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Philanthropy Focus: US Bank and the UHNW, Pt 3—Family Retreats; Investing

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With its unusual staff, more concerned with motivation than money, Ascent Private Capital Management might be expected to take an unusual approach, and Michael Cole, president of Ascent, says it does just that. (See parts one and two of this series on the process and skills at Ascent, US Bank’s UHNW division, and on the non-tax and -monetary benefits of philanthropy.)

Clients at Ascent early on are asked an unusual question: What is the purpose behind the money? In seeking out the impact the UHNW client wants to make with his or her wealth, not just on family members but in the world at large, a different aspect of the planning process from the customary nuts-and-bolts approach takes over, and clients also begin to consider the roles of each family member, as well as a leadership program for succession over time.

Cole (left) cites two examples of client interactions that demonstrate the differences. In the first case, he says, a prospective client came in for an initial meeting after being introduced to the firm through a commercial bank. During the meeting, he remembers, the man’s “keep-him-up-at-night issues” were discussed, which surprised the prospective client; he had expected the “standard investment pitch.” What emerged from the meeting was that he was far more concerned about what kind of world his children and even his great-grandchildren would inherit than he was about how to get the best investment returns.

In the second case, the matriarch and patriarch of a client family wanted to make sure that their children, who would inherit substantial sums, would “do more than write checks” for philanthropy. “They wanted them actively involved in causes, and things that mattered,” recalls Cole.

The firm set up a family retreat customized for them, and put together a participatory exercise that allowed the family to see the impact of their philanthropy. “It wasn’t about the writing of the check,” he says, “but seeing the end user who benefits from charitable contributions and their work.”

Ascent manages client money with philanthropy in mind, as well. Many other advisors, says Cole, will work with a family and design asset allocation that is structured for different legal entities, but the purpose of the money is not segmented off. Following its bottom-up approach, Ascent does segment the money.

The way it does this is by segregating funds into four separate “buckets” that correspond to security, lifestyle, wealth enhancement, and societal or social impact. The first is a high-liquidity, low-risk vehicle that provides the cash the family needs “to write a check tomorrow.”

The second is used to replenish the first, and covers cash flow. The third “is where we get into long-term multigenerational growth,” says Cole. “It’s a long time horizon, with lower liquidity and a different risk profile to build a legacy for future generations, since we’ve already taken care of current generations [in the first and second ‘buckets’].” And the fourth, also with a long time line, defines return in terms of social impact as opposed to financial impact.

Lastly, Ascent is working on another approach to its clients’ needs–building a venue for clients to come and interact with other like-minded families.

Clients struggle with communication, trust and preparation of the next generation to succeed them, and Cole says that Ascent’s goal is for families to be able to learn from each other. Such lessons could indeed have an impact far beyond money.