Category: Uncategorized

Feb 5th

“Can I Pitch You Something?”

How to respond without risking your relationship.

You may know this scenario well: An acquaintance corners you at a party and launches into a pitch about why you should invest in their new venture. Perhaps you are truly intrigued and want to consider the opportunity. Or maybe you’ve been burned by “investing” in a friend’s startup before. Either way, having a thoughtful process, response, and knowing those next steps ahead of time will give you the confidence to make an educated decision. 

Understand your investment process.

No one should expect you to make a financial decision without doing your due diligence. Any investment decision requires analysis and thought, especially when it is in the early stages or “seed’ rounds. These types of investments often take a long time to “season” and will most likely be illiquid or unable to be sold during that time. This extended time horizon can present many challenges to even professional investors. When considering these types of investments, there are a myriad of issues to consider, but at a basic level, you should understand a few: 

  • Does the investment fit with your portfolio and your diversification strategy? You don’t want to end up with tangential investments and risks that you don't fully understand and that make no sense in your overall wealth management plan.
  • Where is the investment in its lifecycle? The earlier the stage of investment, the more likely it is that the company will need to raise additional capital for further growth. Said another way, the initial ask is really the first of a series of asks. Investors need to understand that to maintain overall ownership, they will need to continue investing in follow-on rounds. Otherwise, their shares may become diluted, meaning their ownership stake could shrink over time. 
  • What type of capital needs to be raised? Where you invest in the capital stack and the legal structure of the funding makes a tremendous difference in terms of your control and exposure, especially if things don't go exactly as expected. Understanding your rights as a stakeholder, i.e., where you are in the capital stack, is as, if not more, important than what the new business will do in the future. 
  • How much of an illiquidity premium will this gain you? Higher risk should yield higher return, and if it will take years to get your capital back, the terms should reflect that.
  • What are the limits of your own knowledge? This is often referred to as your sphere of competence. Building significant wealth in one area of business does not always mean it will be easy to replicate in another area. A little humility can go a long way, especially if the idea sounds truly exciting. 

Size any investment accordingly.

It’s a well-known truism that giving or loaning money to a friend or family member can quickly sour the relationship. So if you decide to invest, be comfortable with the fact that not only could you never see a return on your investment, but you could also lose the entire amount of your principal. Sizing an investment is a foundational element of risk control. When it comes to friends and family, risk takes on many forms, including risking your relationships. Understanding this and clearly communicating the types of risks you are comfortable taking is critical. 

Allow your advisor to be the gatekeeper.

An experienced, trusted advisor acting as a fiduciary is invaluable in this process. Early-stage investing is fraught with issues and dynamics that are simply not present in public market investing. Regulatory bodies and entities abound in public markets, helping to ensure safeguards and frameworks to protect investors. Conversely, in this space, very few, if any, of those guardrails exist. An advisor with experience in these types of investments should be well-versed in the types of questions to ask and the risks that may be present. Allowing a professional in the space to assist in or guide your diligence process can help you avoid many of the pitfalls present. Allowing them to “be the bad guy” when declining to make an investment can allow you to make the correct financial decision while maintaining your valuable relationships. If, on the other hand, they think it might be a worthwhile pursuit, you can use their analysis as a way to establish optimal parameters and terms for how you will invest. 

Ask for a clearly articulated business plan.

If you decide to move forward, you will be doing the entrepreneur a favor by requiring them to present a full business plan. It’s not enough that they are passionate about their idea or knowledgeable in their field. After all, most founders and CEOs are impressive and charismatic. And most inventors think their patent will be granted “any day now,” when the timeline might actually be five to seven years. Ask for a well-researched, long-term plan that includes conversion rates and contingency plans. And when you meet, if the entrepreneur can’t answer your third or fourth layer of questions, don’t hesitate to ask them to go back to the drawing board. This will ultimately help them hone their pitch for other investors and also understand the level of accountability you expect if you become an investor.

Know that it’s okay to say “No.”

It’s perfectly acceptable to say “no.” In fact, a quick and decisive “no” can be a useful gift to the entrepreneur. By being upfront, you’re saving them time and energy rather than leading them on with no actual intention of investing. You’re also helping them refine their ask while protecting your relationship from complications down the road.

But how to let them down easy? Simply cite any of the investment factors above, positioning your financial advisor as the gatekeeper. You might also add that saying “no” now doesn’t mean forever, and that you might be interested if circumstances warrant it. With any luck, word will get out that you are an investor who requires significant due diligence, not someone who is open to being pitched at a cocktail party. Cocktail parties can be great for a lot of reasons, but complicated investment decisions shouldn’t be made halfway through your martini.

Written by Teague Sanders, Senior Vice President and Senior Portfolio Manager at Whittier Trust, where he serves on the Investment Committee, is responsible for analyzing Consumer Discretionary companies for the core equity strategies, and serves as the co-manager of Small Cap and SMID investment strategies. 

If you’re ready to explore how Whittier Trust’s investment services can work for you, start a conversation with a Whittier Trust advisor today by visiting our contact page.

From Investments to Family Office to Trustee Services and more, we are your single-source solution.

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Feb 3rd

3 Things to Consider When Buying International Assets

Expert advice for making sure your global financial investments are secure.

The recent passing of international celebrity Ozzy Osbourne was devastating to his fans, but estate and trust lawyers probably had an added reaction of wondering whether or not he had his estate set up properly. Osbourne most likely owned property in his native UK and in the United States, if not other assets around the world, and owning any foreign assets can make things complicated at the best of times.  

Here are three things to know about estate planning and international holdings. 

