Latest news with #nextgen
News.com.au
3 days ago
- Business
- News.com.au
3 Onramps to Equity Ownership at Pathstone
Kevin Casey, managing director of Pathstone, says equity rolls through business combinations, an annual opportunity to buy equity, and a management incentive unit program all help next-gen employees gain ownership.
Khaleej Times
29-05-2025
- Business
- Khaleej Times
A paradigm shift in wealth management of the next generation in the Middle East
The Middle East is experiencing an unprecedented generational wealth transfer as family-owned businesses, investments, and fortunes transition to younger, tech-savvy heirs. This shift presents significant opportunities and challenges for wealth management professionals. At a global level, this 'Great Wealth Transfer' is projected to shift $18.3 trillion of collective wealth to younger generations by 2030. As traditional values intertwine with modern financial strategies, next-generation wealth holders demand a fresh approach to portfolio construction, planning, and governance. More specifically, the Gulf Cooperation Council (GCC) region is home to some of the world's wealthiest families. Nearly 70 per cent of private wealth is tied to family businesses and about $1 trillion in assets expected to pass to the next generation by 2030, the scale of the wealth transfer is extraordinary. This transfer is not merely about financial assets; it is also about legacy and responsibility. Heirs are increasingly aware of the need to adapt to a globalised economy, navigate geopolitical challenges, and prioritise sustainability. These factors necessitate a shift in how wealth is preserved and grown. The new generation of wealth holders in the Middle East is often more educated, globally connected, and digitally adept than their predecessors. They seek a departure from traditional investment approaches, emphasising innovation, diversification, and purpose-driven strategies. Wealth management firms must align with these evolving preferences to remain relevant. Governance and succession planning While family businesses represent the backbone of private wealth in the Middle East some still lack formal governance structures. Without proper planning, succession disputes can erode wealth and damage relationships. To address this, families are increasingly turning to family charters – outlining roles, responsibilities, and decision-making processes for heirs and independent advisors – leveraging the advice of third-party experts to mediate and ensure a smooth transition. Fostering open communication and educating heirs about financial stewardship is equally critical. Portfolio diversification and innovation Historically, Middle Eastern portfolios heavily relied on regional real estate, oil and gas ventures, and equities. While these asset classes remain significant, next-generation investors are diversifying into other asset classes. Over the last few years we have seen an increased focus towards thematic investments such as global equities, crypto, technology startups, green energy projects, and alternative assets such as private equity and hedge funds. This diversification reflects a more sophisticated risk-return strategy, as these younger investors aim to balance traditional wealth preservation with growth opportunities. Beyond the financial benefits, they are also contributing to creating a positive social impact. Personalisation and digital integration Next-generation clients are seeking more personalised services and seamless digital experiences that allow them to engage with their finances on the terms that best suit their needs - tech-driven solutions can provide this. Wealth managers have started to adopt cutting-edge fintech solutions for portfolio monitoring, reporting, and advisory. Artificial intelligence and big data analytics can help tailor strategies to individual preferences and market trends, enhancing client satisfaction and engagement. However, these changes have also created a certain number of shifts in the engagements between wealth manager and client. Recognising that understanding a client's investment goals and values are crucial to delivering personalised advice, wealth managers' interactions, which were once purely transactional, are becoming more grounded in relationship-building. Philanthropy and legacy building The Middle East is increasingly active in philanthropy. The UAE ranked ninth place in the CAF World Giving Index 2024; and annual giving across the GCC surpassed $200 billion in 2022. Reflecting a global trend, younger philanthropists in the region, particularly millennials and Gen Z, are shifting away from traditional charity to embrace strategic, meaningful hands-on approaches aimed at systemic change. A report titled 'Grounded in Tradition, Looking to the Future: Understanding Next-Generation Philanthropy in the Middle East' published by the Pearl Initiative, a non-profit organisation, revealed that over 45 per cent of respondents said they were looking to embrace non-tradition philanthropic models including impact investing, micro lending and donor advised funds. This correlates with the younger generation increasingly looking at solutions that address the root causes of many issues and, in doing so, taking more of a holistic approach to philanthropy. Conclusion The next-generation wealth transfer in the Middle East is more than a financial transition; it is a shift in mindset and priorities. As the younger heirs redefine the region's approach to wealth, emphasising global diversification, sustainability, and technological innovation, striking a balance between respecting cultural traditions and innovating remains crucial. Wealth management professionals must recognise these dual motivations and support the next generation in their quest to navigate them effectively. This is precisely where the strengths of private banks in the region lie — blending centuries-old traditions with modernity and agility to deliver a seamless and exceptional customer experience. By addressing the unique needs of this emerging class of investors, financial institutions can secure their role as indispensable allies in shaping a resilient and impactful future for Middle Eastern wealth.
