Studies suggest that Millennials and Generation Zs, in general, will support companies that align with their values, putting people, the environment and other factors ahead of profits.
As Rebecca Burford mentioned in the Citywealth article dated 15 November 2021 titled ‘Family office tentacles dig into private equity markets’ – “If we rewind 20-30 years, the majority of wealthy private investors would not have the same drivers for their investments that we see more of today. Many would have been focused on return and less so on where the ultimate investment lay. But today’s wealthy are re-investing their wealth and are more cognizant of the positive impact of their money can have not just the return.”
It appears that, as the younger generations take control of family offices, they are searching for investments with purpose and are looking to create a tangible positive impact from their investments. Impact investments are those made with the intention to generate responsible, positive, measurable social and environmental impact alongside a financial return. This creates an opportunity for the younger generation to direct their family’s capital towards investments which align with their values, whilst also having the opportunity to preserve and, hopefully, increase their wealth.
This is probably why private markets have become a popular choice among family offices, as they offer access to impact investments. Furthermore, the fact that private markets may offer double digit returns, rather than the single digit returns you are likely to receive in the public markets, means there is a natural pull towards the private markets. With peoples’ focus gravitating to areas such as climate and sustainability (to name but a few), I believe the appetite for impact investments, and in turn private markets, will continue to develop.
Considering the capital available to family offices, and combined with the values that appear to be driving their investments, family offices are becoming a powerful force within their industries and, I believe, are in a strong position to help scale-up the sector and push sustainable and impact-driven investment strategies towards the top of peoples’ agenda.
For further insight into family offices and their movement towards private markets and impact investments please see Citywealth’s article here.
"Today’s wealthy are re-investing their wealth and are more cognizant of the positive impact of their money can have not just the return.”