Andy Busser, Pitcairn
Andy Busser is president of family office at Pitcairn, where he leads a team focused on client experience. He spoke with Crain Currency about investing for positive change and how philanthropy can bring a family together — or, managed poorly, drive them apart.
How did you get into the family-office space?
By accident. When you’re in college, you learn about stocks, bonds, hedge funds — but family offices, you don’t really hear about. They tend to be small, and they’re set up to be private. In my case, I was working in management consulting. Trustees for a wealthy family asked my firm to do a study on the family’s portfolio. Over time, my relationship with the family grew.
What’s a recent purposeful investment you’ve made for a client?
Clean water is a big one. A client said, “This is important to me, but I don’t know how to invest.” Our research team interviewed a ton of funds and did a bunch of vetting. A lot of these things pitch themselves as ESG or about “clean water,” but they end up being very traditional infrastructure projects. The due diligence led us to a relationship with a fund whose focus is clean water globally. Our original client invested a significant sum, and we’ve had other clients invest as well.
How should investors think about “ESG,” if so much of it is greenwashing?
We don’t think a lot about ESG so much as the impact a project or fund is going to have. In the case of “clean water” — how many people will get access to clean water who don’t have it today? Rebuilding a dam in New York state? Not compelling. But access to clean water in Mali, that’s compelling.
Do you have a story of an ESG investment that really wasn’t impactful in the end?
A town in India 15 years ago didn’t have electricity. A green energy project came in and said, “We’ll give you all these solar panels, and you’ll have this energy.” Great — they had energy, but only 12 hours a day. So you can’t have a refrigerator. The town built its own coal-and-dung power plant, and the actual impact of the project was negative. So you need to know how many people are actually affected by the investment, and how reliably and consistently. It takes a lot of work to get these things, but it’s the only way the investment is ultimately worthwhile.
Is it true that the younger generations are interested in ESG while the older ones are not?
I’ve been impressed with how many people in their 60s, 70s and 80s are interested in impact investment. Sometimes you can make an investment that is a way to pass on values. The thing most grandparents and parents worry about is that their kids will get screwed up somehow. It’s the thing that keeps them up at night more than anything else. One great way to instill values is to set an example. A meaningful investment can be a great tie that binds.
Do you have any advice about philanthropy?
It’s also a great opportunity to tie family members together, but it’s important to give individual family members agency here. A family I worked with set up a foundation and appointed a number of family members to be on the board. Two of the loudest voices were environmentalists, so all the money went to a local park system. Now, that park system is awesome. But the downside was there was no money for other family members to give to schools, hospitals, museums. … It created a real rift in the family, and it unfortunately got very nasty, and eventually the family had to break up the foundation. What was a $250 million foundation is now a group of 10 $30 million ones. Still a lot of money. But the idea of creating a foundation that would bind people together … it wound up driving people apart.
The advice here: Set up a governance structure so that everybody has some control. I see it over and over again: When future generations are compelled, they feel resentment rather than empowerment.
Interview by David Zax, a freelance financial reporter whose work has appeared in Bloomberg CityLab, Entrepreneur Magazine, Fast Company and The New York Times.