Wealth brings with it some important considerations, including the obligation to have an approach to managing it. For families of significant wealth, it primarily revolves around the requirement to develop an investment strategy that ensures the wealth is maintained for future generations. It creates a shift in focus—one that takes an intergenerational approach and goes beyond the protection of capital in the short term.
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The importance of connecting with your children, whether they are ten years old or sixty years old, never diminishes. The investment you make in them comes back ten-fold in the family office setting and in innumerable, intangible ways in your life with them. A filmmaker translates her right-brain know-how to a left-brain playing field—the tax attorneys, wealth consultants, and risk strategists—on how to connect with the rising gen.
For insights on integrated wealth planning, this issue of The Advisor presents a view from the top with Joe Kahn, The New York Times Managing Editor, the impact of globalization 2.0, and the U.S. presidential election 2016 and the candidates’ tax platforms. Also in this issue are the best practices in providing age-appropriate transparency when it comes to discussing a family’s wealth plan. Following it is the takeaway on the advantage of Delaware’s laws on directed trusts.
In both complex commercial and family disputes, the caucus-style mediation has been the predominantly employed method over the joint mediation session. But as society and business systems continue to evolve, the mediation process must also evolve to where mediators should more aggressively explore the benefits of joint sessions with the parties at the outset of mediation. In a new generation of transparency-driven parties—faced with issues of growing complexity and personal implications—it calls for a dispute resolution process that is less obscure and manipulative.
Jessica Jackley, cofounder of KIVA, the world’s first microfinance website, shares her unique wisdom on financial inclusion and social justice. Jessica highlights stories and lessons from her book, Clay Water Brick: Finding Inspiration from Entrepreneurs Who Do the Most with the Least, as well as experiences from her own life as an entrepreneur, investor, and philanthropist.
The expression “an elephant in the room” is readily recognized to mean an uncomfortable situation not talked about but clearly known to all. When elephants make unwanted appearances—at family dinners, social gatherings, meetings—people get uncomfortable and begin to shut down. When this happens, they begin to operate from assumptions and draw conclusions based on their own perceptions. Overtime, these actions may cause family relationships to erode.
All business owners will transition their business at some point in the future. Whether it is a transfer within their family, such as to the next generation, or to an existing business partner or employee, or sold to a competitor or outside investor, transition will occur. Just as successfully run businesses do not happen overnight, transitioning well cannot happen without devoting the necessary focus and intentionality.
While wealthy families prefer to pass nearly two-thirds of their wealth to their children, grandchildren and other heirs, they grapple with a fundamental question: Can their wealth benefit their generation and be passed on to future generations while also having a positive impact on those future generations? Experience shows that sustaining family wealth is indeed possible when families begin to see their wealth not only as a series of activities that need to be performed, but also as an enterprise that needs to be managed.
What do people really mean when they talk about “impact investing?” Why do people make impact investments, and how do they do it? What counts, and what doesn’t? This primer provides family enterprises with clear explanations of the “why,” “how,” and “what” of impact investing. Whether families are just dipping their toes in the water, or ready to dive in, families can make more impact investments more effectively.
Though the challenges to successful wealth transfer across generations may seem overwhelming, they can be overcome. Within the framework of open and honest communication and education, preparing the next generation for life with wealth can increase the probability that the wealth sustains, grows, and benefits many future generations. Along with five key principles to raising responsible owners of wealth, it paves a path where heirs are much better prepared for their inheritance as they become productive, contributing owners of wealth.