Skills to preserve inter-generational wealth

STANDARD Bank, for years, has offered advice on how to preserve inter-generational wealth so that the legacy has not been dissipated by the time of the third generation, which is what normally happens when no advice is offered.

Now it can apply those wealth management skills to make philanthropy more effective through its Wealth and Investment business area.

“We have built up years of experience within the bank, so we have models that can show you what you can give on a sustainable basis, while still preserving or growing your capital,” said Philip Faure, head of Cape Regions and Philanthropy at Standard Bank Wealth and Investment. “As an example, I did a modelling exercise for a corporate foundation that allowed this foundation to increase its funding for charitable causes from R30 million a year to R80m a year, while at the same time preserving its capital.”

Wealthy people want to spread some of their good fortune to other people to uplift the societies they live in, so job creation, training and education rank as the leading causes wealthy Africans are striving to support, according to the 2018 Wealth Report published by Knight Frank, Standard Bank Wealth and Investment’s global property consulting partner.

While the 2018 report highlights the rise in the importance of Africa as a wealth investment location, it also shows that many wealthier families and investors are very concerned about the world in which they live and strive to make a difference by funding causes that are close to their hearts.

“While health and the environment are also high on the agenda of philanthropic causes for Africans, the need for jobs is one of the most pressing and this is clearly reflected in the desire of wealthy Africans to give more towards training and job creation. This can only bode well for the future of the continent, which is desperate to expand and create more opportunities,” said Faure.

According to the Knight Frank Wealth Report, 58 percent of African respondents to the survey selected education as the philanthropic cause their ultra-high net worth individuals were most likely to support, versus a global average of 54 percent. UHNWIs are people with more than $50 million (R718m) in net assets. Thirty percent also selected training and job creation, with the global average at only 14 percent as other countries have better developed apprenticeship systems.

While philanthropy is a relatively immature market in Africa, the Knight Frank report shows that 70 percent of respondents expect philanthropic activities to increase in Africa compared with a 68 percent global average.

Notably, 76 percent of wealth advisers in Africa said their clients’ wealth increased in 2017 and will do so again this year. South Africa is forecast to see a 20 percent gain in its ultra-wealthy population over the next five years following a 14 percent jump between 2012 and 2017.