Share Information with Your Team Immediately

It’s important to inform your team of any foreign real estate investments, properties, stocks, or other investments as soon as you purchase them so they can help you come up with a strategy to incorporate them into your estate plan, says Philip Cook, CPA, and Whittier Trust vice president. 

“Your United States-based estate planner needs to liaise with experts based in the countries where the assets are,” he says. “Every country has its own system of probate, its own tax regime, and its own planning requirements. You’ll need to secure an estate planning attorney in the country where you’re purchasing to make sure the asset passes according to your wishes.” Most countries will have a clear probate system to honor your plan, but some don’t, so make sure you understand how that asset gets transferred. This helps ensure that the transfer happens the way you intended when the time comes.  

Cook cites a cautionary tale involving a foreign-born client who had become a U.S. citizen. The client retained real estate and assets in her home country, and when she passed, it was discovered she had stocks in her name outside the U.S. “We had no way of knowing they existed and discovered the assets late into the estate administration,” says Cook. “They were still sending statements to her address in her home country.”

The client’s team couldn’t file for probate in the foreign country because they were only serving as trustees of her trust, not executors of her will. The client’s beneficiaries were requesting things that couldn’t be done because there was no jurisdiction. “It took us three years to figure it out,” says Cook, who adds that the team had a hard time finding attorneys in the home country who specialized in the help that was needed, and they had to solve complex problems like whether her U.S. will could be admitted for probate in a foreign country and who had the burden of paying for counsel. “We couldn’t give the trust beneficiaries the answers as quickly as they had hoped,” he says.  

The moral of the story: If you have foreign entities or assets, share the information with everyone on your financial team to ensure they’re equipped to act in your best interests. 

Consider Tax Implications

Prepare yourself for more complicated taxes when including international property or other holdings in your estate plan. “As a general rule, U.S. citizens are taxed on all their assets, worldwide,” says Cook. “If you buy a house in Scotland, the value of that house will be included in your U.S. taxable estate.” It’s an important point to consider when being tax conscious is a priority. 

The tax treaties with other countries and/or estate or inheritance tax regimes in those countries could further complicate things. “Make sure that, in addition to an estate planning attorney in that country, you have a tax professional who understands the tax ramifications of ownership. You may be subject to different tax regimes,” Cook says. 

Make Sure the Right Hand Knows What the Left is Doing

It’s important to have someone connecting the complex dots associated with international holdings. Cook advises checking with your U.S.-based counsel for referrals in other countries to ensure that your bases are covered with respect to taxation, as well as wealth and asset transfer. If you have engaged the services of an investment and wealth management firm such as Whittier Trust, they can consider the full picture, so nothing gets overlooked or stuck in the transfer process. “We can help facilitate clients getting those boxes checked, so it’s one less thing to worry about,” says Cook. “That way our clients can just focus on enjoying the property, and there may even be opportunities for planning strategies.”

International estate planning doesn’t have to present insurmountable challenges if you share information as soon and as widely as possible with your financial services team, which could include counsel, tax attorneys, trust lawyers, account managers, and others. “Talk to your team,” says Cook. “The more you disclose, the easier it is for us to find things to follow up on so that efficiencies are discovered, your wishes are carried out, and your estate planning goals are met.”

Written by Philip Cook, Vice President, Client Advisor in Whittier Trust's Seattle office.

If you’re ready to explore how Whittier Trust’s investment services can work for you, start a conversation with a Whittier Trust advisor today by visiting our contact page.

From Investments to Family Office to Trustee Services and more, we are your single-source solution.

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Jan 15th

Market Insights – First Quarter 2026

A Mid-Cycle Economic Revival

The current administration entered this presidential term with an ambitious growth agenda based on reform and stimulus. While most policy initiatives were accommodative, there were also some restrictive measures aimed at improving balance in global trade and productivity from government spending.

Unlike Trump 1.0 when stimulative tax cuts preceded the burden of higher tariffs, the sequence of implementation was reversed in this term. Investors were likely caught off-guard by the policy decision to first reduce the federal deficit, through a combination of higher tariff revenues and government job cuts, before embarking on stimulus and deregulation. Saddled with an unusually high peacetime, non-crisis debt burden, this sequence was deemed to afford greater flexibility and maneuverability on the fiscal front.

Both tariffs and job cuts are inherently restrictive and an impediment to growth. Tariffs also raise prices of imported goods and contribute to inflation. As inflation ticked higher, the Fed was left with no choice but to pause its easing cycle and go on hold. Higher prices took an even greater toll on lower income consumers and slowed consumer spending.

Indeed, barring the amazing resilience of AI spending, U.S. GDP growth was close to 0% in the first half of 2025. These economic developments also took their toll on stock prices as the S&P 500 index tumbled to the brink of a bear market.

We wrote extensively in mid-2025 that the market’s worst fears on tariffs, stagflation and recession were unlikely to be realized. At the depth of the sell-off, we continued to argue for a double-digit gain for U.S. stocks in 2025 and for an economic inflection point in late 2025 that would reverse the slowdown.

We believe our forecasted mid-cycle economic revival has already begun. A remarkable surge in economic activity and stock prices in the second half of 2025 exceeded most investor expectations. Third quarter real GDP growth was reported at 4.3% and real-time indicators of fourth quarter GDP growth are clocking in at around 5%. We believe with high conviction that the U.S. economy will sustain this momentum in 2026.

Stocks performed even more spectacularly over the last six months, and for good reason. Stocks are tasked with pricing in future economic outcomes and, in their collective judgment, they signaled a positive economic and earnings outlook for 2026 and 2027. The S&P 500 index gained +17.9% and the Nasdaq index rose by +21.1%. Foreign stock markets had their best year in over a decade as the MSCI All Country World Ex-U.S. index soared by +32.4%.

