Next generation of investors poses crypto question for family offices
Younger generations are encouraging family offices to switch from a wealth preservation approach to a growth-focused one.
Young people are always inclined to challenge the views of their parents, and the children of the ultra-wealthy are no exception. Within some family offices, crypto investment is the subject of the generational divide.
“A lot of our [ultra-wealthy] families have done equities, they’ve done real estate, they’ve diversified,” Ladi Runsewe, chief executive officer of UR Family Office, told AOX. “They’re thinking: what is the one asset class they haven’t gone into? It’s crypto.”
The appeal of digital currencies lies in the diversification opportunity and the potential for enhanced returns.
It’s also in line with a wider shift among family offices, away from the stuffy world of simple wealth preservation and towards more ambitious growth-focused strategies.
“A lot of our [ultra-wealthy] families have done equities, they’ve done real estate, they’ve diversified, they’re thinking: what is the one asset class they haven’t gone into? It’s crypto.”
“And it’s not coming from the matriarchs [or patriarchs],” Runsewe said. Instead, it’s being driven by the next generation.
In a 2024 survey by Ocorian, 66 per cent of family office professionals said digital assets were a key point of difference in the priorities of the next generation and their forebears.
“We’ve gone into it particularly this year,” said Runsewe, who facilitates investments for 10 main family offices primarily based in the Middle East and Africa. “We [now] have partners that are doing it regularly for our families.”
According to Runsewe, these investments have been remarkably stable so far: “They’ve been less volatile than expected… with double-digit returns.”
Dabbling in digital assets is no child’s play, though. While bitcoin, the ur-digital currency, is currently up around 90 per cent over the past 12 months, it has been 5.1 times more volatile than global equities over the same period, according to BlackRock.
As enthusiasm for the asset class grows, Runsewe is cautious to educate his clients on its unpredictability and opacity, and to integrate investments among stabler bets like private credit and real estate.
“We are going into it gradually, and not heavily,” he says. After all, what goes up 90 per cent one year can go down just as sharply the next.