What’s on the minds of ultra high net worth clients, families with family offices? For answers, we spoke with Jennifer Gabrielli, head of the Ultra High Net Worth Solutions Group and head of Unified Global Banking for UBS Americas. She leads a team of professionals who deliver specialized solutions across a variety of disciplines, including trust and estate planning, family office design and governance, and family philanthropy. The team works with multigenerational families and family office clients in areas that go beyond investment management to help them create purposeful legacies and ensure their families thrive for generations to come.
She shared perspectives on top-of-mind issues for the families her group serves.
Crain Currency: UBS recently held its annual summit for family offices. What topics were top of mind for attendees?
Jennifer Gabrielli: Politics was very much front and center, with just a few days to the US presidential election, but even broader than that. One family office professional listed three key concerns as they look ahead, and surprisingly, the top two were not related directly to the investment portfolio. Both were related to geopolitics.
They are concerned about the implications of America and Europe becoming more populist, as well as the direction of US-China relations.
They are also focused on artificial intelligence (AI). This is a theme that comes up again and again in our research, as well as in conversations with our clients. From curiosity around the broad-ranging impacts of AI on the global economy to the more direct impact on their operating companies in terms of competition, productivity, impact on supply chains and even composition of the workforce. “They are also interested in the investment opportunity that AI creates, as companies acting as first movers to harness the power of these new technologies are hoping to capitalize on outsized growth.”
Finally, they continue to be focused on succession planning for both their enterprises and their families, noting that a key priority for families is creating a transition plan. When surveying billionaire clients for our annual survey, we asked about their primary reasons for setting up a family office. Of those surveyed, 57% said it was to preserve their wealth, while 52% said it was to help manage complexity. It is interesting to compare these findings to our Global Family Office report, where only 47% of family offices have a wealth succession plan in place, so there is work to be done, and that’s where our team comes in.
Crain Currency: Succession planning can be a sensitive subject. How do UBS advisors and your team approach this issue?
Jennifer Gabrielli: Preparedness is key in succession planning. Nearly $84 trillion will be in transition over the next 20 years, according to our 2024 Global Wealth Report. Since only about half of closely held businesses have a succession plan in place, this is an especially important and timely issue — one that goes beyond running numbers and crafting the right legal documents, although those are essential, too. Working toward true alignment among family members is critical and, yes, delicate. To accomplish that, we often help facilitate the meaningful conversations that families must have first. These conversations can be uncomfortable, but we truly believe they are necessary for successful transitions. Our team works to help families identify and tackle the underlying concerns, anxieties, questions and priorities of each family member and weave these topics into the dialogue.
One of our clients, for instance, kept assuring his advisor that everything was fine and that he was developing a succession plan involving his children. The more we talked, however, he gradually revealed that his daughters had different outcomes in mind; they don’t get along and don’t even talk to each other. That conflict caused great pain for our client and made a good succession plan impossible to create and implement. He needed help finding common ground with his children and a path forward that the entire family could embrace and feel confident about.
Fortunately for him, UBS has invested in providing advisors with the resources they need to address challenges that go beyond investments. Our team includes a deep bench of professionals who serve as extensions of our advisor teams, providing expertise ranging from trust and estate and tax planning to family office design and governance, philanthropy, family advisory, art advisory and more. We have experts in family dynamics, for example, who can run family meetings and develop ways to address challenges like the one I touched on. Our objective is to support our client holistically with a team of professionals, and that includes helping clients with aging parents, teaching teenagers about safe social media practices and even creating coloring books for 4- and 5-year-olds to help them learn about money.
Crain Currency: Are your clients concerned about security?
Jennifer Gabrielli: They are, and their concerns take several forms. They worry about the physical safety of their children and grandchildren, as well as information security and confidentiality. Our research has found that only about 40% of families have some sort of cyber controls in place. This is somewhat lower than we expected, and we actively encourage families to protect themselves online. Since we don’t tackle cybersecurity directly, we have vetted cybersecurity experts who can help families develop customized plans. And that leads to the issue of insourcing and outsourcing expertise, which is a significant issue for family offices.
Crain Currency: How do family offices decide whether to insource or outsource their needs?
Jennifer Gabrielli: Whether a family office develops in-house expertise or turns to outside experts depends on its mandate, its goals and the number of generations it is designed to serve. There is no one right answer, since every family office is somewhat unique. But as the industry continues to grow and evolve, providers have emerged who can tackle some of the common needs that all family offices have. Managing a family office involves accounting, performance reporting, information security, tech support and other utility-like functions that can be performed more efficiently on an outsourced basis. What’s more, using outside resources serves as a kind of R&D function for a family office, offering a way to tap into market intelligence and the best practices of others in the business. So, in many ways, outsourcing is a good addition to the capabilities resident in the family office.
Crain Currency: Looking ahead, what are the major issues family offices and ultra high net worth families will face over the next five years?
Jennifer Gabrielli: We see four major themes. First, families are becoming more complex. People are living longer, which means greater attention will be paid to older family members and succession planning. Families also are becoming more dispersed, living all over the country and the world. Family offices and ultra high net worth families are shifting to more complex structures to equip themselves to better handle these global, multigenerational shifts.
A second theme is AI, as we discussed. AI will touch everything and be transformative in ways that are both exciting and disarming. Everyone is trying to understand the many implications and adapt to a new environment that both harnesses the potential and manages the risks.
The two other themes involve investing. We see families acting more like private equity general partners than allocators and leaning in where they have expertise. They don’t just want to invest capital; they want to bring their networks and contacts to bear to have a positive impact on their investments.
We also see a blurring of the lines between investing and philanthropy, in that investors want their values to influence both, so we’ll see more of the power of the purse in action. We all are aware of the great wealth transfer, but there is also the linear wealth transfer, with women projected to control over $30 trillion in assets by 2030. Women tend to measure their success against benchmarks such as impact and legacy, as opposed to the traditional investment benchmarks. They look to use their capital to make an impact on the causes they care about, like their family and their community.
As family offices and the needs of ultra high net worth families evolve, the mission of my team and UBS remains the same: to help families with planning, structure, governance and family dynamics to ensure that families remain not just financially fit but well-positioned in all ways to thrive for several generations.