Matthew Hansell is a Senior Private Client Lawyer and Partner at national law firm Mills & Reeve LLP. Rated by the legal directories as a leader in his field, Matthew specialises in acting for UHNWIs, business owners, family businesses and family offices. 

It never ceases to amaze me how resilient families can be in a crisis, and they have really needed to be over the last two years. Despite the extraordinary circumstances - and the doom-mongering - it’s cheered me to see how private wealth has adapted.

Growing resilience

The most obvious change is perhaps the move to more flexible working, which enabled many businesses and family offices to continue to function through Covid. It’s something that is here to stay, although many businesses are still working on the appropriate split and requiring at least some office-based working to ensure training for younger colleagues, effective teamwork, a strong culture and a sense of belonging.

ESG is becoming increasingly commercially essential for all businesses. Demand for it is driven by employees, suppliers, customers, shareholders and family members. It should not be ignored and needs to be embraced. Whilst ESG is not directly connected to the pandemic, the desire and need for it has undoubtedly been accelerated during this difficult time, when existential threats have been front of mind.

The pandemic has also accelerated the involvement of many next generation family members. This is partly as a result of the need for “all hands to the pump” to make sure that the business has been able to pull through, but the added energy and fresh ideas brought to the table by the next gen have frequently been very beneficial.

Investment implications

The fundamentals of strategic investing, including the need for diversification, remain much as they have always been. We’ve seen resilience sometimes in the form of experienced hands holding firm and not panicking. There have also been opportunities for tactical investment to take advantage of opportunities arising in the market - boldness in a crisis can reap rewards.

Within businesses themselves care has been needed around investment to conserve cash but with significant spend on new technology to improve efficiency, enable working from home and take advantage of new opportunities. Expect this to continue.

The key challenges for 2022

Whilst the pandemic continues (and, with the Omicron variant, at a pace) hopefully increased protection from vaccination and natural infection will mean that its consequences will be much reduced from the second quarter of next year onwards. But what major challenges will we be left facing in 2022? In my view the main ones will be a reduction in the available workforce, the rise in inflation and continued need to take account of ESG.

A combination of people deciding to leave the workforce during the pandemic, individuals re-locating abroad and natural demographics has meant a significant reduction in the available workforce, and with it a loss of skills. The hunt for talent will intensify, and this will in part significantly drive inflation.

Businesses are going to have to make themselves attractive to employees to be able to retain staff and attract the additional ones they need. They will need to provide good remuneration but also excellent working environment and culture, good career prospects and development, good support and training. They will also need to double down on technology to mitigate the talent shortage.

Climate and inflationary spectres

Inflation is growing all around the world and looks set to be high for at least the first part of next year. This is not something we are used to in recent times and a lot of adaptation will be needed. Businesses will need to try to make price rises stick but also increase efficiency with a view to maintaining profit margins in the light of strong wage and supply cost increases.

ESG is going to become more and more important and must not be ignored. Those around you, be they employees or customers, simply won’t allow it and there will also be significant reputational risks if you do. Environmental concerns will also be a driver in looking at supply chains and trying to reduce their length. I believe that ESG will be the number one consideration for businesses and investors over the next few decades.

Despite all this I am confident that businesses, families and UHNWIs have the psychological resilience to approach next year with confidence and positivity, and the wisdom to continue to invest their time and resources in becoming institutionally resilient too.

About Matthew Hansell

Matthew Hansell is a Senior Private Client Lawyer and Partner at national law firm Mills & Reeve LLP, specialising in acting for UHNWIs, business owners, family businesses and family offices. He is rated by the legal directories as a leader in his field.

About The Lede

This article was originally published in The Lede, Transmission Private’s monthly newsletter that tracks the future of reputation management. Featuring interviews with leading private client advisers from the worlds of law, finance, and accountancy, sign up today to receive the newsletter in your inbox every month.