Investing in digital assets such as cryptocurrency is not a widespread practice among family offices: Nearly three-quarters of respondents in Citi Private Bank’s recently released 2024 Global Family Office Survey Insights said these investments are not a priority for their family. Fewer than 20% of the respondents have invested in digital assets, and the vast majority of those who have said the investment represented less than 5% of their investable assets.
Still, some are investing in digital assets due to interest from younger family members. We asked family office professionals and those who work with them how crypto and other alternative investments are being used by family offices as a way to engage the next generation:
“Family offices are often using investments as a mode to engage the next generation, providing the younger generations an opportunity to contribute their interest and understanding of cutting-edge technologies, like crypto or artificial intelligence, to spark engaging conversations and encourage continuous learning for the entire organization.
However, any investment strategy, especially with volatile assets like crypto, must be grounded in rigorous due diligence processes, well-defined governance, and proper risk management. These guardrails are often codified in an investment policy statement. It’s easy to chase the latest trends and deploy capital, but it’s harder to meet or beat market returns. Next-generation investors often are most successful when they earn their seat at the table by first developing an independent track record and building an arsenal of knowledge and skills before joining their family office.
For example, in one family, the next generation attended an Ivy League college, received a master’s in finance, and worked as an investor at a real estate investment fund before joining his family’s family office. Though he led the real estate investment arm, he got approval on every investment from the investment committee and maintained risk and asset allocation parameters of the family office. Over his first decade, he achieved industry-leading returns.”
— Justin Huang, Director of Family Office Advisory, Wingspan Legacy Partners
“We have taken a position in crypto recently in part thanks to the new vehicle of Bitcoin spot ETFs launched this year.  We also outsized our position in Nvidia. The crypto position and tilt to Nvidia were both in response to input from our younger Now Generation, in their 30s and 40s.”  Â
— Nathan Myer, family office principal
“I personally have not come across family offices investing in crypto, and in fact I have seen clients actively move away from this type of investing. Many families are risk averse enough that investments of this nature are not attractive for long-term wealth preservation and growth. I know of some younger generation members who invest in crypto on their own, but not as part of the family office. I do see families moving into direct investing, most effectively [through the] utilizing of a board of directors with independent members who can provide strategic guidance and oversight for these investments. “
— Joshua Nacht, Ph.D., Principal Consultant, The Family Business Consulting Group
“I would say many of the instances where family offices are investing in crypto, ESG, sustainability, impact and sometimes direct investments are at the urging of the next generation. The mistake some family offices and families make is to shut down these requests or interests of the next generation. Often the family office and even the family can struggle to engage the next generation, yet when the next generation does show an interest, the family office or family shuts these down right away because ‘it is not what we do.’ Use these interests as a way to build engagement. Just because you’re going to go invest in one of these, doesn’t mean you’re going to turn the entire portfolio over to crypto, direct, ESG, etc. Look at it as an investment in engagement and education and then build from there.”
— Mark R. Tepsich, Family Office Design and Governance Strategist, UBS
