Acting Globally, Thinking Locally: Meeting the Complex Needs of Today’s UHNW Clients

Ultra-high-net-worth individuals have increasingly cross-border needs, yet still require the kind of service offered by a single family office. Only a wealth manager that operates globally and can think locally is able to meet such requirements, argues AlTi’s Kevin Moran.

Imagine you are a Spanish national who also holds French citizenship. You made your money in the US, then relocated to Italy, but now you are moving to France. Whom do you trust to not only effectively manage your investment assets but also efficiently structure your holdings in different tax jurisdictions? To help create a hybrid family office for you and future generations? To have local knowledge in different countries, as well as expertise across investment asset classes?

It is a tall order for most wealth managers, but that is increasingly what many ultra-high-net-worth individuals (UHNWIs) need. One of the many legacies of COVID-19 – alongside a growing concern regarding the impacts of climate change – has been an increased desire for mobility. A large proportion of UHNWIs are hedging their bets to provide their families with safety and certainty. There has also been a shift in their time horizons, with many now looking for medium-term solutions – places where they may want to spend several months a year, that also offer access to good healthcare and education¹.  

According to a recent industry report, nearly half of the UHNW entrepreneurs surveyed have families that live across more than one country, and three-quarters conduct business with markets beyond their domestic borders².

Beyond short- to medium-term needs, plans for retirement will also play a role in the choices of UNHWIs, as will transferring wealth to the next generation. The largest wealth transfer in history is underway in the US, with an estimated $84 trillion shifting from baby boomers to their heirs by 2045³. This can be complicated in any circumstances, but when individuals with different nationalities and tax residencies are involved, it is even more so.

This shift has implications for how money is invested. Younger generations in particular seem to take to heart the idea that great wealth brings both opportunity and responsibility, resulting in increased interest in sustainable and impact investments.

At the same time, UHNWIs are defying the trend towards deglobalization by diversifying their investments further, worldwide and across asset classes⁴. There is an explosion in demand for alternatives, as capital holders seek opportunities beyond traditional markets. Aside from their personal circumstances, they are considering the impact of a host of economic issues, such as continued high interest rates and inflation, and market and political instability.

Local Needs, Global Views

Global lives and global portfolios mean UHNWIs need a wealth manager that understands their increasingly broad and complex set of needs.

We are finding that local knowledge is a key influence on the choice of institution for these geographically dispersed international families. Firms must appreciate the impact of a broad range of global measures, such as the UK’s changes to “non-dom” status, Canada’s short-term ban on foreign nationals buying residential property, the new mansion tax in Los Angeles, tighter lending rules in Singapore, higher fees for foreign property buyers in Australia, Italy and Spain’s relatively new wealth taxes for non-residents, and the continued use of – but increasing controversy over – investor citizenship schemes. And knowing that some countries, such as Australia, Singapore, Canada, and Greece, are seeing net inflows of UHNWIs – while the UK, Russia, China, and India are seeing high outflows⁵ – can help wealth managers understand which markets may be of most interest to clients.

While this might seem to favor large global wealth managers, UHNWIs still prefer the personal touch of smaller firms that are able to deliver bespoke, localized solutions that offer clarity and simplicity and are tailored precisely to their needs. Clients want their advisors to be able to do more for them, rather than having to go to many different places for different specialisms. This desire for a more holistic approach is growing in wealth management, as well as other specialties such as law and accounting.

Trust in advisors is vital, especially during this time of increased intergenerational wealth transfer and growing desire for firms that consider impact when it comes to the investment opportunities they offer. Emerging technologies such as generative AI will become critical in how firms manage client engagement – however, they cannot replace the human touch. According to a Capgemini report, nearly half of HNWIs surveyed said they are unsatisfied with the digital touchpoints offered by wealth managers⁶, pointing to the need for a continued hands-on approach.

We have also seen that larger wealth managers, often banks, are extremely siloed and teams do not work across borders or share P&Ls – effectively operating as separate businesses.

Wealthy global families and foundations looking for access to world-class expertise and solutions, and the focused attention of a bespoke family office, therefore need a wealth-management firm that is able to offer a unique mix of capabilities to meet their complex and changing needs.

World-Class and Trailblazing Investments

We created AlTi in order to offer global reach and access – an international ecosystem with an experienced network of specialist client advisors, such as lawyers, tax advisors and professional fiduciaries – while still providing continuity of service regardless of where clients start the relationship with AlTi or where they move subsequently.

For a successful firm operating in this space, it is not just about where its clients and offices reside. It needs to offer access to institutional-grade, global investment opportunities, including innovative and differentiated alternatives, from cutting-edge sectors to tangible, regenerative real assets.

It is also necessary to understand that all capital has an impact, and to look at value through a wider lens – returns are just the baseline. Firms must combine a strong impact team with the investment power of its client base to mobilize capital for impact on an individual and collective scale.

Some recent examples of such opportunities that we, at AlTi, are discussing with our clients include:

• A private equity fund dedicated to the semiconductor value chain. With semiconductors enabling the world's digitalization, green transition, and AI revolution, the market is expected to reach $1 trillion by 2030⁷.
• Public and private market investments that tap into the megatrend of “Aging Demographics”.
• The first scalable VC firm capitalizing on the dual opportunities of urban expansion and climate innovation. It invests in businesses that have a measurable impact and sources category-defining companies with a focus on economics, practicality, and scalability – a “win-win” for the planet and investors.

These discussions, combined with our collective knowledge and experience, tell us that the goals of UHNWIs and the challenges that they face are almost universal, regardless of their location or jurisdiction. It is just that the financial regulations are different. Success – for wealth-management firms, and for their clients – stems not only from the ability to offer global reach and access, but also a bespoke service that is based, above all, on trust and understanding.