Aristotle's work Politics references oligarchs, the wealthy few who govern. Today, oligarchs are the wealthy and politically powerful. They differ from tycoons, who seek greater affluence, and many politicians, who seek greater political power. Oligarchs fuse the two drives and use their resources to create more wealth and political power.
Critically, oligarchs are not inherently bad or good. They can use their resources for either. What matters is the oligarch's morality. Oligarchs across the globe, including the U.S., are not new. For example, political megadonors are oligarchs.
We are not opining on the positive or negative impact of oligarchs. Instead, we are taking a clinical approach by recognizing their existing and growing prevalence and addressing their preference for family offices that can blend elite wealth management with their political agenda.
Characteristics
While the term oligarch is often associated with billionaires and foreign actors, oligarchs are present across the political spectrum. They may be involved in all levels of governmental decision-making, from local communities to running countries.
The advantage oligarchs possess is a remarkable ability to identify opportunities and better manage uncertainty. They embrace entrepreneurial capitalism, sometimes creating new companies and now-and-again new industries. They also have a social agenda, which can be incredibly beneficial for others. Philanthropy is also characteristic of many oligarchs. In just about all cases, oligarchs are extraordinary relationship builders.
Oligarchs are generally ultra-wealthy, with a net worth of at least $30 million. Moreover, the billionaire set is replete with oligarchs more than ever.
Future oligarchs tend to make their fortunes through entrepreneurship. They build and sometimes sell successful companies. Because of the Great Wealth Transfer, some inheritors will become oligarchs. On the political side, future oligarchs have built a solid political base by supporting and sometimes being politicians.
It is telling that future oligarchs are learning to combine and enhance their wealth and political power faster. This is a function of the rise in their numbers, wealth and political acumen. It is also because there are now best practices future oligarchs can adopt to expedite their success.
The Rise Of The Oligarchs
Several factors are contributing to the tremendous growth of this cohort. One significant factor is the increasing concentration of wealth worldwide. For example, to be in the 1% in the U.S. today, a person must have a net worth of around $15 million. By 2035, that number will rise to about $50 million. While many discussions and critiques about income and wealth inequality exist, there are no indications that this socioeconomic trend will level out or slow down. More than likely, it will accelerate.
Another significant factor is the intense political divisions between and within countries. Sociopolitical extremism is increasingly prevalent. Meanwhile, social media helps to create echo chambers that emphasize differences, creating a feedback loop of discontent and animosity. Again, this trend will only accelerate.
Another critical factor driving those who can become oligarchs is a mental calculation. Leading business owners and politicians see a more complex world facing dramatic and potentially catastrophic challenges. Consequently, they seek ways to deliver value in this environment and benefit society and their families. Future oligarchs recognize the need to merge financial and political power to make a significant positive difference.
The Preference For Family Offices
Today, many oligarchs, first because of their wealth and second because of their political power, rely heavily on family offices to help them and the people they care about optimize their financial and personal lives. Furthermore, the single-family offices of super-rich oligarchs and the multi-family offices working with less affluent oligarchs adeptly weave in the political agendas of the families.
The family office's comprehensive nature is fundamental and a significant reason future oligarchs will choose this business model over others. The cornerstone is a deep understanding of their financial, political, and lifestyle goals and how they interrelate. The ability to develop and implement expansive and targeted solutions is a major difference between these family offices and other professionals.
Future oligarchs, who are time-starved, need to minimize points of contact and have quick access to specialists. Because of processes like discovery, family office professionals can be highly proactive and responsive when future oligarchs find opportunities or face challenges.
From a financial perspective, family offices prioritize enhancing the wealth of current and future oligarchs and helping them find and benefit from economic and social opportunities. Sophisticated, multifaceted wealth planning requires a creative, conservative approach unique to current and future oligarchs. For example, a common consequential difference exists between how future oligarchs structure their assets and how an ultra-wealthy business owner might structure them.
Many oligarchs invest heavily in private ventures, which have exponential upside potential. They can also leverage their experience and resources to accelerate success in some situations. Family offices are well-positioned to source possible private ventures, structure ownership interests and shield them from political upheavals.
Other capabilities of family offices also play a role. For example, lifestyle services are very attractive to many current and future oligarchs. One of the most appealing lifestyle services is concierge medicine, which focuses on longevity. Protection against physical and cyber threats is also in high demand.
Considerations For Future Oligarchs
Not all potential future oligarchs will become oligarchs, but many likely will. Some will be disqualified due to financial reversals, and others will fall out by choice, such as a disheartening political world. Still, the megatrends suggest that a large percentage of future oligarchs will make a substantial difference in the economic, political and social lives of others. Remember, becoming an oligarch is a potent way of protecting what matters most to them in an increasingly complicated and antagonistic world.
One way for future oligarchs to be more likely to become oligarchs, even if only in their local jurisdiction, is to turn to family offices adept at addressing their goals and concerns, including their societal-influencing aspirations. While some family offices are well-versed in serving current and future oligarchs, many will evolve to support this cohort in achieving their desired outcomes.
Jerry D. Prince is the director of Integrated Academy, part of Integrated Partners, a leading financial advisor firm. Russ Alan Prince is a strategist for family offices and the ultra-wealthy. He has co-authored 70 books in the field, including Making Smart Decisions: How Ultra-Wealthy Families Get Superior Wealth Planning Results.