Why Should I Consider Alternative Assets for Long-Term Wealth Security?
Over the next 20 years, $84.4 trillion in wealth will be passed down to the next generation.
It’s your job to protect that money for your client’s hiers, and alternative assets can help you.
In this blog, we’ll explore three key factors: liquidity, risk appetite, and knowing your clients. Understanding these can help you make the most of alternative assets during this wealth transfer.
Why Is Liquidity Important for Family Wealth?
Thinking about liquidity can be important for family offices, because you need to juggle preserving wealth for the future while ensuring funds are available for immediate needs.
Imagine a scenario where your family office needs to quickly access funds for a significant family event or an unexpected expense, like:
- Covering educational expenses
- Funding a wedding or family celebration
- Handling unforeseen medical costs
- Seizing a time-sensitive investment opportunity
As always, diversification is key. Having a mix of both liquid assets, like publicly traded REITs, and illiquid assets, like private equity, can support your immediate needs while keeping you on track for long-term growth.
Our own small business finance notes can offer you a good middle ground here. Keep in mind that these notes have also achieved 100% of their target returns. How many investments do you know of that can say the same?
How Can I Balance Risk and Reward for Different Generations?
Risk appetite can play an important role in shaping investment strategies across generations, because different generations have different preferences for risk.
A 2023 survey shows that Millennials and Gen X investors are more open to higher-risk, higher-reward assets compared to Boomers.
It’s worth thinking about how you can adjust your client’s portfolio to varying risk preferences. As time goes on, you may want to include more high-risk assets..
This way, you can make sure investments match the financial goals and comfort levels of each generation.
If you want an easy way to learn more about your client’s risk appetite, try using this interactive quiz.
Importance of Aligning Portfolio Allocation with Each Client’s Needs
Aligning portfolio allocation with each client’s needs is key to build trust and ensure long-term client loyalty. When you align investments with your client’s specific goals and concerns, your clients can feel more confident and secure.
To find out what matters most to your clients, try asking questions like:
- What’s your biggest worry about your investments?
- How do you feel about short-term losses for long-term gains?
- How important is liquidity for you?
What can I do now?
By considering liquidity, risk appetite, and client comfort when selecting an alternative asset, you can help maintain and grow family wealth.
Create a free investor account today to explore our own range of alternative investment options.
Plus, don’t forget our referral deal. Refer someone to Supervest, and you’ll receive a personalized, one-on-one meeting with our Chief Investment Officer to review your portfolio.
