Geller’s Oliveira talks about the biggest challenges in wealth management today
Martim De Arantes Oliveira, managing director of Geller Advisors, leads a multidisciplinary team of subject matter experts tasked with delivering integrated advice in all key disciplines of wealth management.
There’s been a surge in the growth of family offices in the past decade. What do you think accounts for that?
Certainly, there’s been a rise in wealth. There’s no doubt we've gone through the second Gilded Age, and I think that a lot of that was driven by easy money with low interest rates, a pretty resilient economy and one of the longest economic growth spurts that we've had in history. And I think that there’s been a desire to bring a lot of these services in-house as opposed to outsourcing them. There's been a decline in trust as far as wealth management is concerned, and a lot of these ultra-high-net-worth individuals want to have in-house advice. Also, I think that there's more complexity out there; and because of that, individuals want to tailor what they have in-house to their particular needs. They don't want to work with a big bank or brokerage house that builds a kettle of soup, if you will, and serves everyone out of that same kettle of soup.
We’ve gone through a turbulent period as of late. What are the biggest challenges facing family offices, whether economic headwinds or potential regulations on the horizon?
There are three things to deal with. One is a change in the low-interest-rate regime and being in a more normalized environment. We’ve got some very rich individuals out there who have never seen a high-interest-rate environment, so they're having to adjust their viewpoint and the way they operate.
The second thing that can't be ignored is the political and societal situation that we're in. There is this feeling that wealth comes with a certain stigma — as a result, the tax environment could change.
And the third thing is exogenous events such as climate change or the geopolitical situation. There is this perception that our institutions are no longer able to deal with these big issues.
Jumping off that last point, is that impelling family offices to look for private sector solutions to some of these big problems in terms of investing?
Absolutely. I was born in Europe and I'm intimately aware of what the European governmental framework looks like. If you stand up and you say I'm gonna fix it myself, you've got the weight of government pushing back on you. And at some point you say, “OK, I give up.” In the United States, you still have the ability to be consequential and to foment change. Part of the allure, part of the benefit of having a lot of money, is to use that money to prompt change. And I think that that's something that these individuals relish, and this type of what I call new wealth is deeply connected to noneconomic issues. There’s a sense of responsibility, especially with next-gen investors, to do something about the issues of the world, whether climate change or public health. The Vanderbilts and previous dynasties, they may have been big into education; they may have built libraries, etc. But the focus of this new wealth is a lot more about what you can do to leave a dent in the universe, to quote Steve Jobs.
What investing areas are family offices excited about?
Obviously, artificial intelligence, as something that’s transformational. It’s very relevant and interesting, but it comes with some potential pitfalls when it comes to execution and implementation. Tech continues to be a huge theme, be it software or hardware. Biotech and the intersection of biotech and big data continues to be very attractive to family offices. Private credit is another one. Hedge funds have made a comeback of sorts, after a decade of being the stepchildren of the investment world, because the current volatility in the investing environment tends to be extremely beneficial to hedging strategies and due to the fact that their fee structures have become more competitive.