Initial index points to family meetings and wealth transitions as potential friction points
A look back at the 2017 Pitcairn Family Wealth & Investment Forum
“One of my passions is to become the top wealth momentum advisor to families.”
With that bold pronouncement, Pitcairn President and Chief Executive Officer Leslie Voth introduced the concept of Wealth Momentum™ in her opening remarks at the 2017 Pitcairn Family Wealth & Investment Forum. Pitcairn dedicated the theme of this year’s forum to wealth momentum, defined as the positive interplay between family and financial dynamics.
A forum with a focus on wealth momentum
As Ms. Voth welcomed guests to the Forum, she explored the concept of wealth momentum in greater detail. She equated the challenges of sustained success in a family with a lifelong passion of her own – gardening. She also expanded on how Pitcairn developed its wealth momentum model, including its three core drivers – innovation, integration, and communication. She reaffirmed her commitment to continue to refine the Pitcairn model so that it will help families and clients improve family and financial dynamics.
The Forum’s keynote speaker was Frances Stroh. Ms. Stroh is an author and a member of the family that once owned the Stroh Brewery Company. She opened her keynote speech Sunday evening with two challenging questions – “How does a family dynasty die? How does a family legacy die?” It served as a compelling introduction to the powerful and emotional story of the Stroh family and its storied past, sliding from one of the most successful beer producers in the world to its ultimate demise in 1999. The old proverb goes “shirtsleeves to shirtsleeves in three generations.” It took the Stroh family five generations, but ultimately it was not exempt from the forces impeding wealth momentum. Ms. Stroh’s remarks served as a moving cautionary tale on family dynamics and the perils that can derail wealth momentum.
Investing for long-term success: A key to your wealth momentum
On Monday morning, Pitcairn Chief Investment Officer Rick Pitcairn oversaw an enlightening and cautiously optimistic transition from family to financial specifics with the Investment Roundtable. Mr. Pitcairn shared the investment team’s views on the continued bull market and the markers that could signal its inevitable decline. He was joined by some of the top economic and political minds working today to touch on topics ranging from the Federal Reserve Chairman and tax reform to North Korea and Black Monday of 1987.
Paul McCulley, Economist and Senior Fellow in Financial Macroeconomics & Adjunct Professor at Cornell Law School, began his portion of the morning with an upbeat video spelling out the difference between fiscal and monetary policy, following that with engaging and experienced commentary on external forces on the market with a focus on inflation – or lack thereof. JT Taylor, Senior Policy Analyst at Hedgeye Potomac Research, offered a political perspective on the tumultuous last year and what the near future holds, including an in-depth look at the current tax reform efforts. Finally, Jeremy Siegel, Russell E. Palmer Professor of Finance and the Wharton School of the University of Pennsylvania, spoke on his groundbreaking research into stock and bond returns and the market’s unwavering climb over the long term that he’s detailed over five editions of his landmark book Stocks for the Long Run.
The Wealth Momentum™ Index: A powerful new tool
The Forum went beyond merely defining the concept of wealth momentum and investment success. During an active working session Monday afternoon led by Pitcairn’s Managing Director of Strategy Andy Busser, families, advisors, and collaborators established the first Wealth Momentum™ Index. Participants completed a scorecard to help them measure the state of their own personal wealth momentum. The scorecard asked respondents to rate their family’s performance in managing both family and financial issues. Each area was scored from one to 10, with one meaning it is a major source of family friction, and 10 denoting it acts as a positive force in the family’s long-term success.
The scoring included family and financial elements:
- Wealth Transition
- Decision Making
- Family Meetings
- Values & Mission
- Wealth Administration
The results were revelatory.
First and foremost, it’s worth noting respondents generally showed optimism overall in both the family and financial spheres. No single area scored less than a five – indicating families see them as closer to positive forces than friction points.
Yet the scorecard also revealed what most participants already understand – family management and financial management pose different challenges to families and family leaders. Even within the financial dynamic, elements with family involvement and personal conviction were more likely to be a point of contention. Specifically, Trusts and Philanthropy scored much lower than Investments and Tax.
On the family side, participants indicated that they were relatively confident in the areas of Education and Values & Mission, while Family Meetings edged closer to being seen as friction point.
These results make it clear that family leaders are eager for effective ways to talk about family and financial considerations with family members and chart a path forward. Pitcairn is enthusiastic about empowering families to better understand and manage the interplay of family and financial dynamics to sustain their wealth momentum from generation to generation.
Looking back on a successful 2017 Pitcairn Family Wealth & Investment Forum, wealth momentum and the best practices that emerge in that newly defined space will be a focus for Pitcairn not only in the year to come, but for generations to come.