How disruption is causing turbulence for international finance

Elliot Wilson
June 10, 2020

By any measure, the data is staggering. Trillions of dollars of wealth is due to be transferred during the 2020s from the older to the younger generation.

But what is the story behind the big, blunt numbers published by the likes of Wealth-X. What do they really mean? When the ‘next generation’ of high- and ultra-high-net-worth individuals (HNWIs and UNHWIs) are discussed in this context, it is widely assumed to span two large age groups: generation X, people born between 1965 and 1980; and millennials, those born before 1996.

Millennials opt for cash over equities

Painting with a broad brush, the two are markedly different to earlier generations. According to a 2018 report by consumer finance specialist Bankrate, millennials prefer to invest primarily in cash, not equities. That’s a significant finding, given that millennials will become America’s largest single demographic this year, and one that has the potential to rewrite the rules of investing.

Wealthy or not, younger people are less likely to be financially literate, but more likely to embrace risk and to be committed to philanthropic causes – notably those that improve the welfare of humans and animals, and address climate change.

In short, the individuals who make up the next generation comprise a complex mix of conflicting interests. As you go up the value chain of wealth, they are both myopic (in that they have a relative distrust of traditional investments like securities and real estate, which historically provide solid returns) and visionary, in that they see the damage being inflicted on the natural world and want to intervene.

Can the modern advisor ever be ‘off the clock’?

Naomi Rive, Head of Family Office at fiduciary and funds services provider Highvern, describes next-gen HNWIs and UHNWIs as ‘very entrepreneurial in nature’ and keen to invest in private equity firms and funds that back innovation in technology, healthcare and transport.

There is, she says, ‘no doubt that they remain focused on growing family wealth, but they are also keen to use their wealth to invest in things that matter to them, and which they believe will have a positive impact’.

This points to some distinct divergences between the older and younger generations. One is technology, which millennials and generation X invest in personally, materially and financially, either because they made their money from it or because they grew up with it – or both. They are therefore ‘more open to using technology to control, manage and track their wealth’, notes David Dorgan, Group Head of Private Clients and Trusts, Jersey, at full-service law firm Appleby.

For the professional advisor, this can be both a help and a hindrance. On the one hand, super-fast digital telecoms keeps advisors in constant touch with clients. On the other, this means they are always on the clock – a challenge when meeting the needs of a customer base scattered around the world.

‘At the start of my career, outside of meeting clients in person, email and telephone were the quickest ways of staying in touch,’ says Robert Dobbyn, Head of Private Capital and Trusts in Jersey at law firm Walkers.

‘Nowadays I have eight different messaging apps on my phone. Clients will often share personal news and interact socially through these channels, as well as asking more work-related questions.’

The trend of ‘instant gratification’

This ease of two-way communication makes clients more demanding and less patient. They might expect an answer to a question posed on WhatsApp straight away – not easy if it is the middle of the night in London or St Helier.

A supplementary challenge, Dobbyn says, is to maintain ‘high levels of accuracy and comprehensiveness in our advice in an environment that is not particularly suited to that process’.

That’s where the professional’s instinct to act in line with local laws and norms must kick in. A client might demand instant gratification on a question relating to, say, their portfolio or the composition of their trust’s board, but it is up to the advisor to consider all legal and compliance matters before responding.

Millennials invest not just money, but also their time, in worthy causes

Another point of divergence between older and younger generations is philanthropy.

‘In places like the US, philanthropy has long been led by older generations, but surveys suggest it is becoming more important to the wealthy in other parts of the world, and that the younger generation are often behind this,’ says Dobbyn, adding that the process is driven by social responsibility and personal fulfilment. In short, by an admirable and old-fashioned stoic desire to build institutions and to do good.

This has implications for financial centres like Jersey, and for advisors and financial institutions. Next-gen HNWIs want advisors to be hands-on and super-responsive. While their parents or grandparents may visit a personal banker once a month or quarter, millennials want to know more about their wealth and to be in contact with it – to see it, at least in its digital form, far more often.

This requires advisors to ask some pretty searching questions. What is their unique selling proposition? At what point do personal life and work life begin to blur? Is their performance being constantly evaluated by clients? If so, what services, options and products do they need to invest in and offer?

It also changes how the industry works – seismically so. Meetings between trustees and clients, once an annual event, now happen ‘on an almost daily basis during active periods of the year’, notes Highvern’s Rive. That’s especially true at times of high uncertainty or volatility – and we are living through one right now.

How can jurisdictions stay one step ahead of the competition?

Here, Jersey is in a good position. It rose ten places in the latest Z/Yen Global Financial Centres Index, published in March 2020, which ranks 108 major financial centres around the world.