We expect the current economic expansion to continue in 2026. In fact, we believe growth will reliably catapult to a higher trend level, well above 2%, without any more detours.

We also expect the current bull market to continue, but with one contrast to what happened in 2025. It is safe to say the stock market performed better than the economy did in 2025. Since the stock market has already priced in a lot of future good news into elevated valuations, we believe the reverse is likely to be true in 2026. The economy will perform better than the stock market in 2026. We expect stock returns this year to be positive, but likely muted and well below their recent levels.

We develop our more granular 2026 outlook in this article through the following progression of topics.

  • Growth, Inflation and Policy Rates
  • Stocks and Bonds
  • Key Risks

We recognize that there is a narrower dispersion of views heading into 2026 after five chaotic post-pandemic years. With a more unified consensus, there are fewer opportunities for differentiated insights. We will highlight ours along the way.

Growth, Inflation and Policy Rates

Growth

We begin the growth narrative with a simple observation. Government job cuts and higher tariffs were obvious headwinds to growth in 1H 2025; they will cease to be so in 2026. The program to minimize waste, misappropriation and fraud in government spending has run its course. Reciprocal tariffs now appear to have stabilized at around the 15% level.

We believe most of last year’s tariffs have been absorbed into higher prices by now. We estimate the increase in the average global tariff rate caused inflation to rise by 0.3–0.4%. With no new tariffs on the horizon, inflation should plateau and then resume its downward trend.

With the dissipation of last year’s headwinds, 2026 will see the emergence of three new tailwinds: fiscal stimulus from the One Big Beautiful Bill, lower interest rates from renewed Fed easing and deregulation policies. In addition, 2026 will inherit a fourth powerful growth driver from last year in the form of continued AI spending.

These multiple drivers of growth in 2026 set up a sharp contrast to 2025. Investors were concerned about the narrow base of leadership in 2025 when most of the GDP growth came from AI CapEx. As the U.S. economy continues its upward momentum, leadership will become more diversified this year.

The U.S. economy has also been searching for equilibrium in a New Post-Pandemic Normal. The growth trajectory over the last five years has been anything but normal; virtually every calendar year has been distorted by the influence of policy intervention.

We believe that the U.S. economy will finally normalize at a 2.5–2.6% GDP growth rate in 2026. We are optimistic that growth in future years may tick even higher towards 3.0%. This New Normal stands in sharp contrast to the pre-pandemic cycle of the longest ever U.S. economic expansion when growth averaged just 1.7%.

This higher level of potential growth is driven not so much by short-term fiscal and monetary stimulus, but by powerful structural supply-side changes instead. Policies aimed at enhancing AI and technological leadership, productivity growth, global competitiveness, critical domestic supply chains, foreign investment, production of energy, commodities and materials, national defense and border security will simultaneously boost growth, incomes and profits. As a desirable by-product, the resulting increase in tax revenues (along with a curb on unproductive spending) will reduce fiscal deficits.

Inflation

Fear and skepticism still abound on the future direction of inflation. Many still believe tariffs will remain inflationary. In combination with stronger growth, it is feared that inflation may remain at or above 3% for an extended period.

We are firmly in the opposite camp. We believe the impact of tariffs on prices has largely played out; in addition, we also see several disinflationary factors at play.

1. We have often discussed how shelter inflation moves slowly on a lagged basis and, therefore, is easier to predict. Shelter inflation peaked in March 2023 and has been steadily declining since then. We are aware of the data distortions in this metric caused by the government shutdown but remain confident that shelter disinflation will continue in 2026.

2. The pronounced weakness in the labor market has attracted a lot of attention in recent months. Indeed, it is a big reason the Fed resumed its easing cycle back in September and cut rates three times in 2025. We attribute the slower job growth in recent months to two factors. One, the supply of available workers has gone down because of recent shifts in immigration policies. And two, there is also lower demand for workers as AI gains a foothold and automates jobs.

One of our differentiated views for 2026 and beyond revolves around the future trajectory of job growth. We expect average monthly job growth to be around 100,000 in 2026, which is well below the 150,000–200,000 level one would normally expect in an economy with 2+% GDP growth. For our purposes here, this disappointing labor market outlook bolsters the argument for wage disinflation.

3. Policy reforms to increase oil, steel and critical rare earth minerals production should lead to lower energy prices and resilience in key supply chains. We have already seen a decline in gasoline prices at the pump with significant savings for all consumers. We expect these trends to continue.

4. Our final observation in the disinflation narrative goes back to a theme we have often highlighted. AI and technology are powerful and secular disinflationary forces. Investments in AI are aimed at increasing productivity and profit margins. And these productivity gains are already playing out in a big way. By the third quarter of 2025, labor productivity had risen to almost 5%, a level previously exceeded only twice in history during the recoveries out of the Global Financial Crisis (GFC) and the Covid recession.

We believe most inflation measures will recede to 2.4–2.6% by the end of 2026. These include the headline and core variations of CPI, PPI and PCE inflation metrics.

Policy Rates

The outlook on inflation makes it easier to form a view on the Fed funds, or policy, rate. The nominal policy rate is normally about half a percent higher than inflation. With inflation centered around 2.5% in our outlook by year-end, we can then expect the Fed funds rate to come down to around 3%. Two rate cuts would take the midpoint policy rate to 3.1%; three rate cuts would take it down to 2.9%.

We believe either of these outcomes is plausible and defensible. If the economy is as strong as we expect it to be, the Fed may not be as urgent to act. We conservatively forecast the policy rate to be at 3.1%, and in the 3–3.25% range, by the end of 2026. We believe there is a high probability of a third rate cut to take the policy rate into the 2.75–3% range.

