Wealthy families face particular challenges when structuring investment portfolios across generations – Novum Partners SA presents modern solutions.
Managing complex asset structures requires an approach that goes far beyond traditional investment strategies. Asset allocation strategy and long-term planning play a central role in sustainable wealth preservation at Novum Partners, Geneva.
Swiss financial services company Novum Partners SA has increasingly focused on multigenerational wealth planning in recent years. With assets under management of over 5 billion Swiss francs and a specialised team of 36 employees, the multifamily office, founded in 2018, is positioned as a partner for complex family office services. Its recent award as ‘Switzerland’s best wealth manager’ by Euromoney underscores this development.
Table of Contents
Challenges of multigenerational wealth planning
Anyone structuring wealth for future generations today does not think in terms of quarters. They think in terms of decades. Sounds abstract? It’s not. Families who want to preserve their wealth across several generations have to make very specific decisions. Which legal structures? Which locations? How much flexibility for future adjustments?
The multifamily office Novum Partners, formerly known as Novum Capital Partners SA, has developed special structures for this purpose. Not every wealthy family needs the same solution. An industrial heir has different needs than someone who has built their wealth through technology exits. The approaches are correspondingly different.
Flexibility versus stability
A dilemma arises time and again: how much structure does wealth need? Too little, and it trickles away over the generations. Too much, and it becomes inflexible when opportunities arise or unforeseen situations occur. How to find the right balance? There is no standard formula.
Let’s take a practical example. A family has invested most of its wealth in real estate. A solid strategy for decades. But what if new technologies suddenly transform entire industries? Or if the tax environment changes fundamentally? Then flexibility becomes the decisive factor.
Modern approaches to asset structuring
Classic asset management works differently from family office services for complex structures. While traditional approaches often focus on optimising returns, multigenerational planning is about much more. Risk management, governance structures, family constitutions – terms that used to be reserved for companies.
Geographical diversification as a basic principle
Today, wealthy families often live internationally. The children study in London, work in New York, and the family home is in Switzerland. This brings with it tax and legal complexities. But it also brings opportunities.
Novum Partners SA Geneva operates in 14 jurisdictions. Why? Because modern asset structures do not stop at national borders.
Part of the portfolio is in Singapore, real estate in various European countries, alternative investments in the USA. That needs to be coordinated.
Technology integration without blind faith in technology
Digitalisation is also changing wealth management. But not everything that is technically possible makes sense. Some families want to be able to check their portfolios every day. Others look at them once a quarter. Both are fine. Technology must adapt to needs, not the other way around.
Alternative investments at Novum Partners: Special asset classes for long-term strategies
Alternative investments are not a new phenomenon. But their importance in long-term portfolios has changed. Private equity, hedge funds, direct investments in companies – these asset classes have longer holding periods. This fits in well with multigenerational approaches.
Private equity and direct investments
Why are wealthy families increasingly buying companies or shares in companies directly? The answer often lies not only in the expected returns, but also in control. Those who invest directly can influence business development. This is more difficult with listed shares.
A typical scenario looks like this:
- Identification of interesting companies in growth industries
- Due diligence over several months
- Structuring of the investment via suitable vehicles
- Active support for the company’s development
- Exit planning after three to seven years
These time horizons suit families who are not under quarterly pressure. But they also require different skills than traditional equity or bond investments.
Real estate as a building block of modern portfolios
Real estate plays a special role in family portfolios. It is tangible. You can visit it, show it off and pass it on. But it has also become complex. Commercial real estate, residential real estate, development projects – each area has its own rules.
Credit advice plays an important role here. Families rarely buy real estate with equity alone.
The right financing structure can bring tax advantages and increase flexibility. At the same time, risks arise that must remain manageable.
Governance and family constitutions
What happens when the second or third generation takes over the assets? Not all family members have the same interest in finance. Some want to be actively involved in decisions, others just want to be kept informed. Still others have completely different priorities in life.
Structures for decision-making
Governance structures sound bureaucratic. Sometimes they are. But they prevent conflicts before they arise. Who decides on major investments? How are family members informed? What happens in the event of disagreements?
The Geneva Multi-Family Office has developed various models for this purpose. Advisory boards in which external experts participate. Family meetings that provide regular information on important developments. Investment committees that prepare investment decisions.
Preparing the next generation
How do you teach the next generation to take responsibility for wealth? This is a question that preoccupies many families. Too early, and children develop a problematic relationship with money. Too late, and they are overwhelmed when they suddenly have to take on responsibility.
Some families start with small portfolios that the children can manage themselves. Others rely on training programmes or internships in the financial sector.
There are different ways, but no silver bullet.
New areas: from luxury goods to technology investments
Advice on new yachts may sound like a niche issue. But it is not, when you consider the tax and structural implications. Where is the yacht registered? How is it financed? What chartering strategies are possible? Suddenly, a luxury purchase becomes a complex structuring task.
The same applies to art collections, classic cars and other collectibles. They often have more than just sentimental value and can also form part of an asset allocation strategy. But then they also need to be insured, stored and managed appropriately.
Technology investments as a new asset class
Venture capital used to be the preserve of professional investors. That is changing. Wealthy families are increasingly investing directly in start-ups or tech companies. The risk is high, but so are the potential returns. And there are often personal connections – the son is active in the tech scene, the daughter is studying computer science.
These investments are illiquid and speculative. But for families with a long-term time horizon, they can work. Provided they understand the risks and have the relevant expertise.
Managing complex asset structures has become more demanding. Globalisation, new asset classes, changing regulatory frameworks – the challenges are growing. At the same time, new opportunities are emerging for families who are prepared to manage this complexity. A specialised multifamily office can help find the right balance between opportunities and risks.
