Looking Forward To 2022 – From Web3 To Yolo; Eight Things Family Offices Should Consider

This time of the year often brings about introspection, reflection and contemplation of what is to come. 2021 has been a year of uncertain recovery and consolidation as society takes stock and re-imagines the post-pandemic world. The status quo is shifting, technology is driving change in unprecedented ways, and the future is fraught with distinct global, economic and environmental challenges. Yet, within this myriad of changes and challenges, opportunity lies.

Family offices are uniquely poised to take advantage of such opportunities and make a lasting difference both now and in the future. According to Nicolas Arroyo, Founding Partner and Director of Foresight at Bespoke there isn’t an absolute way to evaluate what lies ahead, “When we think about the future we shouldn’t focus on finding absolutes. We are not that interested in what is right or wrong, or even if we agree or not with what we are observing. What is fascinating is to find the tensions, the conflicting signals, the opposite trends, because it is in that tension between opposite poles that you we can identify potential challenges or opportunities ahead.”

Bespoke collaborates with Simple on their annual family office trend roundup, taking stock of the current mega trends and evaluating which important changes family offices should be thinking about for either operational or investment considerations. Here are the eight points highlighted in this year’s report:

1. The end of globalization as we know it?

Travel restrictions, supply chain disruptions and uncertainty driving protectionism and nationalist narratives, are signaling the end of globalization as we know it. Yet, at the same time, this is making room for something new – a world where shared ideologies will drive trade patterns, human rights laws and climate mandates rather than purely profit.

The Simple forecast examines what this means for family office investments. It encourages families to consider what happens when uncertainty becomes the norm and what the new economy may become.

2. The rise of Web3

As interlocking technologies and interests intensify, the genesis of Web3, a decentralized internet infrastructure built on blockchain technologies to facilitate interactions and exchange, is inevitable.

The rise of non-fungible tokens (NFTs) in 2021 is illustrative of the potential for change and the ease with which digital assets are being adopted to signify status, membership and meaning as the physical world shifts to a digital one.

In future planning scenarios, family offices should consider the growing role of intangible assets like cryptocurrencies and NFTs and the role of blockchain and decentralized finance (DeFi) in the years to come.

3. Energy impact of the internet

The growing reliance on connected technologies is driving energy demands at unparalleled levels. By mid-decade, it is estimated that the internet alone will draw one-fifth of the world’s power supply.

While this is a cause for concern and adaptation, there is an opportunity. Investments that address this issue will drive innovation in several areas, including renewable energy and operating efficiency.

Family offices with sustainable investment goals are well-aligned to take advantage of the opportunities in this area. Doing so can help fulfill both the sustainable and returns objectives of their investment mandates.

4. Economy: New Generation Workforce

As a generational shift occurs in the workforce, Generation Z is entering the market and will hold the majority by mid-decade. This transition brings with it changes in cultures and expectations. Already a push for pay and gender equality is evident, as is the expectation placed upon employers to do good while making a profit. In addition, a focus on improved work-life balance emphasizes the need for greater efficiency and flexibility, with trade-offs between remuneration and deriving meaning from work on the table.

Considering how this generation will reshape the labor market is vital for family offices. Impacts will extend from office space requirements to company objectives, sustainable goals and accountability.

5. The YOLO economy

YOLO – “You only live once” is an adage that has gripped people the world over since the pandemic hit, destabilizing notions of job and financial security and perpetual continuity. However, the realization that things are temporary has caused many to re-evaluate everything and take risks to seize opportunities that can change where they are to where they want to be.

The “Yolo-ing” of life savings into trading cryptocurrency, conversions into meme stock and minting NFTs is evidence of the shift. On other fronts, people are re-evaluating lucrative corporate jobs, trading them in for more meaningful pursuits. These changes are driving an entire economy with many knock-on effects, all built on the YOLO premise.

Contemplating how a shift in values will change and forge businesses of the future and investments is something family offices shouldn’t ignore.

6. Environment: Regenerative Everything

Climate change is a global emergency, with citizens pressuring governments and organizations to take action. This shift in values drives a circular economy intending to eliminate waste and pollution by circulating products and materials.

Addressing environmental and social needs through sustainable initiatives offers family offices considerable opportunities to make a difference and profit. The Simple forecast examines this in detail and encourages families to explore how these changes will shape business and investment practices.

7. A new health focus

Physical and mental health has shifted to the forefront of consciousness. Technological and social factors have converged, and while a backlash against technology addiction mounts, the reliance on it to track and provide personal health information and data is growing.

Numerous new products, devices and apps are being developed, and life-style altering experiences are launched. Considering these and how they will mould the future health, wellness and fitness industries will benefit family office investment portfolios.

8. Politics: The rise of all voices

The age of activism is upon us. Magnified by technology, people and politicians have more powerful and influential public voices than ever before, and social media is changing the corporate and political landscape immeasurably.

As calls for conscious capitalism steer the future, companies will need to carefully navigate challenging waters where business models and practices are adapted to a diverse set of causes.

As 2022 lies ahead, there is more to consider than ever before in a rapidly changing world where shifting values are forging innovation and may ultimately decide the fate of organizations and the profitability of investors. On this point, Arroyo continues “The world is not made in black & white, it is a colourful plethora of diverse simultaneous events happening all at once, so we must learn to embrace the complexity and beauty of conflict and contradiction as a driver for innovative thinking.”

As a result, family offices with mandates to do good while also making a profit and considering these value shifts and trends when making allocations will find themselves in stronger positions than ever before next year and beyond.