Though President-elect Trump doesn’t take office until Jan. 20, his impact is already being felt by family offices and professionals, who have been busy preparing for the incoming administration’s likely policies affecting taxes, their portfolio and the greater economy.
Trump has selected several prominent financiers to join his administration. They include Scott Bessent, whose New York-based Key Square investment firm advises family offices and foundations — including the Soros family, with $11 billion in assets — and who was recently tapped as Trump’s nominee for treasury secretary.
Many family offices are already adjusting their investing and estate planning strategies in the wake of the election. Though a majority of investors with at least $1 million of investable assets preferred Kamala Harris to Trump in a survey last fall, they gave Trump a higher grade on the economy.
Investing
Caspar Rock, the chief investment officer of London-based Schroders Wealth Management, said his firm is well-positioned for the new administration, having snapped up U.S. equities and reduced its exposure to fixed income. “Given the move in markets, we remain vigilant but for the time being retain our pro-risk stance,” Rock said. [The] “main losers are those countries and markets that are perceived to be on the receiving end of Trump’s proposed tariffs, with the most obvious being Mexican and Chinese shares.”
In a note to its clients, the WE Family Offices — which serves more than 80 families in the U.S., Latin America and Europe — predicted a boost in economic activity that would benefit infrastructure and commodities. Though Trump has vowed to boost oil and gas production, the firm said, the outlook for energy equities is mixed because “more supply is negative for oil prices, but higher demand is supportive.” The WE Family Offices also expects private equity to “benefit from a regulatory regime that supports increased M&A” and for hedge funds to get a lift out of “higher volatility.”
ESG investors might face some headwinds, said Jason Britton, founder and CIO of Isle of Palms, South Carolina-based Reflection Asset Management, which specializes in thematic investing for high-net-worth (HNW) families and foundations. “Half of my clients were excited about a looser regulatory environment, lower tax rates and a pro-business environment; and the other half were literally besides themselves, worried that we’re going to enter a nuclear conflict with Iran.”
Britton expects the term ESG — as environmental, social and governance principles are commonly known — to wither away “like the Hula-Hoop, Pop Rocks and Beanie Babies, since it’s been so vilified and politicized.” But that doesn’t mean the approach will go away, with continued interest in sustainable investing and voluntary disclosure of ESG metrics by companies.
Britton also expects the Securities and Exchange Commission to slow its enforcement action, Trump’s team to pare down President Biden’s Inflation Reduction Act and its massive incentives in clean-energy startups, and the oil and gas industry to profit with renewed leases and drilling on protected lands.
Taxes
The Trump administration’s tax policies are widely expected to benefit family offices and HNW investors with an almost-certain extension of the 2017 Trump tax cuts — which lowered top income tax rates to 37% from 39.6%; doubled the estate tax exemption, which currently stands at $13 million; and reduced corporate taxes to 21% from 35%.
“While we don’t have a crystal ball, we do believe that the tax environment moving forward will be more favorable for family offices and ultra-high-net worth clients,” said Keith Bloomfield, founder and CEO of Palm Beach, Florida-based FFT Wealth Management. But he cautions against making short-term moves, emphasizing that “it’s also important for family offices and the ultra-wealthy to remember that tax, trade and regulatory policy do not drive the economy. Businesses and consumers adapt to each of these changes, which will ultimately impact growth.”
Even with the extension of the estate tax exemption, wealth advisers recommend using it up by the end of the year. “It’s better to transfer the assets and to do gifting and planning than not if you’re in a position to do so,” said Theresa Balducci, counsel at Herrick, Feinstein’s private clients department. “The exemption is so high right now that if you don’t use it, you’re really leaving a lot on the table.”
“Once that planning takes place, no matter what the tax consequence is, you’re at least getting all that appreciation out of your estate.”
The economy
While Trump’s agenda — including tax cuts, deregulation and a $1.5 trillion infrastructure plan — is expected to spark market rallies and lots of short-term growth in the first 100 days of his presidency, some risks have appeared on the horizon, said Nigel Green, CEO of the deVere Group, a global financial advisory firm. The broader economic environment will be affected by the potential for rising inflation; protectionist tariffs affecting sectors such as technology, retail and automobiles; and heightened market volatility, Green said.
“The combination of rising inflation and the cost of capital could lead to a period of market volatility," he said, "requiring investors to adopt more cautious strategies in the latter half of 2025.”