The result was a decision to allocate returns from the sale of the business into several buckets. Most of the funds were invested in lower-risk, more traditional investments that would secure the future of the family. A portion was carved off into an investment fund to pursue investments that engaged family members. Processes have been established for creating a business case to request funds, for reviewing investment performance and for making decisions about selling an investment if it does not perform as expected.
Through the family dialogue, the Gambel family has found a solution to balance engagement and return to ensure the continuity of wealth across generations. They also had the unique opportunity to mold their investment mix to suit their interests. Most families don’t have this opportunity because they are saddled with an existing asset portfolio and allocation that may be difficult to adjust in the near term. However, that is not a reason to ignore the importance of engagement. Understanding what will engage the family in the long term can affect decisions made over time and allow the family’s wealth profile to evolve to a place where it is engaging to family members.
Jennifer Pendergast, Ph.D., is a senior consultant with The Family Business Consulting Group Inc., where she specializes in strategic planning, family and business governance, and family office structure. To learn more, visit www.thefbcg.com.