Inflation tops family-office worries; use the Citi ranking as a hedge script

Citi's annual global family office report, fielded with 350 offices across more than 40 countries in June and July, puts inflation at the top of the worry list ahead of trade wars and tariffs, with interest-rate changes and the stability of the global financial system behind them. For an advisor, the useful part is the ordering: a client's own cohort did the ranking, which is harder to wave off in a review meeting than a strategist's forecast.

Inflation above 3% in three of the four major world economies has kept interest rates high and slowed growth, per Bloomberg Economics data cited in AdvisorHub's coverage of the survey, and the two runner-up concerns read as its downstream effects.

Andy Sieg, who runs Citi's wealth business, described the mindset in an interview: these families have succeeded because they attend to costs as closely as revenue, and they notice when pieces of their lifestyle become more expensive. Wealth does not insulate a household from a rising price level; it likely means more line items that reprice with it, a useful reframe for a client who assumes inflation is somebody else's problem.

The contradiction in the responses is where a hedge conversation should start: more than 90% of the offices said their portfolios posted positive returns this year, and almost half added to public equities in the first half, while public stocks were also the preferred asset class for future net allocations. Sieg attributes that preference to recent equity performance and to questions about private-market valuations, particularly assets vulnerable to regulatory action or other forces investors feel they cannot control. The investors naming inflation as their first risk are the same ones leaning into public equities, a pairing that implicitly bets earnings keep pace with prices.

Gold is where the talk has gone. Nearly every client conversation Sieg has these days involves the metal, which he says was not true two years ago; families who once debated currency pairs now weigh gold as the currency of the day, given similarly strained fiscal positions and rising prices across much of the developed world. Citi is expanding its vault capabilities and recently joined a small group of banks that provide vaulting and clearing in London's gold hub, which suggests the firm expects the demand to outlast the current anxiety.

Treat the gold chatter as a measure of anxiety rather than a completed allocation decision, because the exposure a client fears is likely to live somewhere less visible: bond duration that reprices along the same rate path, cash parked in a sweep, floating-rate debt inside a private allocation. Bring the Citi ranking to the meeting, ask the client to rank the same concerns for their own household, then audit the portfolio against their answers.

The next edition of the report will show whether the equity tilt survived alongside the inflation worry; the allocation pages are where those two answers either line up or not.