The report from JP Morgan Private Bank looks at the attitudes and priorities for some of the richest families around the world. Among its findings is how a significant number expect younger members to work outside the family business and get educated to prepare for future challenges.
A third (33 per cent) of nearly 80 billionaire family principals
interviewed by JP Morgan
Private Bank encourage or require younger members to work
outside the family business to learn skills they need to succeed
in life. The US firm’s study, which delved into how
billionaire families operate, said that nearly half (48 per cent)
of those interviewed encourage or require the next generation of
family members to enroll in educational courses to prepare
for the future.
The bank’s report is called Stewardship & Purpose: Conversations with the world’s wealthiest families. The bank carried out interviews over eight months, starting in December 2021. Respondents came from North America, Latin America, Asia Pacific, Europe, the Middle East and Africa.
“Overwhelmingly, they stressed the importance they place on being good stewards of wealth and, even more significantly, building a connected family,” Benjamin Hesse, chief operating officer, JP Morgan Asset & Wealth Management, said.
The report examined areas such as how to avoid family conflict, philanthropy, how to set up investment processes, and sustainable investing.
Sixty-eight per cent of family principals said creating clear
procedures, policies and rules around the family enterprise are
crucial to handling conflict. Relevant scenarios include
navigating a shareholder exit, compensation agreements and
expectations, and a protocol for expressing feedback or points of
Most family leaders are philanthropically motivated to make a lasting local or global impact, with 74 per cent indicating so. Education (66 per cent), followed by healthcare and medicine (44 per cent), are the predominant categories of interest, with most principals noting the desire to “give to where you live” among their local communities.
Among their investments, 22 per cent of family principals say that they carve out a space for sustainable investing or that it plays a significant role in their strategy, but more than half (52 per cent) note they are considering it for their future investment plans.
Some 63 per cent of principals indicated that their family offices have a chief investment officer, whose role was separate from that of their CEO. A 2016 JP Morgan and World Economic Forum report found that only 37 per cent of family offices had a split role between the CIO and CEO.
Generally, the survey found that families are investing primarily in technology, including biotech, with 54 per cent of principals saying it is their main industry of focus. This is followed by healthcare (30 per cent), real estate (25 per cent), an opportunistic approach (22 per cent) and consumer products (16 per cent).