Ideas about money and wealth change from generation to generation – family office services need to respond.
What grandfather considered a solid investment is boring to his grandchildren today. Novum Partners Geneva is observing a shift in the priorities of different generations. Whereas security used to be the top priority, sustainability and social responsibility are now gaining in importance.
Multifamily office Novum Partners SA, Geneva, is seeing a marked shift in the asset strategies of its clients. While the older generation still relies on tried-and-tested investment portfolios, their children and grandchildren have a completely different way of thinking about money. Sustainability, technology investments and social impact are increasingly becoming the focus. The Geneva-based company has responded by adapting its advisory approach accordingly. With over 5 billion Swiss francs under management, it has sufficient experience to develop cross-generational strategies.
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The generation gap is becoming a generational divide
It used to be simple. Dad bought shares. Son took over the shares. The grandson inherited the shares. End of story. Today? It’s more complicated.
Baby boomers still rely on what has proven itself: blue chips, government bonds, real estate. Boring, but functional. Their children – Generation X – are more experimental. Private equity here, hedge funds there.
Things get really exciting with the millennials. They tick completely differently. Make money? Yes, sure. But please, with a clear conscience.
When morality meets returns
A typical scenario at Novum Partners, formerly known as Novum Capital Partners SA: The 75-year-old patriarch wants to invest in an oil company. Solid dividends, proven business model. His 25-year-old granddaughter is horrified. ‘Grandpa, that’s destroying the planet!’
Who is right? Both, in a way. The grandfather has different life experience. For him, security means having money at the end of the month. His granddaughter thinks further ahead. For her, it is important that the planet is still there at the end of the world.
Discussions like this lead to interesting asset allocation strategy challenges. How do you invest when three generations have completely different ideas?
Digital natives vs. analogue professionals
The younger generations have grown up with the internet. For them, it is natural to monitor investments via an app. Real-time prices, push notifications, social trading. Always connected.
Their grandparents, on the other hand, still read newspapers. On paper. Quarterly reports arrive by post. Two different worlds.
The multifamily office has to serve both worlds. Digital dashboards for the young, printed reports for the old. More work? Definitely. But necessary.
Sustainability: from niche to mainstream
ESG was long a fringe issue. Something for do-gooders and green funds. Today, it is mainstream. At least among younger people.
When impact becomes more important than income
The classic question used to be: ‘What’s in it for me?’ Today, young heirs also ask: ‘What does it achieve?’ A fundamental difference.
This is clearly evident in the family office services offered by Novum Partners SA, Geneva. Young family members want to know which companies are being invested in. They read sustainability reports. They question business models.
A pharmaceutical company that manufactures life-saving drugs? Great. The same company that also treats opioid addicts? Problematic.
Such complexity leads to new evaluation criteria. It’s not just return on investment that counts. It’s also return on planet and return on society.
Learning to see through greenwashing
Many providers have understood this and are exploiting it for marketing purposes. A fund sticks ‘ESG’ on the label and hopes for higher inflows. Inside? Business as usual.
Young investors are quick to learn to see through such tricks. They have a closer look. Which companies are really in the portfolio? How are sustainability criteria checked?
The Geneva-based company has therefore built up its own research capabilities. Due diligence for ESG funds is just as important today as it is for traditional investments.
Technology affinity is changing investment portfolios
Generation Z grew up with smartphones. For them, technology is not the future, but the present. This is reflected in their investment preferences.
From blue chips to unicorns
While grandpa is still buying IBM shares, his grandson prefers to invest in the next big thing. Artificial intelligence, blockchain, quantum computing. Buzzwords that make the older generation suspicious.
Sure, the risk is higher. Many start-ups fail. But the few that take off can generate astronomical returns. Tesla was once a nobody. So was Amazon.
At Novum Partners Geneva, this willingness to take risks is incorporated into the portfolio design. Not as the main component, but as an addition. Satellite investments in emerging technologies can spice up the overall portfolio.
Alternative investments for different generations
Private equity, hedge funds, direct investments. Alternative investments are nothing new. But every generation has different preferences.
Infrastructure vs. innovation
The older generation likes infrastructure investments. Motorways, power grids, waterworks. Boring, but profitable. Long-term cash flows, calculable risks.
The younger generation prefers innovative approaches.
Clean energy, e-mobility, biotechnology. Higher risks, but also higher potential returns. And the good feeling of improving the world.
The optimal solution? A mix of both approaches. Traditional infrastructure for stability. Innovation investments for growth.
Credit consulting for different stages of life
Different generations also have different financing needs. What is optimal for a 30-year-old is not necessarily right for a 70-year-old.
Leverage: friend or foe?
Younger generations are less afraid of debt. They see leverage as a tool for optimising returns. Higher risk, higher reward.
Older generations are more cautious. They have experienced inflation and recessions. For them, debt often means sleepless nights.
The Geneva-based company takes these different risk profiles into account. Aggressive financing structures for risk-takers. Conservative approaches for safety-first types.
New Yacht Consultancy Services in Generational Change
Generational differences are also evident in luxury. What used to be a status symbol is now critically questioned.
From show-off to purpose
The older generation buys yachts as status symbols. Bigger, faster, more expensive. Showing off was socially acceptable.
Young wealthy individuals are more reserved. An 80-metre yacht? Excessive. They prefer something smaller, but with a clear conscience.
Novum Partners is also working on these aspects with expert Benedetta Iovane. Sustainable yachting is becoming an issue. Hybrid drives, environmentally friendly materials, fair working conditions in shipyards.
Chartering instead of owning
The sharing economy does not stop at luxury goods. Why own a yacht if you only use it four weeks a year? Chartering is often more sensible.
This is also changing financing models. Instead of full financing for private ownership, complex chartering structures with several parties are emerging.
Understanding the family as a system
The most difficult thing about family office services? Not the investments. It’s the family.
Governance for generations
How does a family make decisions when four generations want to have a say? Democratically? Autocratically? Anarchically?
Novum Partners SA Geneva has structured approaches for this:
- Family Council for strategic decisions
- Investment Committee for portfolio issues
- Next Generation Board for promoting young talent
- External Advisory for neutral perspectives
Sounds bureaucratic? Sometimes it is. But it works better than family disputes.
Recognising potential conflicts
Generational conflicts are inevitable. Young people want risk, older people want security. Young people think globally, older people think locally. Young people are digital, older people are analogue.
The trick is to channel these differences. Not eliminate them – that’s impossible anyway. But use them productively.
Sometimes the young are right with their crazy ideas.
Sometimes the old are right to be cautious. Mostly, a mix is best.
Managing multi-generational wealth has become complex. In the past, it was enough to grow the money. Today, there is much more at stake. Values, purpose, legacy. Not just financial returns, but emotional returns too.
The multifamily office is becoming a family therapist with financial expertise. A strange combination, but it works. Most of the time, anyway.