This 3% policy rate forecast is also equal to our estimate of the neutral rate for the U.S. economy. The neutral rate is defined as the equilibrium policy rate that is neither expansionary nor contractionary. We estimate our neutral rate to be lower than the consensus, which is more in the range of 3.3–3.5%.

Stocks and Bonds

Stocks

Our constructive view on the economy translates into a positive outlook for stocks. Earnings growth has been unusually high in recent years because of above-trend economic growth and AI-driven margin expansion.

We believe that earnings growth is now driven more by fundamentals than by post-pandemic policies. Our conviction in this transition highlights an important inflection point as we switch from the liquidity-induced phase of the bull market to the earnings-driven phase.

The policy response to the Covid recession was an unprecedented level of monetary and fiscal stimulus. Any liquidity injection to combat a recession typically leads to an expansion of Price/Earnings (P/E) multiples. Prices adjust rapidly and well in advance of the actual improvement in earnings that the liquidity is designed to achieve.

Valuations appear lofty during this phase because of the asymmetric timing of the rapid price spike and the lagged recovery in earnings. For the bull market to persist, earnings must eventually improve. In this earnings-driven phase, earnings typically grow faster than prices; this reverse asymmetry causes P/E multiples to compress and valuations to normalize.

Even though the post-pandemic economic cycle has been chaotic and turbulent, we are able to see the growing influence of earnings on stock prices in Figure 1 below.

Figure 1: Historical S&P 500 Returns

Source: The Daily Shot

In the last three years, earnings growth (shown in teal) has been a progressively bigger part of the S&P 500 total return. At the same time, changes in the P/E multiple (shown in green) have become a smaller component of stock returns. In 2025, almost all of the S&P 500 return came from earnings growth.

We expect this trend to hold true in 2026. U.S. stock prices will be driven almost entirely by growth in forward earnings estimates. We believe that the S&P 500 forward P/E of 21.8 at the end of 2025 is mildly elevated and likely to compress by 3–5% in 2026.

We use this framework to develop our outlook for equities and its key sub-asset classes.

We expect S&P 500 earnings growth in 2026 to be around 14%, but those expectations have already been priced in and are reflected in today’s forward P/E multiple. We expect S&P 500 earnings to grow by another 14% in 2027 to a range of 350–355.

These earnings growth projections are lofty by historical standards. A big driver of higher earnings growth in recent years has been steadily increasing profit margins. We recognize the concern that profit margins cannot keep increasing forever. In the past, they have tended to revert back to some mean or average level; in the best scenario, they simply level off at a higher level and stop growing.

Our high future earnings estimates actually don’t rely so much on continued margin expansion. They are derived instead from higher revenue growth, which, in turn, is supported by higher-than-average nominal GDP growth. We offer evidence to support this assertion.

Revenue growth for the S&P 500 index is projected to be handily above 7% in 2026. Even more remarkably, a historically high percentage of S&P 500 companies are expected to exceed the rare threshold of double-digit revenue growth. We show that below in Figure 2.

Figure 2: Breadth of 2026 Revenue Growth in S&P 500 Sectors

Source: Wolfe Research

102 of the S&P 500 companies, or about 20% of index constituents, are expected to deliver revenue growth of 10% or more. This data point is captured in the fourth bar from the top in Figure 2. Three sectors have a higher percentage of companies that are expected to grow revenues by 10+%. Not surprisingly, Technology and Communication Services, home to some of the best AI companies in the world, lead the market in terms of high-revenue-growth constituents.

Against this backdrop of “high GDP growth => high revenue growth => high profit growth” cascade, we move ahead with our 2026 U.S. equity outlook. We use a 2027 earnings growth rate of around 14% and 2027 earnings estimates of 350–355 in the process.

We believe these 2027 earnings estimates will likely be valued at a forward P/E multiple of around 21 times. In this setting, we leave open the possibility of a multiple compression of up to -5% as an offset to the 2027 earnings growth estimates. These parameters lead us to a likely S&P 500 range of 7,400–7,500 at the end of 2026. We expect a total return for the S&P 500 index of 8–10% in 2026.

We assign a low probability to a bear market. We also believe there is more room for a modest upside surprise to our outlook than the risk of a shortfall.

We expect a continued broadening of the global equity markets. International stocks and value stocks are not as stretched on valuations and could offer attractive returns from both multiple expansion and higher earnings growth. Small cap stocks generally perform well in the early stages of a recovery or a revival and may merit a selective closer look.

Our investment philosophy is rooted in seeking out high quality companies with sustainable profit growth. We remain committed to this ideal in our pursuit of new opportunities in the international, value and small cap segments of the market.

Bonds

We have some of the building blocks for a bond market outlook in the form of expected inflation and policy rates in 2026.

We believe inflation will be contained in a 2.4–2.6% range at the end of 2026. However, the 10-year bond yield is influenced more by long-term inflation expectations than by any contemporaneous measure of inflation. Longer-term inflation expectations have remained remarkably well-anchored in the midst of significant bond market turmoil in the last five years and stand today at 2.2–2.3%. We forecast the neutral rate for the U.S. economy to be around 3% and expect the midpoint Fed funds rate to be in the range of 2.9–3.1% at the end of 2026.

With these views on the short end of the yield curve, the only remaining discussion revolves around the term premium embedded in long-term bonds. In its simplest definition, the term premium is the compensation that investors require for lending money for a longer period and facing greater uncertainty. We use a few different approaches to converge on an estimate for the 10-year bond yield.

