As we settle into 2024, this briefing identifies the key trends which are likely to impact wealthy families and those of us who work with them, in the coming year.
These trends will affect how the world views our clients and how our clients view the world. I have also (tentatively) made suggestions in this briefing as to how we as professionals can best respond to these trends in the interests both of our clients and our own organisations.
1. The politics of change
There is no doubt that 2024 will bring significant political changes globally.
There will be more than 70 elections in countries across the world, covering half the planet’s population.
Political opinion is polarised like never before. The role of public service broadcasting and mainstream media is being replaced by social media and partisan news channels. As voters’ views become increasingly entrenched, two things are happening: elections are becoming increasingly close but also the centre ground is falling away. Consequently, the results of elections are becoming increasingly unpredictable but critical. The decision of a few thousand voters in a handful of counties in a handful of swing states could determine whether Biden or Trump wins the next US election. Six months ahead of the EU elections, polls predict strong results for the two most right-leaning groups in the European Parliament.
All of this means our clients will need to respond to changes in mood in their home countries and to far-reaching new legislation. In the UK, non-domiciliaries (who currently enjoy a privileged tax status) are readying themselves for the end of the non-domicile regime if, as the polls predict, the Labour party wins a general election later this year.
2. Bad actors, very bad outcomes
Alongside all of this political uncertainty is an increasingly volatile geopolitical situation. 2022 brought the invasion of Ukraine, 2023 brought tumult in the Middle East. But, in a world in which the old (western) powers are waning and new alliances are being drawn around the world, it is all too likely that geopolitical “bad actors” will be responsible for further surprises and shocks in the coming year.
We all have sufficient perspective to know that the impact of these shocks on the world’s wealthiest families cannot be the world’s greatest concern. But we nevertheless owe a duty to the clients we work with, and to the organisations we are part of, to expect the unexpected.
3. Big government, big ideas
There has been a sea change this century in the perception of the role of government.
When the world economy was on the brink of collapse in 2007, governments stepped in to save it. When Covid-19 struck in 2020, governments stepped in to protect both the health and economic welfare of its citizens. And, when energy prices spiked in 2022 and 2023, governments around the world spent billions on financial support packages. In the US, the Biden administration has intervened in the economy in a way not seen since the 1930s. In the UK, a right-wing government has overseen the government’s level of debt exceeding annual national income for the first time since 1971.
So, tax rates will remain high. This obviously has immediate implications for wealthy individuals and families as governments seek to fill fiscal gaps. But will the implications be wider still?
Many clients have been embracing philanthropy for many years. But we are starting to see a shift in attitudes to tax itself. Clients who once invariably saw taxes as something to be avoided are starting to see taxes as something to be accepted with good grace and they are occasionally (but increasingly) even seeing taxes as something to be positively embraced.
Wealthy individuals who think like that are certainly becoming more outspoken. In the US and UK, groups such as “Patriotic Millionaires” and “Millionaires for Humanity” are publicly demanding higher taxes on the rich, and they are starting to influence the prevailing mood. Last year, the Patriotic Millionaires urged leaders at the Davos conference to tackle extreme wealth and tax the ultra-rich. It is perhaps no coincidence that the theme for Davos this year is “rebuilding trust”.
4. The Great Transfer
Connected with these changes in attitudes is the “Great Wealth Transfer”, the passing on of assets from the current owners of wealth (baby boomers and Gen X) to the next generations. 2024 will see an acceleration in this trend.
A report by UBS indicated that, for the first year ever, in 2023 billionaires amassed more wealth through succession than wealth creation. Research has indicated that millennials will hold five times as much wealth by 2030 as they do today, but significant wealth will also pass to Gen Z.
All of this requires careful planning for wealthy families, of course. More to the point, however, it also signals a change in mindset. Studies indicate that more than half of the 53 new inherited billionaires this year are breaking away from their family businesses in order to pursue other career ambitions.
With the succession of assets and power to the next generations, attitudes to wealth itself will inevitably change too. Galvanised by the new “science of happiness” (which is now taught in Ivy League universities), the next generation are taking a more holistic approach to the role the accumulation of wealth plays in their lives.
The Great Transfer is also happening inside our offices. Millennials are taking up senior management positions in our organisations and bringing their own values with them. If we are to engage effectively with the next generation of clients and employees, that can only be a good thing.
5. Not just New Money but Neurodiverse money
With the most successful wealth creators often having made their money in technology, we are seeing a new type of hyper-intelligent, hyper-ambitious and hyper-successful wealth creators.
These creators of wealth are increasingly diverse in terms of gender and race, but they are also increasingly neurodiverse. The world’s richest person, Elon Musk, has been very public about having Aspergers and has been quick to link the syndrome to his success (and his leadership style). “I reinvented electric cars, and I’m sending people to Mars in a rocket ship. Did you think I was also going to be a chill, normal dude?”
If we are going to win, keep and (most importantly) do our best for these clients, we will need to accept they will not want us to provide our advice in the same way we have in the past. We are already seeing the pressure for quick verbal or text exchanges to replace long memos of advice.
And, as with the changing of the generations, if we are to best understand this new type of client, it will be increasingly important for us to make room in our workforce for neurodivergent colleagues.
6. Artificial Intelligence and Emotional Intelligence
You do not need me to tell you that the most significant disruptor over the next few years will be Artificial Intelligence.
Studies have indicated that the professional services sector is particularly vulnerable to the automation of work. We need to embrace AI or risk obsolescence. Exactly how we should go about doing that, and what impact it will have on the structure of our workforce, is yet to be seen.
What is clear is that we can best prepare and protect ourselves by honing our most human qualities. In a world in which the answers to our client’s most technical questions will increasingly be accessible to all, what will make us stand out is our ability to identify the right questions to ask in the first place. We can only do this if we take a collaborative approach (involving other experts inside our organisations and across the wider industry) and if we devote our imaginative, intuitive and emotional skills to understanding our clients’ needs. In the past, an ability to be collaborative and emotionally intelligent has distinguished the best private wealth professionals from everybody else. In the near future, we simply will not have careers if we do not display these qualities.
7. The Environment
As the impact of climate change becomes increasingly apparent and serious, protecting the planet will play an ever-larger part in our daily lives.
The increasing controversy around private jets means that clients who are in the public eye would, in 2024, be advised to think twice before using them.
But the impact will surely be felt on the working lives of advisers too.
The private client industry is international and sociable, so travel and conferences are at heart of how we develop relationships and business. The Covid-19 period showed us that virtual meetings have their place, but that nothing beats face to face contact. But, as social and corporate attitudes change, will 2024 be the first year in which a serious conversation begins about how necessary and appropriate such travel is?