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Political Stability Big Concern For Wealthy Families – Julius Baer

Amanda Cheesley

5 January 2024

The 2023 Family Barometer by , found that taxes and regulation, along with political stability, are discussed more often by wealthy families.

Wealthy families are taking political stability and geopolitics into account far more than before, not just in their investment decisions, but also in how they structure their overall wealth, the survey shows.

On a global level, taxes and regulation is the second highest ranked topic, rising from fourth in 2022, the survey reveals. Ongoing political instability and pressure on public sector finances mean that changes to tax and regulation are likely to continue. Yet these adjustments require an understanding of fine details in each country, making local specialist expertise essential, the firm said.

Geopolitical diversification of assets in the face of rising global tensions is also a top investment-related topic for ultra-high net worth clients and their advisors. The past year has confirmed the greater complexity of the world we live in. Geopolitical tensions have intensified, central banks have raised interest rates to contain resurgent inflation and asset prices have corrected. As a result, wealthy families need more specialist advice, not only to cater for complexity, but also to manage inherent risks raised by exposure to a multitude of legislations, the firm continued.

"Family wealth-related topics beyond investments and collaboration with advisors is a topic as old as time. Yet the turmoil of the past three years explains why it’s the main topic clients want to discuss once again this year. Over the past few decades, wealthy families have spread across the globe as they go to university, work and marry in different countries, making their affairs naturally complex." the authors of the report said. "But then Covid-19 turned the world upside down in 2020, heightening that complexity. Since then, geopolitics have made constant challenges a normal state of affairs. As a result, wealthy families need more specialist advice, not only to cater for complexity, but also to manage inherent risks raised by exposure to a multitude of legislations."

Meanwhile, philanthropy retains its place as the fifth most discussed topic, as it was in 2022, the survey shows. Talking about how philanthropy aligns with family values can foster cohesion between an extended international family’s different branches and generations. What’s more, involving the next generation of a family at a young age can instill pride, responsibility and identification with the family values, the firm added.

Finally, family governance is a perennial topic that has become more important as wealthy families have expanded to span several generations, the survey found. After one generation has expended a tremendous effort accumulating wealth, good governance helps to preserve its legacy through the generations. Good communication regarding a family’s constitution, shared values, education, succession and even purpose, can translate into good governance, the firm said.

The barometer monitors the shifting opinions of financial services experts who work with and advise wealthy clients. For the 2023 edition, it canvassed more than 1,500 internal and external experts from Europe, Asia, the Middle East, Africa, and the Americas.