Trends Family Office Transition
November 18, 2021
Know best practices from financial education and investing guiding principles to look out for when a transition occurs. Transition should happen with the family, not to the family.
OUR CURRENT ISSUE OF RISE (Real Ideas to Stimulate Engagement)
So there are a couple ways we interact with family offices to ensure that that transition happens really smoothly. One is financial education. Financial education is really important because the way that we look at investing is very different than the way we might look at an operating company. The skillsets are different looking at a portfolio, understanding an investor's lens, which is a long-time horizon versus a short-term gain as a trader.
The other area that we really help in this... support in this transition is to create investment guiding principles. That next generation may have, often does have different ideas of where that money should be put, how that money should be used. Sometimes we see families who've gained wealth through doing one thing, and yet they give away money with their other arm to really challenge the work that might be done.
For example, although we are industry agnostic, if you're in oil and gas, you might think that's less sustainable, and you might be giving to national forest as an opportunity. So we help the family consider their investing guiding principles, which says, "What do we care about? How do we create wealth through the means that we find meaningful, that can give us a valuable return on investment. And also how do we as a group, instead of one person, think about our risk tolerances? Are we more risk averse? Are we more likely to take risk?" And we spend time as a group working through our investment guiding principles to help support the next generation so that they can govern more effectively.