Jay Goetschius, Pitcairn
Jay Goetschius is a managing director and head of Florida at Pitcairn, a multifamily office that will celebrate its 100th anniversary in 2023. Goetschius spoke with Crain Currency about whether the set of principles known as environmental, social and governance — more commonly referred to as ESG — is overhyped; the paramount importance of telling the family history; and what determines a family office’s culture.
You’re a relationship manager. In a family-office context, how does that go beyond giving simple investment advice?
I’m responsible for managing the full aspect of wealth. Investments are a large part of that, but we also work across the full balance sheet to focus not only on investments but how the estate plan is designed, monitored and implemented. We’ll look at the intersection of the financial considerations — investments, insurance needs, any financial matter you can think of — and we’ll marry that to the family dynamics. So maybe the matriarch or patriarch is trying to figure out how to best communicate to the children the wealth that may be on its way to them. Or maybe it’s about setting up family governance: is the family going to invest together or apart? If there’s a liquidity event. Does the capital stay pooled together, with beneficiaries? Or do the assets get divided, then invested?
Is ESG investing popular with your clients?
While ESG has been a very popular space, believe it or not, I have not had my clients necessarily lean into those types of investments. There’s growing interest in the space, particularly in the younger generations. But for the most part, it has not been a priority with my particular clients.
But don’t you work across generations?
Yes, it is the norm that we are talking to two or three generations of a family at once. But for the more significant wealth, oftentimes the assets are in pooled vehicles. And with that, while the next generations are beneficiaries of those pooled vehicles, the decision-makers will remain the older generations. It’s not that they’re not having family discussions with the younger generations, but there’s also a healthy dose of skepticism on what is a green investment, for example.
So how do the younger generations become enfranchised in actual decision-making?
Oftentimes the voice of the next generation may be part of the discussion around the families’ charitable vehicles. That could be their foundation, where the charitable vehicle is a tool for the older generation to start to bring in the younger generation to decision-making. “Why don’t you come on and be a part of the board of the foundation” or a member of a certain committee affiliated with the foundation. So the voice of the next generation is often heard on the investment side in connection with the philanthropy part.
How do you help prepare families for generational wealth transfer?
Families with large taxable estates tend to spend significant time and resources preparing their fortune for the next generation but little time preparing the next generation for the fortune. In my opinion, the most important thing is sharing the family history. Family history is the greatest story a parent can tell their children. It’s important to share what made the family successful, but also to share the challenges of the previous generations, the source of the wealth. When they’re not a part of creating the wealth, they just know the numbers, the digits. But by sharing the family stories, you help make that connection, and family helps the next generation build resilience by teaching them that there were obstacles the family overcame.
What do you know about the family-office space now that you wish you knew 10 years ago?
The most important thing is culture. I’ve worked at a number of different firms with different structures, and culture is what differentiates the client experience. What I’ve learned related to culture is that the capital structure of a family office and the incentives of that family office play an outsize role in determining culture. Ultimately, that’s led me to join a firm like Pitcairn — which is privately held and does not have a specific private equity investor, so it’s a long-term horizon.
Also, a lot of firms have grown by buying up teams, with people being paid for specific business they individually bring to the firm. That leads to a more individual sport than team sport. But when someone comes to Pitcairn as a new client, they’re choosing Pitcairn as a firm and are treated as a firmwide relationship. So the incentives are such that we serve as a team.
Interview by David Zax, a freelance financial reporter whose work has appeared in Bloomberg CityLab, Entrepreneur Magazine, Fast Company and The New York Times