Lehman Collapse Inspired a Banker to Find a Purpose for Wealth

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(Bloomberg Markets) -- As a wealth manager, Angela Mwanza likes to be prepared for any risk, even on her days off. She recalls a recent visit with her husband and young son to a reptile park in her home country, Zambia, where she’d mused over the deadly consequences of running into some of the venomous residents. “If you see a spitting cobra, put on some glasses,” she suggests. A penchant for planning and unflappability are good traits to have if you’re in Mwanza’s line of work. She’s co-founder of UBS Group AG’s New York-based Evergreen Wealth Management, a nine-person team that manages $1.2 billion for 25 ultrahigh-net-worth families.

Mwanza, 49, grew up in Zambia in the 1970s as tanking copper prices rocked the economy. “Shortages and blackouts,” she says, “they do kind of prepare you in a way that nothing fazes you.” Education and family ties took Mwanza to Germany—her mother’s homeland—for college, and finally to Cornell in the U.S. for business school, where her father had earned his doctorate in economics. Jacob Mumbi Mwanza was governor of the Bank of Zambia (1995-2002) after serving as secretary for the Zambia Ministry of Finance. In an interview, Mwanza talks about the risks to consider for 2020 and some of the findings from UBS’s Billionaires Insights 2019 report. She also shares why her clients like impact investing, how to prepare younger generations to take on a family mission, and why diversity is a business imperative for wealth management.

Karen Toulon: When we look ahead to 2020, are events or trends such as the U.S. presidential election, Brexit, or the slowing of the Chinese economy affecting the conversations you’re having with clients?

Angela Mwanza: Our global family office report says that 55% of family offices expect a recession in 2020. If you’re a billionaire or ultrahigh-net-worth, you don’t really need to care about the short term. You’re really looking across decades, you’re really looking through multiple generations. This is technically a blip on the horizon, but you can’t help but look into it.

Ultimately we go back to the [long-term] resiliency of markets regardless of who’s in office [or] the tax code at the time. We tend to stick the conversation on the long term and really try to position ourselves based on where we think we should go.

Lehman Collapse Inspired a Banker to Find a Purpose for Wealth

KT: How do you set investment goals for your clients, and do priorities differ across generations?

AM: When we engage with clients, we talk about the intersection between family, philanthropy, and finance. I put this at the core of what we do. If you have strong family values, that gets executed in how you engage with your family, how you invest your portfolio, and how you run your businesses. It doesn’t necessarily mean the same thing to everybody, but it’s important to help identify with them and what they care about.

Renewable energy, sustainable agriculture, health tech, or how we can reduce carbon emissions and impact climate change—these are topics that are very unifying across generations, and often the conversation is driven by the younger generation.

When it comes to family succession, it’s almost like a relay race. You have the older generation sprinting with the baton, and they’ve got to reach the younger generation behind to hand over the baton. And if that younger generation hasn’t been trained or engaged, they’re not going to be sprinting. They’re not even going to know what the baton is. We just found that on average the next generation takes over at age 45.

KT: Are any of your clients taking a portion of their portfolio and handing the reins to their children?

AM: We’re seeing a couple of things happening. We’re seeing the younger generation coming to the old generation saying, “I want to see [an investment] happen in the books earlier,” and the older generation saying, “You have no experience in investing and have no idea. Come back when you have a little credibility.” I think there’s a little frustration with that. With other families we try to really foster this mindset: Whether or not you’re part of the decision-making, be a part of the discussion. It is almost like training on the job. You’re in the board meeting, you’re in the investment committee meetings, you’re hearing the conversation, [and] you’re participating, so that by the time you’re talking about recommendations, they’re not coming out of the blue.

And then you see the third group, who are really very entrepreneurial. They’re the ones that go forth and say, “I want to do something completely different.” And I think that’s where it gets interesting, because they tend to want to be a B Corp [a sustainably certified company] or want to build a company in a way that is sustainable and get away from industries that may not be as appealing to them.

KT: Does the increased interest in environmental-, social,- and governance-focused investing surprise you?

AM: Some of us would say it’s been a really long journey. You know, I’ve been involved in sustainable investing for 15 years or so. It was very nascent. There were not a lot of investment opportunities back then. Fast-forward to today, and 70% of investors [in general] are very interested in sustainable investing, but only 20% actually have sustainable investments in their portfolios. Most of our clients have multiple investments that are focused on impact simply because they are better investments.

KT: How does Evergreen Wealth Management define success or whether a portfolio is working well?

AM: We’re very even keel across multiple market environments. Markets go up, markets go down. While we cannot influence that, ultimately our focus has to be on what the families’ objectives are. If they are in preservation mode, then success is protecting portfolios in more volatile markets.

My team is making sure that we’re making decisions not just looking at investments in isolation, but taking all aspects of their wealth into consideration—from their tax situation, to their liquidity and liability positioning, to their philanthropic intent, and beyond. Success is family unity. Success is sowing the seed of entrepreneurship to help sustain the wealth. Success is when family capital is aligned with the family mission, and we see this transition from one generation to the next.

KT: You mentioned your clients are looking to make an impact with their investments. What about their philanthropy? UBS’s recent billionaires report indicates philanthropists are seeking measurable results. It’s not just about getting your name on a building.

AM: Absolutely. Every single one of my clients is engaged philanthropically. We create a chart [of how their money is donated] and present it to the client. Usually in the early years, there are multiple thin pie pieces within the chart because they might be giving to social justice [as well as] anti-trafficking, climate change, and education. And then they get to a point where they are ready to start thinking more strategically.

We have one client who is incredibly passionate about anti-human trafficking. They really honed in on not just the consumer awareness but also how to bring about more exponential change. They are determined to figure out what makes a supply chain ethical and transparent and how to deliver that information in a format that consumers can easily digest and use to inform their purchase decisions.

Lehman Collapse Inspired a Banker to Find a Purpose for Wealth

KT: How did your early years prepare you for guiding ultrarich families with their life and legacy?

AM: When I first started in 2000, the tech bubble had burst. I experienced my first recession. As everybody was coming out of it, boom, 2008 hit. I was at Lehman Brothers, and Lehman was bankrupt.

Before Lehman Brothers went bankrupt, I think I used to really just focus on investing and posting results. After I took the step to say, “What is the actual pain point? What are the problems that people are trying to solve?” I honed in on having the conversation around to, “What does it mean to have this wealth?”

KT: The asset management industry has a reputation for being male-dominated. Could more diversity improve how the industry serves its clients, especially as UBS’s recent report points out there’s been a 46% increase in female billionaires globally from 2014 through 2018?

AM: What I find exciting about the recent UBS Billionaires Insights report is that it makes it very apparent that diversity is not just nice to have, but a real business imperative. Not only do we need to look like the families that we advise, but investors across the board are demanding it. More diversity of thought frankly makes us better investors and advisers, which better serves our clients. Just take my team for example: Jordan is from the U.S., Jason is from China, and I am from Zambia. We have different perspectives, and it helps us push each other to come up with better solutions for our clients and to think beyond the echo chamber and question the status quo.

Toulon is a senior editor at Bloomberg News in New York.

©2019 Bloomberg L.P.

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