Next-Gen Ultra High Net Worth Advisors

Future-proofing investments: The real challenge ahead

Elie Chamat Senior Partner, Chief Executive Officer

We’re not futurologists. But we do try to know the people who are building tomorrow’s technologies and day to day economies.

Future-proofing investments: The real challenge ahead

Everyone understands that technological change is moving ever faster. There’s even a name for it: futurist Ray Kurzweil described a pattern of technological advances moving ever faster as the ‘law of accelerating returns’. The question is, how can we reflect relentless disruption in a positive way through investments?

Let’s start with what’s on offer today from traditional-thinking wealth management. Most managers offer their clients ‘wealth preservation’ through investments that are all about this month, next quarter, at best, next year. But we think that ‘preservation’ isn’t ambitious enough anymore. The greatest threat to investments over the next decade is that the real cost of living has changed. As a result, portfolio safe havens of today may prove an investment liability as the past’s corporate leaders are overtaken.

That’s because the basket of goods that measure the inflation that economists worry about doesn’t represent what we need to enjoy our same standard of living in the long run. The technologies behind everything from the telephone in your pocket to the car that you drive are getting more powerful, and more expensive. Even without the post-lockdown price rises we’ve experienced in 2021, the real cost of maintaining our living standard is closer to 8% per year.

This wealth price inflation risks eroding investors’ real net worth. Investors need a strategy to counter the rising cost of an evolving basket of technological goods.

At Decisive, we’re not interested in farming a portfolio’s assets for a few percentage points of yield this quarter or next year because that doesn’t solve this problem of real rising costs.

We try to think in terms of decades and the next generation, not the next business cycle or market downturn. ‘Next generation’ shouldn’t just be about smart twenty-somethings, because it isn’t about an age group, it’s a way of thinking. And the key to proofing investments against the future isn’t in an asset class, or a portfolio model, but a mindset. This mindset is about spotting where smart capital is moving and then curating the opportunities that invest in our futures.

Of course we’re not futurologists and we don’t know what the world will look like a decade from now. But we work with the people who do, because they’re building the technologies and infrastructures that are changing our future.

One food for thought, how are the smartest endowments in the world investing?

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