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Sustainability as a pillar of successful wealth preservation

Successful multi-generational families are investing sustainably to build their financial, business and social capital. Julius Baer can provide multi-family offices with a roadmap for the families they serve.

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It can be said that a family’s ability to preserve its wealth successfully over multiple generations depends partly on a bit of luck. More importantly, it depends on the ability and willingness of the family to work together to articulate and act on their long-term goals, more and more frequently using sustainability as a framework.

These long-term goals look beyond quarterly business results or monthly portfolio returns. Successful multi-generational families are increasingly pursuing their long-term goals through aligning sustainability and impact objectives with their business and investment strategies. What’s more, families find this is important for managing their reputations in the communities where they live.

Sustainable investing’s multiple benefits

Sustainable investing guidelines can be defined as seeking out established companies which operate successfully along the criteria set by environmental social and governance (ESG) norms or the UN’s Sustainable Development Goals. Investors aim to achieve not only a financial return but also external benefits for other stakeholders.

This form of investing can also align a family’s long-term goals with its family office’s risk management mandate. For instance, data shows that companies with higher ESG ratings are comparatively resilient, and less prone than others to bankruptcies and downward earnings revisions.

Thus, sustainable investing fulfils several roles: it not only aligns investments with personal goals, but also serves as a hedge in times of crisis. 

Impact investing: a force for change

Turing to impact investing, this can be defined as using capital as a force for change. Through innovative investment strategies, investors seek to make an out-sized social impact – accepting a higher risk profile and longer investment horizon.

Longevity of capital is the most elusive and challenging of all wealth preservation goals, and our world is changing at speed.

Kripa Sethuraman, Wealth Planning, Bank Julius Baer

Impact investing is increasingly attractive for the rising generation of wealth owners who aspire to responsible stewardship of wealth. Often, they are risk takers with a strongly articulated sense of social purpose who are open to investing at the cutting edge of technology. Finding the stars of this new impact investment world requires time, passion and energy.

Julius Baer Next Generation Research can be a useful tool for accessing the latest trends in innovation, across some of the most exciting industries of the future.

Supporting the family office

As advisors to families, we support wealth preservation mission in several ways:

  • Help the family reach a consensus on long-term goals and actionability which is documented and shared with the family office: create a ‘Family Roadmap’.
  • Support the family office in a health check exercise: does the current set-up support the family’s long-term goals? What needs to be changed or improved? 
  • Help the family office conduct regular oversight and review of a family’s goals. This involves alignment with business and financial benchmarks, and exploring the products and services that are rapidly changing in this evolving field.
  • Further education on sustainable and impact investment strategies in public and private markets, which may align closely with family goals and long-term wealth preservation.

When discussing activities which the Family Office may wish to insource and outsource, Julius Baer Wealth Planning can guide the process and engage our ecosystem of experts across several specialist areas.

Longevity of capital is the most elusive and challenging of all wealth preservation goals, and our world is changing at speed. We face risks to traditional sources of capital – climate, natural resources, a stable workforce. But we also see opportunities in terms of new technologies, innovation and agility.

Families that aspire to be multi-generational, are looking for sustainable solutions that foster long-term wealth preservation, and provide stability for decades to come.

If you would like to find out more, please contact your relationship manager, who will be pleased to put you in touch with our network of Wealth Planning experts.