Given our above-trend growth outlook, we expect the yield curve to steepen from its recent inverted-and-then-flat shape. We expect the steepening to evolve from falling short rates and steady long rates. Nominal long-term rates are driven primarily by inflation expectations and real growth rates. We attribute the steeper yield curve to a sustainable increase in real growth rates and not to any realistic possibility of the loss of Fed independence.

Outside of the unusual post-GFC and post-Covid cycles of ultra-easy monetary policy, the real 10-year bond yield (nominal minus inflation) has averaged around 2% for the last 3 decades. In normal parts of the economic cycle, the spread between long-term and short-term Treasury rates has ranged between 0.5–2.0%.

We expect the 10-year bond yield will remain in the 4.0–4.2% range at the end of 2026 based on our assessment of inflation, growth, short rates and the historical priors described above. We anticipate a total return of 4–5% for a conservative bond portfolio with modest credit exposure.

Key Risks

AI CapEx

Investors are concerned about the risks associated with high levels of AI spending. This capital expenditure clearly strives to earn a commensurate return on investment. However, many worry that excessive spending will not only outpace but eventually dwarf any practical rewards in the form of higher margins and returns. These fears are further exacerbated by the rapid depreciation rates of these investments and growing competition.

At the same time, the third quarter of 2025 saw soaring stock prices for many of these AI companies. High valuations have compounded the basic concern that a lot of AI spending may come to nought and eventually be unproductive.

We summarize our thoughts on the topic along the following dichotomy.

a. We believe several speculative “AI mini bubbles” have already formed. We urge caution in making any of the following investments.

  • Companies that borrow more to spend more on AI
  • Unprofitable companies with high imminent spending and deferred revenue growth
  • Small companies with no competitive advantage and ability to scale
  • Stocks that are already at unsustainable valuations e.g. Price/Sales ratios > 100

b. At the same time, we believe we are not in a pervasive “AI everywhere” bubble. The large hyperscalers (Microsoft, Amazon, Google and Meta) are still able to fund their AI investments out of operating cash flow. They are also well-established, highly profitable companies with strong fundamentals. We believe these larger AI players with a bigger economic footprint are not at significant risk; they are certainly not in bubble territory.

Geopolitical

Venezuela, Iran and Greenland have featured prominently in the news in recent weeks. We offer brief comments on the broad topic; our brevity and parsimony are dictated by two considerations.

First, geopolitical events rarely have a material or lasting impact on markets. They simply do not justify the airtime for that reason alone. Second, an extended discussion on this topic runs the risk of drifting into political commentary, which we wish to refrain from.

We believe U.S. actions in both Venezuela and Iran are best understood as efforts to establish military and economic deterrents against hostile regimes such as the ones in China and Russia. Venezuela, in particular, had evolved into a rare convergence point where Chinese, Iranian and Russian interests overlapped simultaneously in the Western Hemisphere. U.S. influence in Venezuela disrupts Chinese energy supply chains, while indirectly weakening Russia’s and Iran's ability to monetize oil exports.

Unlike Venezuela or Iran, Greenland operates as an autonomous territory of Denmark with no ties to China or Russia. Greenland sits between the U.S. and Europe along critical Arctic and North Atlantic routes, including emerging shipping lanes and strategically significant locations linking the U.S., Russia and China.

Its relevance is geographic rather than political and its position carries increasing importance as Arctic access expands.

  • Enhanced national security positioning for the U.S. and Europe
  • Access to significant natural resources, including oil, gas and rare earth minerals
  • Control and monitoring of emerging Arctic and North Atlantic shipping lanes

The U.S. strategy in Greenland may be viewed as preemptive deterrence aimed at limiting future adversarial access and reducing the risk of disruption to global security and trade.

Conclusions

Our first publication of 2026 focused on our economic and market outlook for the upcoming year. Our views, beliefs and forecasts are summarized below.

  • Real U.S. GDP growth will reliably and handily exceed 2% from 2026 onwards without major disruptions.
  • We expect real GDP growth to be 2.5–2.6% in 2026.
  • The U.S. economy will become more diversified in leadership as the new drivers of fiscal policy, lower interest rates and deregulation augment AI spending.
  • Beyond 2026, the U.S. will be able to achieve a higher level of potential growth based on AI and technological leadership, productivity growth, global competitiveness, critical domestic supply chains, and lower energy and materials costs.
  • We assign a very low probability to a recession in 2026.
  • Inflation will resume its downward trajectory and descend to 2.4–2.6% by the end of 2026. Major disinflationary forces include shelter, wages, energy costs and technology.
  • We believe the neutral rate for the U.S. economy is around 3% with some more room to the downside.
  • We believe the Fed will get to the neutral rate in 2026 with two or three rate cuts.
  • Stock returns will be positive but more muted than those in the last three years.
  • We assign a low probability to a bear market.
  • We expect the S&P 500 index to be at 7,400–7,500 at the end of 2026.
  • The total return for the S&P 500 index will likely be 8–10% in 2026. We see more room for a modest upside surprise here than the risk of a shortfall.
  • We expect the 10-year bond yield to remain at 4.0–4.2% at the end of 2026. We anticipate a 4–5% total return for a conservative bond portfolio with modest credit exposure.

We are more constructive on the U.S. economy than we have been in the recent past. We believe a number of structural supply-side changes will lift the U.S. to a higher level of potential growth approaching 3% in future years.

Our optimism for the future will not distract us from the care and diligence we bring to the portfolio management process. We remain vigilant and focused on behalf of our clients.

To learn more about our views on the market or to speak with an advisor about our services, visit our Contact Page.

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Real U.S. GDP growth will handily exceed 2% from 2026 onwards without major disruptions.

