Familosophy v5#7 - Jul 2022

Lawyer Or Friend?

Friends and family members often turn to lawyers (and other professionals like accountants and wealth managers) they know in because they naturally trust a lawyer who is close to them rather than a stranger. But is this the best approach?

Advisors can provide the best services when they are objective and are governed by reason and not by emotion. Often, and especially in a family situation, they specifically need to be the voice of reason while clients are the ones whose decisions may be driven by passion and emotions.

For lawyers in particular, the issue of 'who is the client?' is important. Initially, the client is usually the patriarch / matriarch as wealth owner. But as the family grows, things can get complicated. It may not be possible for the lawyer to act 'for the family'. Where there is a 'family office', consideration will be needed as to what the family office actually is and who is, in fact, the client.

Similarly, wealth managers may not be permitted to talk to the children of their client without a formal engagement. And of course, don't engage a wealth manager if you're going to be uncomfortable sacking them if they don't perform well.

The relationship between a family and all its advisors needs to have just the right amount of 'emotional distance'.

Consider This:?How close are you to your advisors? Are they too close that you can't get rid of them if you needed, or adequately assess their performance? Do you have genuinely independent voices at the table?

Further reading:?https://abovethelaw.com/2022/06/lawyers-shouldnt-get-too-emotional-when-representing-friends-and-family/,?https://www.lexology.com/library/detail.aspx?g=47051b35-6556-4bfd-b130-58fa573336f5

Buy- VS. Sell-Side Philanthropy

There are many consultants out there who advise non-profits on things like strategy, marketing, grant-writing, etc. The market for the philanthropic dollar follows the usual 80/20 rule: 80% of the funding comes from 20% of the donors (it's probably far more skewed than that - more like 95/5). A particular area of focus for consultants is therefore how to capture the high-end of the market - HNW family giving. We can think of this as the 'sell-side' of philanthropy.

On the 'buy-side', there are the families. Because of supply-demand economics, it is a buyer's market: causes are most always chasing families rather than the other way around.

Families choose causes for a variety of reasons, but too often those reasons are unorganised and reactive. They may be a response to a personal connection, or a direct solicitation. That may leave family members looking back at a schedule of the gifts for the year and wondering why, and what their impact has been.

It behoves families on the 'buy-side' to take a more strategic and proactive approach to their philanthropy. That starts with having a strategy and goals, and then choosing to allocate in a more sophisticated way. This can be balanced by an 'allocation' or 'bucket' for opportunistic or reactive giving.?

Consider This:?What proportion of your family's giving is reactive vs proactive? Does your family have articulated goals for its philanthropy? How does it measure against those goals?

Original articles:?https://www.forbes.com/sites/johnjennings/2022/04/30/top-tips-for-effective-charitable-giving/,?https://www.forbes.com/sites/forbesfinancecouncil/2022/03/28/philanthropy-four-steps-to-giving-strategically/,?https://www.wealthprofessional.ca/news/industry-news/its-a-great-time-to-help-clients-think-about-their-philanthropy/362908