Gen Z learns the ABCs of family offices
By CHARLES PAIKERT
Cayla Surovsky, a 21-year-old student at the University of Washington in Seattle, describes Cresset Family Office’s Launch Generation program as “a boot camp in how to be an adult.”
As a senior preparing to interview for a job in urban planning, learning how to “present myself with business professionals” while in the program has proved to be invaluable, Surovsky said.
Cresset’s Launch Generation is a prime example of how family offices are increasingly turning their attention to Gen Z, offering educational and leadership programs specifically designed for the cohort of young people in their teens and early 20s. This one is open to the public, but most such programs are aimed at the Gen Z members of clients’ families.
“Families are recognizing that Gen Z needs to learn financial skills, leadership and entrepreneurial education,” said Whitney Webb, Cresset’s managing director of family governance.
KEY FAMILY AND FAMILY OFFICE CONCERNS
- Preserving the value of our assets 65%
- Preparing the next generation to be responsible wealth owners 51%
- Managing transitions 43%
- Developing a shared family vision 24%
- Managing wealth consumption 23%
- Strengthening the governance system 23%
- Developing future family leaders 22%
- Enhancing the philanthropic impact 16%
To be sure, preparing young adults for leadership and succession in family offices and businesses has always been a priority for wealthy families. According to a recent Citi survey of family-office members, their second-biggest concern is “preparing the next generation to be responsible wealth owners,” cited by 51% of respondents.
And an enduring concern of parents, especially in wealthy families, is a fear that their children will have a sense of entitlement and be unprepared to make their way in the world.
“There’s always the tension between smoothing the path for your child and helping them become resilient and finding their own way,” said Rebecca Meyer, a partner at New Jersey-based Relative Solutions, a consulting firm that works with multigenerational families.
A more topical reason that so many educational programs for Gen Z are being rolled out now is the ubiquity and availability of digital information, said Valerie Galinskaya, head of Merrill Lynch’s Center for Family Wealth.
“Things are changing so quickly in the world,” Galinskaya said. “It’s so much easier for young people to know so much more sooner than ever, so families are asking what they can do to be more proactive.”
Families who haven’t invested in preparing the next generation for leadership could be acting pennywise and pound-foolish, said Thomas Livergood, CEO of the Family Wealth Alliance.
“Successful families and family offices realize these kinds of programs are critical for future viability,” Livergood said. “Poorly prepared successors can mean big problems later on.”
Chicago-based Cresset describes its 4-year-old summer program as a “virtual accelerator for teenagers.” The curriculum includes courses in networking, negotiations, budgeting, branding, credit and funding a business. Teens attend workshops and lectures and work with mentors to help them “attain the tools necessary to create an independent life.”
Sessions this past summer, offered virtually, included lessons on making presentations, investing and interview skills, along with a presentation from a venture capitalist on what he looks for in a business, “from pitches and finances to ethics and social responsibility.”
Cresset’s eight-day virtual program for teens ages 14 to 18 costs between $650 and $750. Next year, when the program returns to in-person learning on the campus of Cambridge University in England and the University of California at San Diego, tuition jumps to $5,000 per session for nonscholarship students.
Rita Rozental, a 20-year-old engineering major at Johns Hopkins University in Baltimore, said the program helped her prepare for the business world, introduced her to a new group of friends from around the world and taught her new ways to think. “When there’s a problem,” Rozental said, “you can be the solution.”
That’s exactly the point, said Cresset’s Webb.
“Wealth education is the starting point,” she said, “but we want to also examine how wealth effects life and relationships, and we want to foster empathy. One-third of the students are on full scholarships, so you’ll have a kid on scholarship from Brooklyn in the same class as a Saudi prince.”
Cresset is hardly the only advisory firm catering to Gen Z.
Pitcairn’s “Gen7 Project: Money and Finance for Teens and Rising Gens” uses “active learning techniques” to help young people build mock investment portfolios and learn about topics such as budgeting, debt and philanthropy during four-day retreat workshops or in a series of online courses.
“We believe that having these personal finance skills are critically important for the rising generation to develop at an early age,” said Amy Hart Clyne, chief knowledge and learning officer for the suburban Philadelphia-based multifamily office.
As part of its Financial Bootcamp, Merrill Lynch’s Center for Family Wealth offers its clients a Gen Z program with interactive modules on saving, budgeting and “thoughtful spending” as well as basic skills in government, business and philanthropy, all emphasizing on experiential learning.
“Gen Z are digital natives,” said Galinskaya, who heads the center. “They want to be engaged, and passive learning doesn’t work.”
In San Francisco, Wetherby Asset Management offers its family-office clients what it calls “customized conversations with Gen Z” to encourage “more open dialogue between parents and their children about money.”
“What we don’t want is for our educational programs to feel more like school,” said Jennifer Chan, a wealth manager at the firm. “We’ve created resources to help young adults to navigate major life events and the personal finance implications of [those] events.”
Wetherby uses trending topics such as meme stocks, cryptocurrency and nonfungible tokens (NFTs) to illustrate the firm’s approach to portfolio construction and risk management, Chan said. Weatherby also keeps in mind that, as digital natives, Gen Z responds to “on-demand services, video streaming and short-form content,” she said.
But Wetherby also highlights the emotional aspects of money, Chan said, and incorporates exercises “designed to help young adults and Gen Z teens gain more awareness about their beliefs and values around money.”
And what are those beliefs?
Gen Zers from wealthy families are aware of their privilege, said Relative Solutions’ Meyer. “They’ll ask, ‘Am I deserving?’ in the context of broader society.”
Teens and college students are “far more interested” in impact investing and the importance of environmental responsibility than previous generations, said Kristi Mathisen, a managing director at Laird Norton, a $15 billion multifamily office based in Seattle. The firm offers education programs in money management and philanthropy for clients with Gen Z children.
Other generations have adopted environmental concerns, but Gen Z has grown up with them, Mathisen said. “Older people may see saving the environment as a financial sacrifice,” she said, “but Gen Z sees it as an expectation and wants to know if their family’s investments have done good and not just if they’ve made money.”
Her generation does in fact have “an empathetic world view that is maybe not the most financially realistic” said Gen Zer Surovsky.
Rozental agrees. “Our generation is very much ready to challenge the ways things are done and wants to help others.”