A millennial learns about wealth management the hard way, Americans are snapping up London townhouses, a trading card sells for $3 million and a new study reveals the X-factor in the Great Wealth Transfer.
|
|
|
Some of the best companies are started by frustrated customers: Netflix (born out of a $40 late fee from Blockbuster), Uber (inspired by bad taxi service), and even Lamborghini (Ferruccio was disappointed with his Ferrari). This week, I take a look at a new multi-family office aimed at young inheritors – founded by a young inheritor herself. Christina Lewis’s wealth journey is heartbreaking, educational and ultimately triumphant. Her new company, Beatrice Advisors, has lessons for both clients and wealth advisors alike. I’m excited to tell the exclusive story of their launch.
I also look at the American invasion of British real estate, Sotheby’s getting into the business of trading cards and the little-noticed generation that’s about to get rich. Keep sending me comments, questions and suggestions – they’re the highlight of my week! Thanks for reading and keep spreading the Inside Wealth. Best, Robert |
|
|
Christina Lewis shakes up the wealth space with Beatrice Advisors |
Christina Lewis, founder of multi-family office Beatrice Advisors, in front of a portrait of her late father Reginald Lewis. Credit: Christina Lewis |
Christina Lewis had her first asset-allocation meeting with her wealth manager when she was 13. “I remember the meeting well,” she says. “It was a turbulent time for my family. And [the advisor] was the only one who had the information I needed and how to talk to me for this new world I was in.”
That new world involved a tragic loss and sudden inheritance. Her father, Reginald Lewis, the founder of the foods giant TLC Beatrice International and the first African American to build a business with $1 billion in revenue, died at the age of 50 from a cerebral hemmorhage. Christina was left with a large fortune and few answers.
Over the next 30 years, Lewis would work with six different institutional wealth managers and 12 different relationship managers. Her experience and success in forming her own family office and two foundations has led her to her new venture: a multi-family office aimed at the next generation, for people like herself.
“This is about families and their assets and how you think about them,” she said. “When you’re inclusive, when you look at diverse perspectives, when you empower women, when you empower your children, when you educate your clients, when you allow them authority and autonomy and independence, that’s a better way to live. Your family will be healthier, wealthier, happier and more functional.”
Lewis’s company, called Beatrice Advisors, aims to change the traditional business of managing the fortunes of the wealthy and inheritors. She hopes to appeal to an increasingly diverse wealth population – in terms of age, gender and race.
With Beatrice, Lewis aims to take a “holistic approach” to a family’s assets, considering not just their money but also their values, skills and life paths. The firm has spent years building a tech dashboard that gives families an up-to-the-minute, unified view of their portfolio and assets. And it will give high priority to education, Lewis said. “We build the dashboard and advise the clients, but they drive the car,” she said. Most of all, Lewis hopes to be a trusted advisor to GenZ and millennial inheritors who are grappling with the same wealth-management challenges she faced.
Over $84 trillion is expected to be passed down from older to younger generations in the next 30 years, according to recent estimates from Cerulli Associates. Multi-family offices like Beatrice, which have the hyper-personalized and confidential approach of a family office but with the shared costs of an investment firm, are increasingly popular with ultra-wealthy families looking to transition to the next generation. In addition to managing investments, multi-family offices handle taxes, trusts, family governance, philanthropy and legal issues.
Lewis’s own personal investing education began when she was 7 years old, helping her father manage his stock portfolio. In addition to his company, Reginald Lewis had a portfolio of personal stocks and designated Christina as his “broker.”
“I would read the stock tables in newspaper in the morning,” she said, “And then at the end of the day, after market close, I would call to get the evening’s close. And I had this notebook where I tracked everything.” After her father’s death, she worked with her first wealth manager to pick stocks and build an aggressive portfolio. Among her stock picks: Disney and Limited, “because we talked about investing in what I know.” Over the years, her wealth advisors were constantly churning: Firms got acquired and her relationship managers changed year by year. It was hard, she said, to find an asset manager “who sees you for you, not just an appendage of another entity.”
