to explore emerging markets and unconventional investments.
- Desire for Collaboration: Seeking alliances to access established networks and expertise.
While agile, new money offices may lack the institutional knowledge and established connections of their old money counterparts. This can lead to challenges in accessing exclusive deals or navigating complex regulatory environments.
Trends in Family Offices
Positive movement toward club deal, impact investing, and professionalizing family office management.
Multi-Family Offices: The Convergence Point
MFOs serve as integrative platforms where old and new money families can:
- Share Resources: Pooling expertise, networks, and capital to access diversified investment opportunities.
- Foster Mutual Learning: Old money imparts governance and legacy planning insights, while new money introduces technological innovation and fresh perspectives.
- Enhance Deal Flow: Collaborative environments increase exposure to a broader range of investment opportunities.
This symbiotic relationship not only bridges generational gaps but also cultivates a dynamic ecosystem conducive to sustainable wealth growth.
Supporting Insights
Research indicates a growing trend of younger generations influencing family office strategies, emphasizing the importance of ESG considerations and digital assets. A study by Ocorian, a service provider to family offices, found that 87% of family offices report increased involvement from next-generation members in investment strategies, with 84% focusing more on ESG factors. (Ocorian)
Furthermore, Canadian Family Offices, a media and research platform, highlights that new money families can benefit from the governance and wealth stewardship practices honed by old money families, suggesting a valuable exchange of knowledge and experience. (Canadian Family Offices).
Conclusion: Embracing Collaborative Evolution
The convergence of old and new money within MFOs represents a progressive shift in wealth management. By leveraging each other’s strengths, these families can navigate the complexities of modern finance more effectively. MFOs not only facilitate this collaboration but also set the stage for a more integrated and resilient wealth management paradigm.
About GLOFOS. The Global Family Office Syndicate (GLOFOS) is a non-profit organization that brings together multi-family and family offices around the world to form an alliance of collaboration and influence. The Member Firms collaborate on deal flow and share professional resources such as offices, local professional service providers, and global contacts in banking, trade financing, resources, commodities, and other.
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