Impact investing no longer uncharted territory for family offices
Impact investing is at a stage where family offices can get involved without having to chart unknown territory, according to a new appointment at Trusted Family, who previously worked for LGT Venture Philanthropy.
Wolfgang Hafenmayer became the new head of impact advisory at Trusted Family in January, and will be responsible for expanding societal impact solutions for business-owning families that are part of the online network.
“Families are interested to understand if we are talking about an industry that is very new and where everything is still unclear. They are always satisfied to hear that this industry is more than 15 years old and has matured quite a bit,” Hafenmayer says.
The former managing partner at LGT Venture Philanthropy is not the first person to note that impact investing is at an inflection point in its development, with many pioneers in the space pointing to the institutional investment that's being drawn into the space.
In the last year, BlackRock and Bain Capital have launched impact divisions, while investment bank Goldman Sachs bought impact asset manager Imprint, partly in response to the growing appetite of the next generation of wealth holders to invest in assets that align with their values.
Single family offices and ultra-high net worth individuals have been some of the pioneers in the impact investing space, with Liesel Pritzker Simmons and Charly and Lisa Kleissner among those who have pledged 100% of their assets to impact.
“Now the broad guidelines have been set, and 80-90% of the whole industry is stable, at least for the insiders,” says Hafenmayer. “That's what many families like; that it's still dynamic, but we're not at a stage where we don't know what's going to happen.”
Hafenmayer was responsible for building LGT Venture Philanthropy from scratch. The division was part of the private bank and asset manager, LGT Group, owned by one of Europe's wealthiest royal families, the Princely House of Liechtenstein.
“The biggest difference between LGT Venture Philanthropy and Trusted Family is that in LGT VP we had our own investment team and our own products, whereas Trusted Family is a product-neutral platform by families for families.”
“The last 10 years helped me to develop very strong networks and observe our different partners, how good a job they're doing.” East African education business Bridges International Academies, Brazilian healthcare company Dr.Consulta, and agricultural business KFI are some of the stand-out examples of ventures Hafenmayer has worked with during his social impact career.
“I have co-invested with most of the people we would recommend Trust Family members to work with as partners,” Hafenmayer says.
Speaking to the comparisons between measuring financial returns and social impact, Hafenmayer says: “There is this very strange perception that the financial returns can be measured extremely well and that's not true on the impact space. I would disagree, because if that would be the case then all of us would know the one company that has the highest financial return and all invest our money in that company.
“But, as we know, there are different risk perceptions around companies, there are different ways to adapt financial returns within companies. There is a whole advisory industry that advises people about investing and they all advise different things. On the financial side there is not this clear cut clarity in what to invest, so we should never expect that on the impact side.”
Prior to LGT, Hafenmayer managed the investments of a family-backed social venture fund, and has contributed to launching a sustainable asset management company. He is also a published author, having interviewed 230 social entrepreneurs, politicians, and scientists in 26 countries for The Future Makers.
Trusted Family CEO Joachim Vandaele said Hafenmayer embodied the innovation Trusted Family wanted to bring to the family wealth sector, which is “steeped in tradition”.
Vandaele added: “His deep experience in positioning societal impact as a catalyst for sustainable growth adds perfectly to our quest of demonstrating that the true source of a family's wealth creation is not only about financial and succession planning, but about fostering and actively managing the family's intangible capital.”
“We have seen [social impact] allows a conversation about 'what is our identity as a family'; 'what are our values', 'how do we think about the longevity of the family', 'what is important to us' and 'how do we relate to society at large',” says Vandaele. “These types of conservations let you talk about the true DNA of the family and what really defines you.”
Trusted Family is an online network and advisory for ultra-high net worth families. Family cohesion is central to Trusted Family's offering – something it seeks to address through communication, education and societal strategies.