Eventually she created a family office, BFO21, and hired her own team. Beatrice will be separate from BF021, but will have team members in common and will share best practices, investments and expertise. Meredith Bowen, a former partner at Seven Bridges Advisors who is now President and CIO of Beatrice, said the advisory firm will put a high priority on tax efficiency and custom tax structures.
“We are really trying to create an investment infrastructure that is specific to an individual taxpayer’s picture,” Bowen said. Beatrice will target clients with between $25 million and $300 million in net worth, although Bowen said “the largest families will get a lot out of us.”
As an active philanthropist, Lewis founded All Star Code, a nonprofit that provides young men of color with basic web and coding skills, and cofounded Giving Gap (formerly Give Blck), a searchable database of vetted, Black-founded nonprofits. She is also vice chair of the Reginald F. Lewis Foundation. Lewis said that by making wealth advice accessible to a more diverse and young population, she hopes to help more families like her own. “When I was looking at firms, I wanted that alignment with the values and style of the clients,” she said. “I feel like [Beatrice] will be diverse and inclusive from the get-go.” |
|
|
X-treme wealth: The most overlooked generation in the Great Wealth Transfer |
Credit: Fg Trade | E+ | Getty Images |
More than $80 trillion in wealth is expected to be passed down from older generations to their kids and grandkids in the coming years, according to Cerulli Associates. Millennials and Gen Z are expecting the biggest windfalls, with more than two-thirds of people under the age of 43 expecting an inheritance.
They may be disappointed, at least for the next decade. According to a new study from Wealth-X, the generation that stands to receive the first big wave of wealth from the Great Transfer is Generation X. The average age of individuals in North America set to inherit fortunes from parents worth $5 million or more is 46.1 years old, according to the report. The average age of children expected to receive the biggest fortunes – from parents worth $30 million or more – is 47.6, according to the study. (The study defines members of Gen X as between the ages of 44 and 59 today, and millennials as between the ages of 28 and 43.)
“Much is often made in the media of millennial and Generation Z heirs but, in fact, Generation X will be first in line to inherit from their wealthy parent(s),” according to the report. The report said that for now, millennials and Gen Z “are more likely to receive sums as grandchildren, which will often be less substantial.”
Inheritances, like wealth, will also be extremely concentrated at the top. In the next 10 years, 1.2 million individuals worth $5 million or more will pass down a total of over $31 trillion in wealth, according to the report. Of that amount, nearly two thirds (64%), will be from the ultra-wealthy, defined as those worth $30 million or more. In other words, nearly $20 trillion will be passed down from 155,000 people in that upper echelon of wealth.
The super-wealthy, or those worth $100 million or more, will account for nearly half of the $31 trillion total being handed down. Billionaires will pass down about $5 trillion, according to the report. What does it all mean for wealth managers and philanthropies? First, don’t forget Gen Xers – they will be the moneyed generation in the next decade, followed by millennials and then Gen Z. Inheritors will have different values and priorities from previous generations, which wealth managers, luxury firms and philanthropies need to adapt to. They are more tech influenced, more focused on the environment and social justice and more global, according to the report.
“New technologies, the clean-energy transition and ‘impact investing’ will be a focus of many heirs’ ambitions, which may not necessarily align with a family’s existing business structures or the legacy plans of those transferring their fortunes,” the report said. |
London calling: Why Americans are snapping up posh London real estate |
Luxury properties in the Kensington and Chelsea district of London, UK, on Monday, Aug. 21, 2023. Credit: Jason Alden | Bloomberg | Getty Images |
Wealthy Americans are replacing rich Russians and Saudis when it comes to buying luxury real estate in London, according to brokerage firms.
Americans were the largest foreign buyers of high-end London real estate in 2023 and are set to continue pouring more money into the market this year. According to Douglas Elliman and Knight Frank, the U.K. is expected to be the largest beneficiary of the $13 billion Americans expect to spend on overseas real estate this year, up from $10 billion last year.
