Vincent Hayes is global head of family office and international wealth management at BNY Mellon, which serves over 300 families across 38 countries. Hayes discussed with Crain Currency how to engage with younger generations, the role of digital assets in portfolios and the advantage of taking a patient, multigenerational view.
What lessons can you share, particularly about succession issues and generational transfer?
I’ve always been fascinated by families who are able to carry a legacy forward for multiple generations. It could be money, property or family values, but 90% of families are not able to steward wealth beyond the third generation. There’s a saying: “From shirtsleeves to shirtsleeves in three generations.” There needs to be proper education, continued learning and community-building within the family itself. You have to have some form of documentation compiling some standards and values. My grandfather didn’t create a family office, but what he did was this: He was the son of a slave, and during Reconstruction he farmed, opened a grocery store, and was able to secure a plot of land in Alabama. We’ve held onto that land for five generations; we’re very organized around it. It’s continued to be a symbol of entrepreneurship, of freedom and of family togetherness.
A recent report from BNY Mellon discusses the younger generation’s interest in cryptocurrency. How should family offices think about digital assets?
There’s always going to be some new investment that becomes mainstream and that younger generations latch onto. For our family offices, they are approaching crypto markets and the digital-assets space by dipping their toe in the water. Their main focus is on wealth preservation, but they also have a portion of assets to use in ways that are more forward-thinking, more risky. The thing is, there’s not enough education around crypto and digital assets yet. Families want to know the rules and regulations—if you get a key, how that key is protected, and so on. Until they really understand it better, crypto and digital assets are more on the outskirts of our families’ main investments.
Younger generations often ditch their parents’ advisers. How do you make them feel heard and retain them?
We understand that to maintain the relationship with a family for multiple generations, you have to understand who the younger generations are, what their interests are, how they like to connect and the investments they want to make for the future. A massive wealth transition is underway right now—$4 trillion in assets from one generation to the next. The younger generation is starting to make investment decisions and has more of a focus on making an impact, ESG investments and being responsible. They want the return, but they also want to make the world a better place. We also need to be connecting with the younger generation on the platforms they are connecting on as well, meeting our clients where they are.
So will you be doing TikTok dances soon?
I don’t know if that’s gonna be me. But one of my biggest investments is in talent –– investing in retention, but also attracting new talent, the younger generational talent that’s interested in new ways of going about things.
What’s the biggest advantage you have in making investment decisions for the long term?
It’s really embedded in your question––the fact that families have a long-term view. Our families are looking at how to sustain and steward wealth. They put strategies in place and institutionalize processes. In 2008, a lot of individuals panicked and took money out, whereas most institutions looked at that as an opportunity. If you look at the history of markets over the last 120 years, markets go up. That is the benefit we have: patient capital.
Interview by David Zax, a freelance financial reporter whose work has appeared in Bloomberg CityLab, Entrepreneur Magazine, Fast Company and the New York Times.