 

The U.S. will achieve higher potential growth based on AI leadership, productivity growth, global competitiveness and lower energy costs.

 

Inflation will resume its downward trajectory and descend to 2.4–2.6% by the end of 2026.

 

The total return for the S&P 500 index will likely be 8–10% in 2026.

From Investments to Family Office to Trustee Services and more, we are your single-source solution.

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Jan 14th

A Pathway to Global Mobility Through Strategic Investment

New Zealand’s Active Investor Plus Visa could be your family’s ticket to dual residency.

The idea of having another country to decamp to—either for a change or scenery, new cultural immersion, or for the peace of mind that comes with flexibility—is increasingly attractive. While many countries around the world offer some sort of investment-based residency, New Zealand has emerged as an attractive frontrunner for high-net-worth families. New Zealand's Active Investor Plus visa program offers a strategic pathway to permanent residency through qualifying investments. With investment thresholds starting at NZ$5 million (approximately USD$3 million) and minimal physical presence requirements as low as 21 days over the course of three years, the program provides an attractive "Plan B" option for globally mobile families.

Why UHNW families might want to consider New Zealand

Affluent families increasingly seek optionality through "Plan B" residency strategies—securing permanent residency rights in stable, economically viable countries while maintaining their primary lifestyle and business interests elsewhere (such as in the United States).

New Zealand has emerged as a premier destination, offering political stability, exceptional quality of life, world-class education and healthcare, and an English-speaking democratic society. In April 2025, the country revised the requirements for its Active Investor Plus visa, a move that has generated more than NZ$1 billion in pending applications, with Americans representing a substantial proportion of applicants. Note that residency is not the same as citizenship. Those who establish residency in New Zealand won’t receive a New Zealand passport, and they will be taxed in the United States. Still, this can be an intriguing opportunity for families and individuals seeking greater geographic flexibility. 

How the Active Investor Plus visa program works

Applicants should be prepared to invest at least NZ$5 million (approximately USD$3 million) in New Zealand’s economy, via qualifying New Zealand investments, with options ranging from higher-risk managed funds and direct business investments to diversified portfolios including listed equities and bonds. There is a second opportunity that requires more cash investment but offers additional flexibility in terms of the time spent in-country. In either case, applicants will navigate an approval process that includes a character and health verification and ongoing compliance monitoring to ensure that foreign permanent residents don’t create a drain on the country’s resources. 

The Active Investor Plus visa program emphasises economic contribution while maintaining flexibility for investors who don't wish to relocate permanently. If clients choose to pursue this residency program, Whittier Trust can help select the qualifying investments, stay on top of the requirements, such as minimum thresholds and holding periods, and coordinate with Immigration New Zealand. 

How the two programs work

The first program is called the Growth Category, and it requires an investment of NZ$5 million (approximately USD$3 million). Investors are required to leave the funds invested in Invest New Zealand-approved managed funds (such as private equity, venture capital, or private debt) for a minimum of three years. They are also required to be physically in New Zealand for 21 days over the course of those three years. This program could be ideal for investors who are seeking a minimal time commitment and the shortest path to residency.

The second investment program is called the Balanced Category. It requires a higher investment amount of NZ$10 million (equivalent to USD$6 million) with a five-year holding period and investment options such as NZ equities, bonds, property development, managed funds, and philanthropy. To obtain residency, these investors must spend 105 days in New Zealand over the five years. However, the physical presence requirement may be reduced by 14 days per additional NZ$1 million investment for Balanced category investors who add Growth-type investments above the NZ $10M minimum (the maximum reduction is 42 days). This program is best for investors seeking diversified, lower-risk portfolios with longer time horizons. 

Key program features

Once the initial investment and physical presence requirements are met, both programs provide lifelong permanent residency for the investor(s) and their immediate family. This gives those family members the unrestricted right to live, work, or study in New Zealand and offers access to the country’s healthcare and education systems. Citizenship may be explored after five years. 

Plus, the capital investments may be fully repatriated after the designated holding period. This is an advantage over many other countries’ residency programs. 

Important tax considerations

United States citizens are required to pay taxes in their home country; it’s vital to consider the tax implications of establishing residency in another country, including New Zealand. Individuals become NZ tax residents when they are either present in-country more than 183 days in any 12-month period or they maintain a "permanent place of abode" in New Zealand. Those looking to avoid taxation in New Zealand should structure their presence carefully to avoid unintentional tax residency.

However, for Active Investor Plus holders, those meeting only the minimum physical presence requirements (from 21 to 105 days over a period of years) without establishing a permanent home typically avoid NZ tax residency entirely.

The U.S.-New Zealand Tax Treaty, a bilateral agreement established in 1982, prevents double taxation through foreign tax credits and tie-breaker rules for dual residency. Whittier Trust clients can expect their client advisor to help guide them through the process to achieve the most tax-advantaged outcomes. 

Next steps

If you and your family are considering exploring alternate international residency and these programs sound intriguing, it’s important to have a trusted advisor in your corner to help you successfully navigate the challenges that come with such a shift. As the coordinating family office, Whittier Trust can help assess whether such a move aligns with your family’s wealth and estate planning goals. We will help make sure that any investments made integrate well with your overall portfolio planning, monitor the NZ investment’s performance and compliance, and, if necessary, plan for capital repatriation at the end of the holding period. 

We are also poised to make connections with vetted immigration, investment, and travel specialists. This represents a natural extension of our family office consulting for globally mobile families who need complex coordination across immigration, investment, tax, and lifestyle planning.