Their favorite neighborhoods: Kensington, St John’s Wood and Belgravia. American buying in Kensington hit a 10-year high in 2023, and they accounted for 10% of all deals in Kensington. Elliman and Knight Frank said they’re seeing “exceptionally strong interest from Americans” in the Old War Office (OWO) residences, a collection of 85 private residences serviced by the U.K.’s first Raffles hotel.
“American buyers have a great affinity for London,” said Scott Durkin, CEO of Douglas Elliman, which has a partnership with the U.K.’s Knight. “It’s the schools, the parks, the West End and the common language. And it’s still one of the great financial capitals of the world.”
The strong dollar helps. The British pound dropped to a four-month low against the dollar in April. A property that costs 1 million pounds in the U.K. equates to $1.27 million, making property more affordable to U.S. buyers. With U.S. interest rates expected to remain high, the dollar could strengthen further.
Safety is another driver. Brokers say wealthy Americans concerned about crime in major cities and guns in schools are increasingly looking to London as a safe haven. Some wealthy buyers are also increasingly concerned about social unrest and uncertainty after the U.S. elections and see London as an easy (if temporary) escape.
“We’re such a mobile society now,“ Durkin said. “It’s an English-speaking country, and it’s only a 7-hour flight. And the Concord is coming back, so it will be even faster.” |
Trading up: Sotheby’s and Fanatics form new venture for trading cards |
A 1948 Leaf #79 Jackie Robinson card, set to go to auction at Sotheby's and estimated at between $275,000 and $350,000. Credit: Sotheby's |
This week, a 2003-2004 Michael Jordan “Logoman” trading card sold for $2.98 million, making it the most expensive Jordan trading card ever sold. The news was a perfect layup for an even bigger announcement in the sports collectible business: Sotheby’s is teaming up with Fanatics to launch a new series of auctions for the most prized trophy trading cards, valued at $100,000 and up.
The announcement, which coincides with the launch of the Fanatics Collect marketplace, is the latest sign that trading cards and sports memorabilia have now found their place alongside fine art, classic cars, wine and diamonds as a broad-based collectible.
“Through high-end auctions, state-of-the-art exhibitions, and exhilarating events, this collaboration marks a significant milestone within the ever-growing and engaged trading card community,” said Brahm Wachter, Sotheby's Head of Modern Collectibles. “We eagerly anticipate ushering promising collectors into an exciting new era of innovation and accessibility.”
Trading card prices and demand has skyrocketed, especially since the pandemic, when a flood of young collectors poured into the market. Prices have been slipping in recent months, with CardLadder’s “CL50” Index, which tracks 50 high-profile trading cards, down 7% over the past three months, but prices are still well above 2019 levels.
The most expensive sports card ever sold was a 1952 Topps Mickey Mantle card that went for $12.6 million in 2022. Last year, a 1914 Babe Ruth Rookie Card sold for $7.2 million.
The first live auction for the Sotheby’s Fanatics venture will feature a 1948 Leaf #79 Jackie Robinson card, estimated at between $275,000 and $350,000. The card is the only true rookie card of Robinson and is in “exceptional condition,” according to Sotheby’s. The sale will take place in September. |
|
|
"Wrapped Volkswagen" 1963-2014, by Bulgarian born artist Christo displayed at the Unlimited sector of Art Basel fair for Modern and contemporary art, in Basel, northern Switzerland, on June 11, 2024. Credit: Valentin Flauraud | AFP | Getty Images |
|
|
Forwarded this email? Sign up here to join the Inside Wealth community.
|
|
|
© 2024 CNBC LLC. All rights reserved. A property of NBCUniversal. 900 Sylvan Avenue, Englewood Cliffs, NJ 07632 Data is a real-time snapshot *Data is delayed at least 15 minutes. Global Business and Financial News, Stock Quotes and Market Data and Analysis.
Data also provided by THOMSON REUTERS |
|
|
|