The British Crown Dependency’s long history as a financial hub is based on its rule of law and its enduring ability to adapt to a shifting financial landscape. It also offers a high quality of life, from award-winning beaches and areas of outstanding natural beauty to Michelin-starred restaurants – offering the perfect mix of business and pleasure.

Another key factor, often overlooked until recently, is Jersey’s telecoms network. Its decision to introduce a full-fibre, super-fast network to 40,000 homes and business premises has resulted in some of the highest download speeds in the world, says Daragh McDermott, Managing Director at JT Channel Islands.

‘We were the first jurisdiction in the world to make that investment,’ he says. ‘And it has been a game-changer.’

Download and upload speeds matter, as do the reliability and quality of the product, and JT Group’s success has been noted. Operators from across the globe have visited the island, keen to learn the lessons for a successful installation of their own full-fibre system.


During Jersey’s coronavirus lockdown, the network has been a vital communications instrument, helping financial services providers talk to one another and to clients, and to host meetings virtually and securely.

JT Group’s plans to boost synchronous download speeds to ten gigabits a minute, up from one at present, will make Jersey’s advantage even more visible and beneficial to the high-end financial services market.

Walkers’ Dobbyn notes that ‘at least one trust company on the island has an excellent private office virtual platform’, which provides clients with full visibility of their personal assets and corporate and trust structures via an app. It includes not just traditional financial holdings, but also the individual’s collectible assets, including artwork and wine.

That’s a huge advantage for a financial hub, given that the next generation ‘doesn’t remember the world without the internet, smartphones, tablets and being connected to each other’, notes Appleby’s Dorgan. Given that cities will in future likely vie with one another for business based in large part on download and streaming speeds, investing in and installing a full-fibre broadband network may be the best investment decision the civic authorities ever made.

The competitive value of being a bastion of sustainability

How else can Jersey stand out from the crowd? Highvern’s Rive says the island ‘needs to demonstrate that it is a jurisdiction that understands the importance of innovation and is also contributing towards the UN’s Sustainable Development Goals’.

Dobbyn also points to the great gift of giving. The island’s legal framework is designed to support established charities, as well as broad philanthropic endeavours that don’t require public funding, including foundations and purpose trusts.

He adds: ‘What I’d really like to see is the development of professional services firms that specialise in assisting the globally wealthy with selecting the best targets for their philanthropic activities.’

That would require a long-term vision, perhaps including the participation of well-known philanthropists and the hosting of landmark charitable events. It could be driven by the principles of ‘effective altruism’, a social movement that seeks to find ways to bring the greatest possible benefit to others when you put money to good use.

Then there is the alternative investment space, which has benefited from a decade-long push by institutional investors to find ways to glean a few extra slivers of return, a bit of extra bang for your buck. This too could be a long-term winner for Jersey, as millennials and generation X view alternatives, such as investing in environmentally and ethically minded private equity and venture capital firms and funds, as a way to generate returns while doing good.

There has, notes Dobbyn, been interest in creating new funds designed expressly ‘with unusual asset classes in mind’. But he warns that the current legal framework, which judges trustees by their ability to deliver pure financial returns, ‘is a little outdated’. While understandable, it can stymie a trustee’s ability to pursue socially responsible investment strategies under the terms of existing trust structures.

Is COVID-19 creating a more mobile-friendly wealth management industry?

Finally we come to the elephant in the room. Coronavirus threatens to throw the world into recession in 2020, and maybe beyond. The journey back may be arduous, and it is likely to change how we work in many ways, from the hollowing out of entire industries to a concerted push by many firms to encourage working from home.

That would accelerate a process, underway since before the turn of the millennium, which has seen wealth management become less of a starchy affair carried out in oak-panelled rooms. It is now a highly mobile business, designed to channel timely market news and portfolio data to HNWIs and UHNWIs, wherever they happen to be.

‘[O]ur businesses will need to adjust to a more mobile client base,’ says Rive. ‘Remote working during the COVID-19 pandemic may actually facilitate this as we learn to be more flexible in our working hours, and increasingly communicate via secure applications including Zoom, Skype and Microsoft Teams.’

The challenge here, she adds, will be ensuring that instructions sent via the likes of WhatsApp and FaceTime are ‘sufficiently detailed and that an audit trail is kept’.

Appleby’s Dorgan offers a balanced view of the world after coronavirus. On the one hand, he says it’s possible for next-gen HNWIs to see the pandemic as a rare chance to channel more of their money into assets that ‘improve health [and] quality of life, including that of our planet, rather than repeating existing mistakes’. Alternatively, we may just ‘return to the status quo once the pandemic passes’.

Can money change the world? How about the young and wealthy? Perhaps it’s time to find out.

About the Author

Elliot Wilson

is a business journalist who writes for The Economist, The Spectator, Euromoney and many more

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