Philanthropy: the key to the new generation of wealthy individuals

In the coming years, large sums of wealth will be passed on. The new generation has its own ideas about how it wants to use this fortune. Asset managers need to position themselves accordingly – and philanthropy offers them a wealth of opportunities to do so. 

Julia Kleiser Philanthropy Advisor, LGT Bank Switzerland AG

The figures are staggering: according to various estimates, between USD 84 and 124 trillion will be passed on to the next generation over the next two decades. Advisors to wealthy individuals who want to position themselves well for the future should also think about the next generation and convince them of their qualities; studies show that 70 to 80 per cent of clients could change advisors in the course of the wealth transfer.

It is therefore important for wealth managers to discuss wealth succession with their existing clients and to find a way to engage with the next generation. In our experience at LGT, the topic of philanthropy can be helpful, as it enables open discussion within the family on topics that are very closely related to key issues of wealth transfer – but without the usual division of roles, because philanthropy affects everyone equally, whether young or old, male or female.

Philanthropy is also important to LGT because the Princely Family of Liechtenstein, owner and largest client of LGT, has a long tradition of philanthropic engagement. We want to share this experience with our clients. Over the past decades, we have also observed that expertise in the field of philanthropy does not stand alone, but is particularly in demand when holistic wealth solutions need to be developed.

LGT has invested in its own expertise in this area, including by setting up a Philanthropy Advisory team. This team of three experts not only advises our clients, but also makes its knowledge available to other LGT employees and external asset managers with whom we work in partnership. 

What we can offer is not only many years of practical experience. In collaboration with other thought leaders, we have systematically built up comprehensive fundamental knowledge of philanthropy and the new generation of wealthy individuals. One result of this is the study ‘Wealth for Impact’ conducted by LGT. It paints a detailed picture of the ideas that the next generation has about wealth, its impact and the responsibility that comes with it. The study also emphasizes that the next generations view wealth holistically – along the five dimensions of creating, investing, spending, donating and passing on wealth. According to their ideas, wealth should be more strongly aligned with values, sustainability and social impact.

We have already discussed these findings with wealth managers on several occasions. The feedback from these discussions highlights the opportunities available to wealth managers when they address philanthropy in conversations with clients and their families. 

• Conversations are moving away from a pure focus on performance towards the values, purpose and goals of families. This gives wealth managers a different, often deeper access to families.
   
• Due to the thematic focus of the discussions, wealth managers at the table are more likely to be perceived as strategic sparring partners and long-term advisors, even for matters beyond the purely financial.
   
• Philanthropic initiatives are an ideal entry point for the next generations to prepare for their new roles on the one hand and to uphold family values on the other. Wealth managers who accompany these initiatives can build their own relationship with the next generations of wealthy individuals.
   
• A large portion of the wealth that will be transferred in the coming years will go to women. They are involved in philanthropy in a wide variety of areas and are often more value-driven. Wealth managers who include philanthropy in their dialogue with these clients address this target group in a more holistic manner.
   
• The next generations take a holistic view of philanthropy and asset allocation in terms of impact and sustainability. Advisors who are competent in both areas can align their impact and consistency with the goals of individuals and families. 

Contact us to learn more about the ‘Wealth for Impact’ study and our offerings for asset managers.

Biography

Julia Kleiser is an accomplished Philanthropy Advisor with over 10 years of experience in philanthropy and advising UHNW individuals to transform their philanthropic aspirations into reality. Julia joined LGT in 2021 and previously worked with UBS Philanthropy Services. In previous roles, she set up a Donor-Advised Foundation and was one of the architects of an exclusive and pioneering philanthropists’ community connecting like-minded UHNW philanthropists globally. She is especially skilled at curating collaborative initiatives and developing thought leadership agendas for philanthropic gatherings. Julia started her philanthropic career at the Mercator Foundation in Germany. She holds an MA in International Affairs from the Graduate Institute of International and Development Studies (IHEID) in Geneva, a BSc. in Economics and Social Sciences from the Free University of Bozen-Bolzano and is member of the Advisory Board of a Family Office in Italy.