Working with family offices on their investment and philanthropic endeavors serves as a “great education platform” for involving the next gen in important issues such as governance, GenSpring's Chris Chandler tells Family Wealth Report.

Florida-based GenSpring believes that wealth management advice can be less effective if conveyed in a siloed manner and so has in recent years outlined more explicitly what it identifies as the key elements of a family office.

The New York-listed wealth management firm for ultra high net worth families keeps a close eye on how individual elements of advice and services interplay with each other, and two areas that marry particularly well together are investments and philanthropy. 

In particular, working with family offices on their investment and philanthropic endeavors serves as a “great education platform” for involving the next generation in important issues such as governance and administration, Chris Chandler, head of portfolio implementation and investment experience at GenSpring Family Offices, told Family Wealth Report.

Chandler used the example of how one family created a foundation as a “shared philanthropic vehicle” to capture the values of the family - a move regarded by the family as a way of giving back to society, bringing the family together and ultimately learning how to be philanthropists. For GenSpring, the foundation was an effective platform through which to educate the next gen on the ever-important subject of philanthropy, but equally on other key areas of wealth management such as investments. 

By working with the next gen and their families on investments and philanthropy, GenSpring aims to enhance younger individuals’ willingness to engage by familiarizing them with the dialogue on the investments side, so that they feel more confident to ask questions and in turn expand their knowledge.

“During the meetings, we talked through the global economic outlook, performance for the portfolio, what to look for, and some of the themes we’re seeing, so they get used to some of the dialogue and conversations around investments,” Chandler said.

“When we’ve met with the families to talk about the portfolios we reinforce a lot of the concepts that we discussed during the foundation meetings. It serves as a great platform for education; we also help them think through some of the governance issues, how to get the next gen involved in, for example, the investment committee portion of the foundation,” he said. Chandler added that those who were interested and thus given that opportunity had to “come prepared” to be active members of those committees and recognize what it means to be an active member.

Of course, not all next gen family members will be interested in involving themselves with investments as they relate to philanthropy, and this is something which Chandler acknowledges “you’re always going to have” and is why it takes a “really customized approach when we work with each family.” Equally, in some cases, the next gen will be passionate about different causes than the proceeding generation, in which case reinventing the family’s mission statement is one way of making them feel that their interests are being spoken for, he added.

Being more interactive

A 2013 global paper by Charities Aid Foundation, entitled The Future Stars Of Philanthropy: How the next generation can shape a bright future, says young people “thrive on engagement.” Meanwhile, an overwhelming 90 per cent of next gen donors are influenced by their parents’ philanthropic thinking and 53 per cent plan to be involved with their family’s philanthropy, according to another report this year by the Johnson Center for Philanthropy.

But advisors and indeed families themselves must be proactive in their quest to involve children and grandchildren. “If you are lecturing to the family they’re going to be less willing to participate and be active in that process. But if you make the process more interactive and help them be part of the discussion and learning, and have a say in how they best learn, we found that to be very helpful,” Chandler said.

"I think the bottom line is that it’s going to be on a family-by-family basis and that is why it’s important that we engage the family around all of the key elements - especially education - to determine the most effective ways of working and communicating with them," he said.

Referring to the family mentioned previously, he explained how GenSpring helped host a mock trading platform through which the next gen were able to enter trades, track stocks and report back to the family. This gave them a real-time experience with investing, helping them to understand some of the basic concepts around diversification and how investments act and react. “Getting them involved and understanding some of these basic concepts…is something we think is critical in helping families sustain their wealth,” Chandler said.