CNBC25: Rebels, Icons and Leaders

For super-rich, investing to see dramatic changes

Mark Zuckerberg
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Lots of start-up funding. Crowd-sourced investment ideas. Real-time low-cost portfolio monitoring. An emphasis on environmental and social impact.

Call it the Silicon Valley effect on the future of money management for the global ultrawealthy.

Those are some of the broad themes that CNBC.com heard from leading family offices, private banks and other experts in an effort to understand how the world's wealthiest people will manage their fortunes in 25 years.

In 2039, today's 20- and 30-something multimillionaires and billionaires will be in their 50s and 60s.

Think of Americans like Mark Zuckerberg, the 29-year-old Facebook chief who's worth an estimated $25 billion, according to Forbes, and Jan Koum, the 38-year-old co-founder of WhatsApp now worth an estimated $6 billion. Or Asian billionaires Liu Qiangdong, the 39-year-old head of Chinese e-commerce firm JD.com who's worth an estimated $2.7 billion, and Naruatsu Baba, the 35-year-old founder of Japanese smartphone gaming company Colopl who's worth about $2 billion.

"We're seeing big wealth created faster than ever," Thomas Hainlin, national investment strategist at U.S. Bank's Ascent Private Capital Management, said of the boom in technology-related fortunes at a young age. "It's going to transform the client base of the ultrahigh net worth space."

The tech effect

So-called ultrahigh net worth is often defined as more than $50 million today. Assuming low-level inflation, that number will likely increase to at least $100 million in 2039.

The new generation of ultrahigh net worth entrepreneurs will cause profound changes in how money is managed by making it more transparent and social—consistent with their Facebook, Google and Apple iPhone-filled worlds today.

For one, money management will be high tech and transparent.

"Technology will be a much bigger part of money management in 25 years—clients will be much more tech savvy having grown up with it and will demand real-time deep data on their portfolios," said Erik Hirsch, chief investment officer of Hamilton Lane, which advises or invests $175 billion in private markets for institutions and individuals. "The era of the monthly paper statement is already nearing its end."

Technology advances will also allow for greater investing precision.

"Over time, we expect your ability to understand the true alpha of an investment, and to gain a much, much more precise exposure, is going to be enhanced," said Scott Dille, national director of client experience at Northern Trust Wealth Management, which manages $222 billion on behalf of clients.

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"Technology power will allow us to deliver that with more and more precision, so you get exactly the exposure you want and you know exactly what you're paying for, and exactly what its role is in diversifying your portfolio," Dille added .

That new precision is likely to lower the catch-all fees—some of them just for portfolio monitoring services—that wealth advisors currently charge their clients.

"It's highly predictable that accounting and portfolio tracking services will [cut out] some of the wealth managers because those services are going to get better and better and more real-time," said Michael Sonnenfeldt, founder of TIGER 21, a 250-person network of wealthy investors who control about $25 billion in investable assets.

The cost of portfolio tracking will fall to less than 10 basis points, or 0.10 percent, according to Sonnenfeldt, and the remainder of what wealth advisors such as private banks and family offices provide—counsel—will remain as a separate cost.

"While information will be cheaper and better, what endures is advice. And good advice is priceless," Sonnenfeldt said. "That's were wealth advisors can add value."

Money management in 25 years also could be more social.

"At the very high end, you'll see more large family offices coming together and pursuing investment opportunities as a club," said Dille.

"It will essentially be a social collaboration among the super wealthy in parallel with the behavior of the millennial generation today," he said. "Investing will become a much more social, fluid, transparent and open experience where historically most of us have been more careful about transparency into our own financial position."

Part of the more social nature of elite investing will be backing the next generation through private investments.

Sonnenfeldt said the tech executives and others who cashed out early in life will continue to invest in others' growing businesses, much in the way their ventures were initially funded. He foresees a dramatic rise in the use of private equity.

"By definition, those investors will continue to build their careers by rolling up their shirt sleeves and funding more and more start-ups and small businesses," Sonnenfeldt said. "The combination of expanding wealth and frictionless capacity for young entrepreneurs to get liquid will dramatically expand the number of young funders."

Hirsch of Hamilton Lane, which links large investors to private equity firms and other opportunities outside the public markets, agreed.

"Private equity as an asset class will be much more prominent. People will learn that it's not a risky venture capital play—it's stable, long-term investing in real growth and value," Hirsch said. "Private equity will continue to offer better rates of return than public markets or anything else over the long run. So there will be more, not less, of it in 25 years."

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A more conscious era

Ultrahigh net worth investors will increasingly consider the social and environmental impact of their portfolios.

"There will probably be a greater focus on not investing for the sake of solely achieving return but investing for the sake of achieving both return and impact in some way, shape or form," said Hainlin.

Climate change could be central to that.

"It's already present in the millennial way of being. If anything, if some of the longer-term predictions around things like climate change firm up, their initial concerns around being more socially responsible may well be radically amplified and may become the primary criteria they use to evaluate things like investment opportunities," Dille said.

At minimum, global warming will be a risk factor to manage.

"Each year from here on in, when you think about risk assessment, climate change is going to have an impact," Sonnenfeldt said. "It affects ultrahigh net worth investing as a risk throughout."

Among the implications he pointed to were municipal bonds and other investments tied to geographical "victims" of climate change. There will also be opportunities from global warming, such as funding companies that help produce alternative sources energy.

Jose Rasco, head of investment strategy for HSBC Private Bank in the Americas, said the rise of socially responsible investing or "SRI" is part of the younger generation's desire to make the world a better place.

"There is a huge amount of potential in the development of impact investing as the wealthy are increasingly focused on the idea of wanting to 'give back,'" Rasco said. "The younger generations are especially interested and realize there are areas that governments may not be able to resolve on their own—so (impact investing) is of interest to them."

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The new geography of wealth

The rise of China and other emerging markets will reshape the location of the ultrawealthy in 2039.

"What you're going to see in 25 years is really the rise of Asia," said Hainlin. He cited estimates from the Organization for Economic Co-operation and Development that Asia will represent 66 percent of the global middle class population and 59 percent of middle-class consumption by 2030.

"Obviously anybody that services that or supports that is going to create wealth. But it also creates wealth in those companies in the U.S. and Europe that sell into that, too," Hainlin said.

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An important part of that international wealth creation will come from technology.

"The deployment of developed world technologies—like 4G, cloud computing, mobility, social networking, 3-D printing, etc.—into the world of emerging markets should continue to create wealth for those with the knowledge and products or services to offer," Rasco said.

Indeed, most new emerging market billionaires won't make their fortunes on large natural resource and state-owned companies as in the past.

"It won't be oligarch oil companies or Brazilian mining companies. It's going to be the people who can provide logistics support or services that can help China figure out how to frack oil and natural gas," Hainlin said as examples. "Those are different wealth-creating opportunities than they had in the past."

Instead, consumer and service-oriented business will win.

"How do you tap into all the things happening in the Philippines, how do you tap into the rising middle class in Indonesia?" asked Hainlin. "That's where the wealth creation will be."

—By CNBC's Lawrence Delevingne