Time is a Commodity

The coronavirus pandemic has heightened our awareness of time. The shutdown has left us with more time on our hands, but thoughts of mortality have led us to wonder how much time we have left. In the day-to-day busyness of normal life, we rarely pause to evaluate this depleting asset. Perhaps one positive outcome of the current situation is that it gives us an opportunity to do just that.

If you take a financial planning class, you are taught that the adult lifetime consists of three life cycle phases. The asset-accumulation phase starting in your early 20s, followed by the conservation/protection phase, and then finally the distribution/gifting phase in later years. This last phase is characterized by spending and giving away the wealth that has been accumulated over one’s lifetime, perhaps by financing a grandchild’s education, taking expensive vacations or making large gifts to charity.

I believe this is an outdated model. And it appears there is a whole generation of people who agree.

Members of the Gen X and millennial generations have abandoned this old model. They have an increased desire to make an impact now and are on fire to do good. NextGen philanthropists are already starting to change our world.

The term “NextGen” refers to the next generation of wealth – both young inheritors and earners of major wealth. It includes millennials, born between 1980 and 1996, and the Gen Xers born just before them. We are living in an extraordinary time of wealth creation, with tech billionaires and hedge fund managers the obvious examples. Wealth is being created at an unprecedented rate, and it is also being transferred like never before. According to a 2018 study by Cerulli Associates, it is estimated that $48 Trillion will be passed down from Boomers to their children within the next three decades, a phenomenon becoming known as the “Great Wealth Transfer.”

As someone who has made a few more trips around the sun than those in the NextGen group, I find this phenomenon not only fascinating, but also inspiring. Perhaps it is time to take some lessons from the next generation and challenge the conventional wisdom.

Charitable foundations are a good thing, right? Many millennials say they’re not enough. Those fortunate to be members of large family foundations are either challenging the giving practices of those foundations or walking away from them completely to start their own. They eschew placing names on buildings or buying tables at fundraising events, and would rather seek hands-on volunteer involvement. They are less interested in arts, education and hospitals, and focus instead on global issues such as climate change. Unsatisfied with donations out of the 5% spend rate, they are also demanding that endowment funds be invested in accordance with sustainable and impact investing principles.

The Giving Pledge made headlines in 2010 when Bill & Melinda Gates and Warren Buffett pledged to give away the majority of their wealth and encouraged others to do so. Again, many next generation philanthropists say this is not enough. Pledging to give the majority of your wealth to charity is fine, but not if you wait until your death to do so. Instead, they applaud the efforts of the Gates family and others like them, who are addressing large-scale global issues with active, hands-on efforts.

So perhaps it is time for a conversation about priorities, starting in each of our families. This is as much about listening and learning from each other as it is about realignment. At SineCera Capital, we offer an array of family office services to our high net worth clients. From the most mundane such as financial administration to customized solutions including family mission statements and philanthropic consulting, our goal is to free our clients from time-consuming financial matters so they can focus on what matters most to them.

As always, if you have any questions, please do not hesitate to contact us.

Best regards,

Connee B. Sullivan

Head of Family Office Services | SineCera Capital

Resources for this article:

Goldseker, Sharna and Michael Moody, Generation Impact: How Next Gen Donors are Revolutionizing Giving, John Wiley & Sons, 2017

Dimock, Michael, “Defining Generations: Where Millennials and Generation Z Begins,” Pew Research Center, 2019