Alexander Hoare talks to Matt Norman of Familia about engaging with a family with 2,000 descendants and the Golden Bottle Trust philanthropy projects.
What is the most important thing to your family?
Reputation is key to the family and the family business. Our mission is to perpetuate a profitable family business. This means maintaining a good reputation and ensuring good succession planning.
How do you instil this philosophy into the next generation?
The first thing you have to understand is that our definition of “the family” is very wide indeed. There are about 2,000 living descendants of the founder and we consider them all family members.
We work hard at knowing and engaging with this wider family and we encourage those family members with an interest in banking to become interns. We support the philanthropic interests of the wider family through the family charity, the Golden Bottle Trust, which also encourages our staff’s philanthropy by double-matching their donations to charities.
How does your family get involved in succession planning?
As far as succession planning for the family business is concerned it’s not primogeniture, rather we will select from the best extended family to be Partners of the bank. We don’t assume that is the children of the existing partners. The last thing we want to do is inflict on an eldest son something he does not want to do. Rather we encourage those from the wider family pool to participate and pick from the best.
Do you give advice to family offices?
Ironically, as a banker, my view is always “family offices are there to protect the wealthy from banks.” I tell people to find a trusted adviser, but its not easy as most people are keen to sell you their services.
Family offices that come to us, and who have a minimum of $100m, already have their own investment expertise, so what we tend to do is hold a large amount of their cash. We also tend to enjoy longstanding relationships and, by way of example, one relationship is 300 years old.
One thing we do try and do is where SFOs want it, we will attend a meeting of all the key advisers; the trustees, investment managers, the bankers, the accountants and the lawyers so that things are joined up and don’t fall through the gaps. Where we can really add value is banking for the family members. When one of them buys a new yacht, plane or house, there is often a liquidity requirement from an understanding bank such as us. Furthermore some wealthy investors like to have some long-term leverage.
What’s your approach to finding clients?
I’m pleased to say as a privately-owned bank we are not here to maximise profit. The Partners have joint unlimited liability, and that makes us sensitive to risk. We regularly turn business down and we are not trying to maximise assets under management. Neither do we have any in-house funds. Our approach is to keep it simple and small. Empathy with our clients is key and although we are a UK bank for UK people, we have the facility to service clients who are not domiciled and deposit money offshore. In fact our non-dom service has exceeded expectations.
What’s your approach to philanthropy?
Through the Golden Bottle Trust (GBT) we have developed a form of tithing. In effect the GBT is treated as an eighth Partner in the bank for distributions. This is one of the things that continues to motivate me to ensure the bank is a success given the fact that we are also benefitting the trust. Through the trust we have developed a lot of expertise in giving and investing in philanthropy. Richard Hoare also founded the Bulldog Trust in 1983 to help spread strategic philanthropy.
We also offer family clients a Donor Advised Fund. This has all the benefits of a charitable trust and none of the administrative hassle. We also have lots of experience and plenty to say about how to run a family endowment.
We engage with City Philanthropy as a natural extension of our own, our cousins, and our staff’s giving through the Golden Bottle to try to encourage wider audiences also to experience philanthropy. We encourage our customers through the Master Charitable Trust (the donor advised fund), and the City public by association with City philanthropy.
Is impact investing a focus?
Yes, absolutely. For four years we have been making impact investments, and we have built up a portfolio with a dozen funds within GBT. These include Fair Finance – an alternative to payday loans – Bridges Ventures, Big Issue Invest, and the Peterborough Social Impact Bond. This is about getting to the source of problems rather than the surface. I’m pleased to say as a privately-owned bank we are not here to maximise profit… Our approach is to keep it simple and small.
We are grateful to Cheryl Chapman, Director of City Philanthropy for facilitating this interview. City Philanthropy – A Wealth of Opportunity is funded by the City of London Corporation’s charity, City Bridge Trust to encourage and embed a culture of philanthropy among younger City professionals. Their central aims are to highlight and promote the many emerging and influential people, debates, trends and causes in good giving in the City and connect more people around effective philanthropy.