If this sounds attractive, don’t expect it to be an instant process. Allow several months to explore whether these programs are right for you, building in time to discuss financial planning, have tax consultations, plan an exploratory visit to New Zealand, and select the necessary service provider. If you decide you want to proceed, the application process can take three to six months to gather the necessary documents, submit an EOI (expression of interest), apply for the visa, and receive an approval letter. Depending on the program, the investment period is three to five years, so be prepared to leave your investments for at least that long. Once the investment period is complete and you’ve obtained permanent resident status, it’s appropriate to consider capital repatriation and redeployment of those funds into the family portfolio. 

If you’re curious about whether or not such a program aligns with your family’s goals, we are always available.

Written by Whit Batchelor, Executive Vice President, Client Advisor and San Diego Regional Manager.

If you're interested in learning more about how strategic investments can impact your residency, speak to a Whittier Trust advisor today by visiting our contact page.

From Investments to Family Office to Trustee Services and more, we are your single-source solution.

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Jan 8th

Hidden Fees & Hidden Agendas

Who's benefiting the most from your investments?

Many investors choose their financial advisor based on a personal or professional connection. If you’re like most people, you’ve likely stayed with that advisor for years because you trust them, appreciate their guidance, and your portfolio may have even performed well.

But even trusted relationships benefit from a periodic review. It’s essential to understand how your advisor is compensated and whether any hidden fees are affecting your long-term returns. Over time, even small differences in fees can have a significant effect on your overall wealth.

For example, a $1 million portfolio growing at 6% annually over 20 years would reach about $3.2 million. If that same portfolio incurred an additional 1% in annual fees, the growth would instead be roughly $2.6 million—a difference of $600,000.

This isn’t about distrust. The financial services industry is inherently complex, and compensation structures can be difficult to interpret. Understanding these dynamics can help you make more informed decisions about how and where you invest.

Uncover Embedded Fees

If you’re invested in mutual funds or ETFs (exchange-traded funds), those funds typically charge an annual expense ratio to cover operational costs. For most investors, these charges are typically around 0.25%.

For example, if you have $200,000 invested in a fund with a 1% annual fee, that’s $2,000 per year in costs—regardless of the fund’s performance. These fees are automatically deducted before you see your returns.

Some funds also charge sales commissions when you buy or sell, and others include additional expenses, such as 12b-1 fees to support marketing. In some cases, firms may charge higher fees for their own proprietary products. Understanding these costs ensures you know exactly what you’re paying for.

For investors with portfolios over $1 million, mutual funds are often less efficient. Larger investors can typically achieve more flexibility and tax efficiency through separately managed accounts that hold individual securities. This approach allows for more customized management of capital gains and losses.

Understand How Commissions Create Bias

In addition to fund fees, many advisors receive commissions for selling certain products. These incentives can influence recommendations, even unintentionally.

You should feel comfortable asking your advisor for clear documentation of how they’re paid. It is important that you understand how your advisor is compensated. Are they paid through advisory fees, commissions, or perhaps they charge an ad valorem fee (a percentage of assets under management)? The ad valorem structure, for example, helps align your advisor’s success with your own: When your portfolio grows, so does their compensation.

It’s also wise to ask about fiduciary status. Fiduciaries are legally obligated to act in your best interest, though not all advisors operate under that standard in every capacity. It is beneficial to understand when you are being advised by a fiduciary and when you are not.

Stay Engaged

If you discover fees or structures you weren’t aware of, don’t be discouraged. The financial industry can be convoluted, and transparency isn’t always straightforward. The key is to stay informed and ask questions regularly. A trustworthy advisor should always welcome those conversations.

At Whittier Trust, we believe in full transparency. We do not use hidden or embedded fees, and we don’t utilize a commission structure. Our clients hold separately managed accounts with individual securities, designed to minimize costs and taxes while maximizing control.

Our advisors are paid on an ad valorem basis—if you do well, we do well. This alignment fosters long-term relationships, which is why 99% of Whittier Trust clients stay with us, as do their children and grandchildren.

That’s what it means to build trust that lasts for generations.

Written by Tim McCarthy, Managing Director.

If you’re ready to explore how Whittier Trust’s investment services can work for you, start a conversation with a Whittier Trust advisor today by visiting our contact page.

From Investments to Family Office to Trustee Services and more, we are your single-source solution.

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Dec 16th

Balancing Principles and Performance When Investing

Key considerations for those investing with environmental impact in mind.

If you’ve ever felt tension between your investment holdings and your personal values, you’re not alone. Fortunately, doing good doesn’t have to mean sacrificing returns. 

Most high-net-worth individuals still approach investing from a strictly performance-based perspective. They’re not necessarily looking for portfolios that mirror their values—but that doesn’t mean they don’t care about expressing them. Often, those expressions come through philanthropic foundations or donor-advised funds (DAFs). 

As a senior portfolio manager with the investment team at Whittier Trust, I often help clients align their financial capital with environmental or sustainability concerns in two primary ways. First, we design custom portfolios that reflect a client’s priorities, covering everything from carbon intensity to labor practices. While many funds are available, we take selection to the individual security level. With funds you are along for the ride, whereas with individual stock selection, you are in control. 

Second, we look for companies that exhibit strong operational integrity for all the investments we manage, not just because it aligns with values, but because it’s good business. Companies that think long-term about sustainability tend to manage better, allocate better, and ultimately perform better. Take Nvidia, whose new Blackwell chips are far more efficient in both energy and water use. That makes them more competitive for two reasons. Yes, customers like Amazon and Google care about the cost of the water and energy but more importantly, they care about sustainability. Nvidia benefits because they’re delivering a product that meets both criteria: performance and values. 

