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How Family History Informs Impact Investing Goals

Tom Burroughes, Group Editor , May 3, 2019


A focus on the values and culture that made a family wealthy in the first place helps inform how the US organization works with clients over impact investing, it says.

Abbot Downing wants to stand out in the field of family and social impact investing – a field drawing increasing wealth management attention.

The organization is tapping into its work with family dynamics and family histories to help clients frame where they want to put their money and how this advances their priorities.

This week Abbot Downing said it had appointed Bill Lyons to its Institute for Family Culture, working with ultra-high net worth clients. Most recently Lyons worked with family offices and multi-generational wealthy families from his national private practice in Greenwich, Connecticut. Lyons earned a bachelor’s degree in Philosophy from Boston College, a master’s degree in counseling psychology – family studies from Loyola University and a juris doctor degree from Georgetown.

For some time, the firm has made a point of delving into clients’ family histories and family culture, harnessing the skills of family dynamics consultants and professional historians. These figures tell the stories and the impact of dynasties so that present generations can connect to the ideas and values that produced their wealth. This process can also help a family work out how it aligns across generations to drive change with in the future, it said.

With impact investing all the rage in wealth management and the wider financial world, Abbot Downing regards its approach as a real differentiator.

“I was thinking of a term to use and an expression could be `aligned impact’,” Lyons told Family Wealth Report in a call. He gave examples of families where one generation had fled as refugees to the US and the case of a family business where a number of its members suffered from breast cancer.

In these cases, experiences shaped the kind of causes families supported through impact investing and transfer of wealth, Lyons said. 

“Deep clarity about their values, what we call `family culture’, drives not only philanthropy and impact investing, but also employment policies, corporate philanthropy, social entrepreneurship, volunteerism and how family members spend their time,” he said. 

“These families expect to see measurable results across the time and money they allocate to for-profit, non-profit and personal endeavors. This echoes the broader trend to win younger HNW and UHNW individuals, improve the sometimes tarnished image of financial services and harness assets to tackle issues ranging from high crime re-offending rates to pollution of the seas. Impact investing, which puts money to work to achieve non-financial and financial returns, is arguably all of a piece of “goal-based investing” that is sometimes a term used in the sector. 

Momentum is growing. In June last year a global study of 229 impact investors around the world, together holding more than $228 billion of assets, showed that over half of them jumped into the market for the first time last year, suggesting the rapid increase in interest, and planned to hike investment by 8 per cent in 2018. The figures come in the Global Impact Investing Network, aka GIIN. The sector is not without some controversy – there has been concern that fashion-conscious asset managers might flood the sector with money, leading to “mission drift” and corrupting the meaning of the original concept. Another potential issue is that the concept has not yet been challenged by a global or regional recession, although proponents claim impact investing actually diversifies portfolios and reduces certain risks, making it a sensible way to handle investments anyway.

“Our clients are looking to Abbot Downing to not only help them with family communication, education and decision-making strategies surrounding their wealth, but to also help them define and measure their philanthropic and giving strategies,” Arne Boudewyn, head of Abbot Downing’s Institute for Family Culture, said.

Abbot Downing’s Family Dynamics and Family History teams have partnered with thought leaders from institutions such as Harvard University, Stanford University, Yale University, the Aspen Institute, the University of North Carolina and Northwestern University to bring thought leadership on a range of technical and qualitative topics important to wealthy families. The firm also works with these partners to create social networking and experiential learning opportunities for multi-generational client families.

Boudewyn cited a study showing that next-generation donors are projected to inherit nearly $60 trillion over the next four decades and allocate almost half to charity, ushering in a “golden age of giving.”

Another survey from Oppenheimer Funds/Campden Research shows that 33 per cent of ultra-high net worth Millennials say they would increase allocations to impact investments.

The US government’s recent creation of Qualified Opportunity Zones, which are areas in US states deemed in need of special incentives to help development, is in some ways arguably close to impact investing. This publication has examined the connection here. See a recent article with Abbot Downing about such zones here.

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