As with nearly every facet of the economy in the past year, family wealth has had its share of financial setbacks.
An April 2 report in the Economist estimated that the financial crisis has created a loss of more than $10 trillion worldwide for high-net-worth individuals. And the collective shudder that results from the mere mention of the name Madoff suggests that this is more than a financial crisis — it’s a trust crisis.
Family Wealth Management, a new Executive Education program launched in partnership with the Heilbrunn Center for Graham & Dodd Investing, is designed to specifically address some of the unique challenges facing families with large and complex investment portfolios.
“If people had asked more specific process and operational questions of Madoff, they wouldn’t have invested with him,” says Professor Bruce Greenwald, the program’s faculty director. “We see an opportunity to bring the principles of value investing to families. People will better understand what their money managers are doing, and because it’s their own money they have the most incentive to listen.”
For families who take an active role in investing, the first step is learning the basic framework of sound capital management.
“The Graham and Dodd approach is, we believe, the most sustainable and long-term strategy for investing,” Greenwald says. “If you’re thinking about a family that wants to preserve wealth over many generations, you want to look where there is limited impairment of capital and some upside that isn’t just market swing.”
The four-day course, which begins in May, will cover the framework of value investing, how and what questions to ask, and even behavioral economics.
“The Family Wealth Management program helps families understand what the process is about before they put their family assets at stake,” Greenwald says.
Photo courtesy of Columbia Business School