Having spent over 25 years at Morgan Stanley, Ruchir Sharma is embracing a re-birth in the world of financial advisory. He joins a global family office in a move that underscores what future of wealth management could look like. Call it wealth management 2.0. The pandemic has significantly advanced many timelines, and dispensing financial management services is one of them.
The Cloud has empowered smaller wealth advisories and family offices to rub shoulders with incumbent giants in wealth advisory, without having to spend on the technological infrastructure and computing power. This disruption also comes at a time when world over, we have seen an unprecedented consolidation of wealth. Recall the Hurun Global Richlist of 2021. You will remember that the total wealth of all billionaires the world over swelled by 32%, to $14.7 trillion. The Hurun Report chairman Rupert Hoogewerf said in March last year, that "despite the disruption caused by Covid-19, this year has seen the biggest wealth increase of the last decade".
This mushrooming of billionaires has prompted many, including Rockefeller Capital Management (RCF), to now expand global footprint, and cater to the nouveau riche. What also helps RCF is that capital is flush, with the one of the world's largest hedge funds - Viking Global - backing the venture. Rockefeller Capital claims that by December, it had about $95 billion worth of client's capital as AUM. Not long ago, it wanted to raise roughly the same corpus over a period of five years. A fat AUM allows a globally diversified allocation, and with that comes the needs for diversely experienced advisors.
When asked last month, how will Rockefeller compete with the established behemoths, the National Field Director at Rockefeller Global Family Office told podcaster Mindy Diamond, "third-party service providers like Microsoft are making new age financial advisories more nimble". And they are not stopping at just being nimble. The low technological cost and access to research and data is democratising investment advisory business. A 2019 UBS-Campden Wealth report finds that more than two-third of the 360 family offices surveyed were established in 2000, or later. The age of multi-family offices has well and truly begun.
Advisors are jostling to tell billionaires where to park their money, amid a Fed-fuelled stock market boom, and investors chasing startups at stratospheric valuations. As a result, 2021 also saw a never-before level of M&A activity. As per Dealogic, global M&A crossed the $5-trillion mark for the first time last year. It goes on to say, "buyout activity is expected to grow further in 2022 with PE firms in the early stages of tapping into new markets such as the insurance and retail." In September last year, the US Securities and Exchange Commission approved a proposed to allow ordinary investors greater access to private equity and real-estate deals. Will it mean we will see more money joining this party? Time will tell. But as the fight gets intense to manage this money, the influence of bankers, consultants and advisors is on the rise.
The World Wealth Report by Capgemini talks about the winds of change. Rising share of retail investors, HNWIs investing in cryptocurrencies and other virtual assets, increasing M&A deals and women entrepreneurs - all of it tells us about a new colour of money in the post-pandemic world.
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