From working arrangements to social events, the pandemic has pushed people to reassess what’s important.
For some that meant living in a bigger house on a quieter street. For others, their finances became their biggest priority.
And it seems ultra-high net worths and their families fall into the latter category, with the super-rich looking to take a more active role in managing their wealth, Ali Jamal, founder of wealth management firm Azura, tells International Adviser.
More specifically, they are on the hunt for “off-market” opportunities and “partnerships with other wealthy families”, and have started to prefer taking the independent road and keep things outside of the banks to not get stuck in cross-border issues or “internal politics”.
Opportunities
Cheap borrowing from banks is driving interest in credit investing; with private flying, luxury homes and summer houses also popular among ultra-high net worths, said Jamal.
Private jets – owned and rented – are being increasingly viewed as a necessity in light of lockdown. Pre-pandemic, very wealthy people tended not to fly private, he added.
But it’s not just the tangible investments UHNWs are making that has changed.
“I think they are moving away from being a passive investor to becoming more active,” Jamal added. “And it is an ecosystem: it is the client, it is us and the banks, and the three of us have to work together to create something.
“Before, there were a lot of people working in silo. But lots of big transactions have been funded by the families themselves, for example, Spacs, which are the ultimate trend today. Now the clients have become more sophisticated.
“I think, by spending time at home during covid, they’ve been also more educated about what’s going on and how they can make the best out of the current market conditions.”
Another hot area for UHNWs, Jamal said, is the M&A market. Super rich families are looking to get involved, especially when it comes to acquisitions, considering how well the private equity sector is doing.
Their interest in M&A, according to Jamal, is due to the fact that, despite the stock market looking good, it is still “too expensive”.
Older v younger
All families, regardless of how much wealth they hold, will have internal struggles between the needs of the older and younger generations.
Older UHNWs seem to be holding on to real estate, while the younger cohort wants to be more cutting edge and invest in the latest trends such as TikTok and Robinhood.
That doesn’t mean, however, that they are not willing to meet in the middle if the right opportunity arises.
Jamal explained he was part of a conversation between a UHNW father and son, where the son wanted to invest in Disney stocks during the first few months of the pandemic.
His father contested the move because “all the theme parks were closed”, but as the movie giant was gearing up to launch its own streaming platform – Dinsey+ – and the son explained to his father the similarities with Netflix, the father did not take long to convince.
“It is one of the biggest challenges for us to have discussions when we deal with our single family office clients, but a lot of the old generation are giving the next generation a little bit of the allocation to prove themselves,” Jamal said.
That also applies to their ESG preferences. The Azura founder said that older UHNWs have moved past the stage where they need convincing and have fully embraced that this is where the world is headed.
High on their priority lists are social issues such as creating more jobs and increasing minimum wages, but also putting money towards a greener society.
The most popular choices, Jamal explained, are either “Beyond Burgers or climate change”.
Additionally, he believes that the attitudes towards ESG among UHNWs are only going to become increasingly positive.
This is because, he thinks that world governments will apply the same framework they currently have for philanthropic and charitable donations from the super-rich in a way where investing and supporting ESG initiatives won’t hurt their tax income or their lifestyle.
