As family offices prepare to pool more of their cash into private markets, including cryptocurrency, wealth advisors and RIAs are taking a deeper look at how clients are thinking about preserving long-term capital and growth. 

Chelsea Smith, Senior National Director of Family Office Services at Bernstein Private Wealth Management, discusses how her work with family offices is reshaping governance, the wealth transfer discussion, and matching generational goals.

The following responses have been edited for clarity and conciseness. 

CM: You work with families that think in decades, not quarters. How are their priorities around preserving and growing wealth for future generations changing right now? 

I don’t think their priorities are changing, but there’s more emphasis on ensuring they hold up the legacy and values that the first generation really wants to obtain.  

Making sure the rising generation is clear on what they value, ensuring they’re educated, understanding the trust structures, and knowing how to live with this wealth and how to manage it.  

I have seen a lot of families at Bernstein creating a bucket for their future generation to figure out and create something, go out in the world, and make their mark. It’s an interesting trend that’s happening, and there’s almost this permission that it’s okay if you fail, because that’s going to make you better, and learn what it is to have an impact with money. 

CM: Bernstein is known for going deep on planning, not just portfolios. How do you practically integrate investment performance with tax strategy, estate planning, and philanthropy in one cohesive approach? 

[Bernstein] always starts with discovery, for example, helping clients understand what they care about. 
Where we see problems occur is when clients jump into the asset allocation and planning, and they haven’t done the work to figure out what they value the most.  

Second, we move to get a better understanding of their needs and complexities, then we move to focus on the best tax strategies. From there, it’s an integrated approach, and how we can help understand what the best structures are to help medicate their tactics. After that, we can align their asset allocation based on what they value the most. Finally, it ends with investments. 

CM: Private markets are becoming a core allocation for wealthy families. How are you guiding clients on incorporating these assets into diversified portfolios? 

Once we understand what their goals and objectives are and what they want their outcomes to be, that will dictate how we approach their asset allocation. Given that companies are staying private for longer, we’re anticipating clients will still get more returns from the private market.  

However, we have to think that not every family is a cookie-cutter. For example, if they’re a business-owning family and they are already taking risks, then maybe the private allocation doesn’t make sense for it to be as high compared to other families. It’s about taking into account, in tailoring the asset allocation for the family that is in front of us. 

CM: Beyond investments, governance can be critical for sustaining wealth across generations. What structures or frameworks do you see working best for families managing complex wealth? 

Family meetings are super powerful. What we are learning is that families that communicate together stay together. So, what are the mechanisms that will get your families to talk? Second, there’s power in writing things down and having clarity on the ‘what-if’ scenarios. 
For instance, if there’s a disturbance in the markets, we need to have a quorum of four people to make decisions on whether we have to sell something out of the portfolio. 

Having 
Independent boards can also be super powerful. Having contacts, like a trustee, outside the industry that could provide an outside perspective, and having contacts who work with several different family offices.  

The things you would do for a business need to be applied to your family as well. 

CM: We’ve seen a wave of RIA consolidation and expect more this year. From your vantage point, what’s really driving that M&A activity, and what does it mean for wealthy families? 

It’s a drive to have more resources to pull together. 
I think the power Bernstein has is that we can leverage our asset manager, AllianceBernstein. At Bernstein, we can act as a boutique and a service for family office clients.  

RIAs tend to have fewer resources, and when they merge with another firm or get acquired, they can potentially grow their resources. I believe it’s a way to help RIAs get more well-positioned resources to serve their families, and they can benefit by gaining access to more resources.  

CM: If you zoom out, how are technology and data most meaningfully changing the way you serve clients—not just in terms of efficiency, but in the actual advice and insights you can deliver? 

I think if we freed up on administrative tasks, then we can lean into understanding what families need. Now more than ever, families need humans. 
Families need handholding; families need to hear what other families are doing.  

We consistently hear that families are experiencing isolation, and if we can show up as humans and help break through the isolation, we can make suggestions on how we can convene and bring other families together. 

It’s almost ironic, in this age of technology, but we need more of the human element.