Part 3: Impact investing: Transferring wealth, wisdom and values between generations

We recommend families work with their wealth managers to create an impact investment plan that both generations are part of building. Here are a few steps to get the process started:

Ask your parents or your children if they are interested in impact investing.

This may sound like an investment plan, because it is, but with twist. In addition to defining things like geographic focus, industry focus, risk and return objectives and timeline, you can also define impact targets related to jobs, environment, health, etc. that will help you construct your impact investment portfolio. You can also talk with your wealth manager about whether they offer impact investment options.

The Bahamas can wait another year. If you have a geographic focus, find an on-the-ground partner and plan a trip to the country you are looking to impact to begin gathering data and learning about the culture. We have hosted a number of families on investment trips in Africa and find them to be wonderful times of bonding, sharing war stories and cross-generational learning. Be sure to work with a vetted, trained professional team that knows the countries you are visiting. This is still the Wild West, so be cautious.

Consider using a foundation, trust or LLC to make your impact investments. Again, work with a trained professional.

I hear of people dedicating a portion of their portfolio (e.g. 5%) to impact investments, or they pledge a certain amount each year. This can make the investment process become a tradition for your family (such as one impact investment trip and one investment per year). Then, begin exploring opportunities.

As we enter this period in history - the greatest transfer of wealth of all time - I believe families can leverage impact investing as a bridge to connect two generations. Impact investing has the potential to offer a platform to transfer more than wealth between generations. It offers Baby Boomers a way to leave a legacy; it offers Gen X and Y heirs the meaning they are looking for; it offers companies access to capital to tackle challenging problems; and it creates a bridge for wealth, wisdom and values to pass between generations.