Somewhere along the way, DEI initiatives fell out of favor. The term has caused widespread controversy, yet family offices are looking past the semantics and continuing to implement the concepts of diversity, equity and inclusion. Experts tell us that one of the most overlooked components of DEI just might be inclusion. Read on to learn how families are thoughtfully implementing this by tuning out the noise.
Multigenerational businesses were the quintessential American dream for most families. In today’s world, with the advancement of technology and an ever-changing society, family businesses need to stay nimble and innovate to continue their legacy. We share with you a story of a New York-based musical family embarking on a new era of entertainment.
As always, we appreciate any comments, ideas and insights that would make this newsletter more useful. I look forward to growing this family office community with your help. Please email me at [email protected].
HANDPICKED: Family offices forge ahead with DEI initiatives despite criticism
By MARCUS BARAM
In recent months, advocates for diversity, equity and inclusion programs (DEI) that seek to increase the hiring of women and people of color have been on the defensive due to a backlash from some conservative lawmakers and high-profile business leaders like Elon Musk.
The critics argue that such initiatives unfairly discriminate against white and Asian candidates.
For family offices, the controversy has been a distraction but has not swayed them from pushing ahead with these initiatives, say family office members and advisers.
“My response: Don’t talk about DEI, just do it and ignore the noise coming from a small group of haters,” said a family office patriarch who wanted to remain anonymous.
That sentiment aligns with public companies in general, where 38% of investors say they plan to engage companies on workforce or board diversity in 2024 — a figure in line with results last year in an Ernst & Young survey.
General partners at companies are keenly aware of the debate. But 53% say they have created their own DEI policies at their firm, and 64% say DEI has made them think about equity and inclusion in their ownership and investment strategies, according to a new global survey of limited and general partners.
Rather than pulling back, clients have been pushing forward on their efforts, said Jason Britton, who runs Mount Pleasant, South Carolina-based Reflection Asset Management, advising a few family offices on their environmental, social and governance (ESG) and DEI initiatives.
“They may not be using the term front-and-center anymore,” Britton said, “but they’re very comfortable with the economic concept of diversity. Equity and inclusion is to their human capital inputs as diversity and diversification is to their physical capital assets. It’s around exposure and seeing things differently, bringing in different opinions and about leveling the playing field.”
Among examples, Britton cites two professional athletes who share a family office and another firm that functions like a family office, “and they’re both embracing it.” The firm asked him to review the entirety of their portfolio from a DEI perspective, both related to the management teams they were hiring and to the investments they were making.
Family offices tend to lag most financial firms when it comes to their workforce since they lack the hiring infrastructure of bigger companies, Britton said. But they lead the way on the investment side.
“From a venture capital perspective, it’s still very difficult to invest in minority-owned startups,” he said. “The flow of capital just isn’t there. So you’re seeing some of the more progressive family offices embrace that and purposely allocate to them.”
Britton believes that few people are debating the issue, attributing the controversy to “a handful of people who are really, really loud on the subject” and “saber-rattling in an election year.”
Part of the appeal of DEI for these families is how they think it tends to improve the bottom line. Almost half of family businesses that are addressing DEI predict strong future growth, compared with 40% who are not prioritizing those areas, according to a PwC survey last year.
INCLUSION, RATHER THAN DIVERSITY
Tim Volk, the founder and managing director of T. Volk & Co., a Chicago-based advisory firm that works with family offices, had his own experience with DEI as the openly gay fourth-generation member of a wealthy family. When Volk came out in 1992, it was a “jarring experience.” But he’s now a leading voice in his own family and in the family office world, serving as a senior adviser at the UHNW Institute with a podcast focusing on LGBTQ+ issues.
The emphasis should be more on inclusion than diversity, Volk said. “The term DEI is misleading because when most people think of diversity, they think of affirmative action and quotas — and that’s a misnomer,” he said. “If you overlay inclusion as the first term, that’s an issue that all families are facing, and that’s where we should be focusing.
“That part is huge. If 10% of family offices have at least one LGBTQ member, by the end of the third generation, every family will have an LGBTQ member.”
Rather than diversity, Volk said, “we should use the word ‘inclusion,’ and it resets the conversation.”
Some critics at the UHNW Institute — as is the case in many organizations — are pushing back, he said. But its board is fully committed to its DEI initiative. “When I have met with the board to discuss, they have been notably concerned that anyone would think we are not fully committed,” Volk said.
He also sees younger generations as much more into making DEI a priority. “The rising generation is much more aware of the people in the firms they’re investing in and making an impact,” Volk said.
Amy Ellisor, the director of marketing at Bordeaux Wealth Advisors in Menlo Park, California, said her firm is committed to its DEI efforts. “Building a more diverse team of advisers in terms of gender, ethnicity or even experience is simple in concept but challenging to execute and requires a multifaceted solution,” Ellisor said.
“We knew that we wouldn’t be able to increase our diversity by doing exactly what we did in the past. If the diverse talent wasn’t going to come to us, we were going to have to go after them. We expanded our recruiting efforts and started looking in new places for this talent. We increased our recruiting at universities known for their diversity as well as tapped into new sources for experienced wealth management hires.”
Some family offices are widening the focus of DEI beyond gender, identity and race, said Wendy Smith, who advises Canadian families as managing partner at the Toronto-based DEI consultancy Advanced Inclusion. “Other attributes such as accessibility, age and neurodiversity are being recognized,” she said.
Musical family transcends generations, embarking on new era of entertainment
By KRISTEN OLIVERI
For Harris Lane, his whole life has been about music.
Hank Lane Music was founded 45 years ago by Harris’ father, Hank Lane, along with DeeAnn Cowart and Marc Stevens, to create one-of-a-kind musical experiences for events of all kinds in New York City. The company was behind some of New York’s most notable weddings, galas and high-profile charity events, such as the grand reopening of the 5th Avenue landmark Tiffany & Co.
Today, partners Harris Lane and Erik Marshall are running the show.
“We’ve been doing this our whole lives,” Lane said. “We started when we were teenagers at all of these private events. We were roadies, carrying the equipment. We were musicians ourselves.”
Following their humble beginnings, the duo quickly rose the ranks within the family business — learning the business side of things, expanding the music library and working with contract department hiring and facilities. “Eventually we both became band leaders over the weekends while working in the office during the week,” said Marshall.
Eventually Hank Lane took a back seat, allowing for the next generation to rise and for the company itself to grow its brand.
“We’ve grown in size, but we’re still a small family business,” Harris Lane said. “We don’t have a high rate of turnover, and people are with us 10 to 12 years, since we have so much promotion from within.”
But creating a name for yourself within an established business can have its challenges, especially when your name is on the door, Lane said.
“I didn’t want to just be known as Hank’s son,” he said. “For me, it was a little harder each step of the way. I always had to prove myself and go the extra mile. With a lot of hard work and help from Erik, I did make a name for myself. That was the hardest part of transitioning.”
Lane and Marshall are focused on discovering and harnessing new performers who also have an interest in business. “We’re continuing our legacy and bringing Hank Lane Music into other markets like Philadelphia and South Florida,” Marshall said.
As they look to the future with a budding third generation waiting in the wings, the duo understand the need for a family business to continue to keep up with times to be successful.
“My father did business a certain way, and we learned how to do it that way,” Lane said. “But through the years, we’ve had to learn how to run it according to today’s standards. For example, some people getting married today, with an average age of late 20s to mid-30s, have a different mindset than those getting married in 1993. We’re changing and shifting the way we present our products.”
LOOSE CHANGE
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Help us with a story: We’re working on a story about family offices investing in women's health initiatives. If you have any comments on the topic, reach out to [email protected].