Our US correspondent outlines the issues set out at this news service's investment summit for family offices, held in Manhattan yesterday.

Investments, public policy, generational change and healthcare planning were among the wide range of topics highlighted at yesterday’s Family Wealth Report Family Investment Summit in New York.

Investors should be keeping an eye on how the incoming Republican Congress and president will impact the massive US debt – now accumulated at $34 trillion – warned Scott Eckel, managing director, legislative and regulatory affairs for Charles Schwab, speaking on the Policy, Politics and the Markets panel. 

Campaign promises, including extending the corporate tax cut past 2025 and eliminating taxes on Social Security and tips, will add billions to the already ballooning deficit ($1.8 trillion so far this year), Eckel noted. “The question is how do Republicans pay for their tax bill?” he said.

Cuts to benefits programs such as Social Security and Medicare may have been targets for Republican cost cutting in the past. However, Donald Trump’s “complete transformation of the party” into a more populist voting block seemingly precludes any effort to put those social programs on the chopping block now, Eckel said, leaving Republicans little wiggle room.

He pointed to rising long-term interest rates in the US bond market as a sign that investors are already nervous about the likelihood of further deficit increases. An out-of-control debt could also threaten the US dollar’s status as the world’s reserve currency, Eckel said. 

“The US has the world’s biggest economy and is the world’s reserve currency,” he told Family Wealth Report. “It’s a golden handcuffs situation: countries look the other way as our debt goes up and up – until one day they don’t.”

NextGen shift
As an anticipated $84 trillion in wealth is transferred between generations over the next 20 years, family offices are also undergoing rapid change.

Younger family members are increasingly environmentally conscious, said Paul Winder, former chair of the Bahamas Financial Services Board, speaking at the Trends in Wealth Structuring for the Next Generation panel.

Left to right: Antoine Bastian, Niekia Horton, Paul Winder and Dr Iyandra Smith Bryan

“We’re seeing a change in the way they’re approaching investment management in philanthropy,” Winder said. “Instead of just asking about a company’s financials, they’re asking ‘what is their carbon footprint?’”

NextGen family members are getting involved in the family office earlier, said Antoine Bastian, CEO of Genesis Fund Services Limited. They’re also more transient internationally, added Winder. And when it comes to investing, younger family members are getting their ideas from TikTok and YouTube, according to Dr Iyandra Smith Bryan, COO of Quantfury Trading.

What’s more, NextGen members are prioritizing a wealth management’s ability to act quickly over previous ties, Smith Bryan said. “Speed is more important than loyalty,” she said. (Also on this panel was Niekia Horton, CEO at the Bahamas Financial Services Board.)

Health and wealth
The importance of pro-active planning  was the central theme of the Intersection of Wealth and Health panel. Strokes are very common, happen very quickly, are life altering and very expensive, said Dr Anthony D’Ambrosio, a neurosurgeon and CEO of Neurosurgeons of New Jersey. In fact, in-home care for stroke victims can cost up to $400,000 a year or more, said Diane Sirakovsky, a nurse practitioner and co-founder of TrustHouse, a private in-home nursing company.

“Healthcare has to be considered from a long-term perspective,” Sirakovsky said. “The biggest hurdle for people is to do what they need to do today to take care of themselves in the future,” added Lorna Redup, senior tax services manager at Trove.

While many people think Medicare will pay medial bills in the event of a stroke, trauma or serious injury, the government program doesn’t cover long-term health costs, Redup noted. Advisors should consider Roth IRAs, Health Savings Accounts and gifting as planning tools for healthcare, she suggested.

Attorney Michael Greenberg stressed the need for flexibility.

“Make sure clients’ power of attorney, healthcare proxy and estate planning are in order,” Greenberg said. “Things can change quickly.”

The latest industry takes on collectibles and alternatives as an asset class, artificial intelligence, custom indexing and risk management will be detailed in upcoming stories covering the Family Office Investment Summit.