Wealth Strategies for Intergenerational Success

The reappearance of investment risk at the top of families’ agendas has quite rightly prompted a renewed focus on financial capital.

After more than a decade of generally benign markets and buoyant returns, the economic landscape has undergone a series of tectonic shifts. Are strategies which worked for the last ten years going to work for the next ten? Which asset classes stand to benefit from the new risk environment - and which will suffer? And should families pull back from incorporating non-financial values into their wealth management strategies - or does the resurgence of social, political and environmental risks mean that they should be accelerating the most momentous investment management trend of the past decade?

Survey Highlights

Despite volatility in financial markets, respondents’ views on asset allocation have remained stable, with public and private equities and real estate the most popular asset classes.
The number of respondents adopting values - driven investing in response to concerns about the changing climate, social inequality and poor corporate governance continues to grow.
Less than half of respondents have an agreed set of non-financial values, however - making implementing a more proactive values-based approach a challenge.

The Stonehage Fleming View

A patient approach that complements exposure to mainstream public markets with private market instruments makes sense across the investment cycle.
Defining and agreeing families’ non-financial values is an essential first step in adopting values-based investing.
Aligning portfolios with those values is then achievable: 95% of Stonehage Fleming’s third party managers, for example, are signatories to the UN Principles for Responsible Investment (UNPRI)

In reality, investors are subject to numerous systematic psychological biases such as loss aversion and overconfidence.