Poorly structured family meetings that lack a clear purpose and agenda can do more harm than good. Failing to get buy-in from all family members can cause irreparable damage to relationships, despite the best of intentions. There are five key tips for holding a successful family meeting, which is an essential ingredient for managing wealth across generations and ensuring families achieve their ultimate goal of sustaining family unity, maintaining wealth, and preserving the family legacy.
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Investing strategies encompassing responsible investing are expanding rapidly amid greater interest from asset managers, pension plans, endowments and foundations, and plan participants. The primary challenge remains educating market participants on the different types of approaches and products. At the same time, there is rising demand among investors to align their financial objectives and investment goals with their value systems and beliefs. As a result, assets under management that were “responsibly invested” grew to $59 trillion in 2015, from $4 trillion in 2006.
The nascent market for green bonds saw a growth spurt in 2014 with issuance tripling from a year earlier, surpassing $38 billion. The growth in green bonds comes amid greater awareness of climate change and expanding investor appetite for environmentally-aware investment products. The prevalence of these securities is likely to rise as they allow issuers and investors alike to demonstrate their commitment to environmentally focused initiatives.
A family constitution—the rule book that defines the vision and principles of a family’s wealth strategy and acts as an operating model—should be as unique as the family itself. The key to developing an appropriate family constitution is not in the ultimate output, but in the collaborative process of developing it. In working together, families often uncover factors which bind them together. However, the process can also elicit confronting discussions about what really matters to individual members.
Avoiding the issue of succession planning is much easier to do than starting a conversation about handing over the reins to other family members. But avoidance does not defer the inevitable, and it puts family harmony and wealth at risk. As patriarchs and matriarchs of wealth families confront the issue of succession planning, there are seven questions families must address if they want to avoid a failed wealth transfer.
The average family office spends about 32 percent of its time on financial administration and reporting. That’s almost 17 weeks a year on collecting, verifying, analyzing, and consolidating financial information. For some family offices, these jobs took up as much as 75 percent of their time, which left them with little time to contribute to the true strategic objectives of a family office: succession planning, educating the next generation of owners, or protecting and growing the family’s assets.
Families are often overwhelmed by the complexity and sense of burden that comes with managing wealth across generations. Whether they have taken on the responsibility for self-managing all of their affairs directly, or coordinating a virtual team of outsourced advisors, families spend an extraordinary amount of time juggling all the component parts of their wealth. But owning and managing significant wealth does not have to be difficult, and learning from the ten most common mistakes that a family office investor makes can help the process become easier.
Corporate America is doing it, so why shouldn’t individual and institutional investors do it too? In this case, it refers to creating a so-called “fortress balance sheet” that provides protection and downside risk management by holding excess cash and cash alternatives to retain liquidity. The king of this conjectural fortress is cash—often thought of as the core foundation to a strong balance sheet due to the known and consistent outcome it delivers.
A growing trend among healthcare organizations is to evaluate and/or invest in private equity funds or directly in companies focusing on opportunities in the healthcare industry. This trend stems from the necessity of healthcare organizations to adapt to the changes within their industry in order to maintain key advantages and stay relevant. Each organization’s approach, objective, and expectation for success will differ when considering a strategic investment.
Impact investing has gone mainstream. The Employee Retirement Income Security Act of 1974 (ERISA), which regulates single-employer and multi-employer private pension plans, now officially agrees. Recent regulatory guidance clarifies that ERISA fiduciaries may now consider ESG, impact, and other factors in their investment decisions.