Earnings from Embracing Innovation

One of the more interesting success stories in energy and infrastructure is Eaton Corporation, a power management company that began electrifying its factories decades ago. That head start has become a growth engine today as industrial customers seek reliable, clean energy solutions. Their projects with solar-plus-storage microgrids are helping clients reduce energy costs by 20% or more, with typical paybacks in the three to six year range. 

United Rentals is doing something similar, not by selling energy but by helping clients use less of it. In Costa Rica, they built a grid solution that saves smaller firms close to $1 million annually by reducing diesel dependence and improving reliability. In the U.S., they’ve replaced 24/7 generator setups with hybrid battery systems and smarter power distribution, delivering immediate ROI to clients while reducing emissions. 

Planning for Future Profits

Of course, many of these projects are long-term. Investors need to understand that companies making these bets may deviate from short-term benchmarks, especially if they’re taking a capital-heavy route. We also see challenges when clients want to divest from entire sectors (“I don’t want to own any pharma stocks,” for example). We help them analyze what that sector has contributed to performance historically, and what the trade-offs may be moving forward. 

For clients who want to exit quickly but still make a positive impact, there are creative solutions. One option is to donate the shares to a DAF or charity, securing a tax write-off and avoiding capital gains. Another is a charitable remainder trust, which allows them to receive income from the assets during their lifetime while making structured gifts to charities and getting upfront tax benefits. 

For people who want to align their personal values with their portfolio values, my advice is always move thoughtfully and give your wealth management team time to do the research. Strong investing is about pairing performance with principles. 

Multiple studies have shown the financial value of sustainable initiatives including McKinsey’s “The Triple Play: Growth, Profit, and Sustainability” (2023). The companies that will still be thriving 50 years from now are taking a strategic, business-first approach to environmental adaptation. These investments in energy efficiency, water stewardship, and climate resilience are becoming high quality profit centers.

Written by Craig T. Ayers, Senior Portfolio Manager and Senior Vice President in Whittier Trust's San Francisco office. Craig specializes in working with high-net-worth individuals, families, and their philanthropic foundations to create customized investment portfolios.

If you’re ready to explore how Whittier Trust’s investment services can work for you, start a conversation with a Whittier Trust advisor today by visiting our contact page.

From Investments to Family Office to Trustee Services and more, we are your single-source solution.

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Dec 4th

Whittier Trust Leadership Recognized by the Orange County Business Journal’s OC500 List

Whittier Trust is honored to announce that two of our distinguished leaders, Greg E. Custer and Dr. James “Jim” Doti, have once again been selected for the Orange County Business Journal’s OC500 Directory of Influence. Curated annually, the OC500 highlights the most impactful leaders, innovators, and change-makers shaping Orange County’s business landscape. This recognition underscores Greg and Jim’s enduring achievements, visibility, and significant contributions to the Orange County community across their respective industries.

While the list evolves each year to reflect the region’s growth and shifting priorities, a select group of leaders consistently earns recognition. Greg and Jim are among those returning honorees in the 2025 OC500, published on November 17, a testament to their sustained leadership and lasting influence within the community.

Greg Custer, Executive Vice President and head of our Newport Beach office, continues to be recognized for his leadership within the West Coast’s oldest and largest family office. His stewardship of Whittier Trust’s growth in Orange County, his deep commitment to client families, and his extensive involvement across regional nonprofits have made him a consistent presence on the OC500. Greg’s work with organizations such as the YMCA of Orange County, United Way, and the Pasadena Tournament of Roses reflects his dedication to strengthening the community we serve.

 

Dr. Jim Doti, President Emeritus of Chapman University and a member of Whittier Trust’s Board of Directors, is also featured again on this year’s list. Known for his influential economic forecasting and decades of service to Chapman, Jim remains a respected voice in both academic and business circles. His leadership has shaped the trajectory of one of the region’s most prominent universities, and his insights continue to guide sectors across Orange County.

 

 

"We are proud to see Greg and Jim recognized among such distinguished company. Their continued presence on the OC500 reflects not only their great individual accomplishments but also Whittier Trust’s commitment to thoughtful leadership, community partnership, and the pursuit of excellence across generations," says David Dahl, President and CEO of Whittier Trust.

Learn more about our community leaders in our Newport Beach office. Start a conversation with a Whittier Trust advisor today by visiting our contact page.

From Investments to Family Office to Trustee Services and more, we are your single-source solution.

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Dec 2nd

Re-Visiting Roth Conversions

A shifting landscape for retirement and estate planning.

Planning for Roth conversions has long been a staple in year-end tax planning. Roth conversions involve taking a tax-deferred account, such as a 401(k) or individual retirement account (“IRA”), and transferring it into a Roth account. By doing so, any tax-deferred amounts, including principal and associated earnings, are converted into taxable income. 

Although filers must accelerate the recognition of taxable income, these amounts are no longer subject to the onerous required minimum distribution (“RMD”) regime that typically plagues retirees with hefty income tax bills and threats of IRS penalties if managed incorrectly. Structured properly, Roth conversions can allow filers to “choose” their tax rate, only converting amounts that avoid their next marginal tax bracket.

For filers with taxable estates or those who have already utilized their entire unified gift and estate exemption (in 2025, $13.99m per individual, $27.98m per couple), a recent tax law change has introduced a new planning consideration. Although the population of filers impacted is small (<1% of filers), the dollar amounts could be meaningful.

Beneficiaries of tax-deferred accounts inherited from such filers typically face two layers of taxation: a 40% rate at the estate level when the accounts are valued for estate tax purposes, and an income tax rate as high as 37% upon withdrawal. Historically, beneficiaries could offset the “double tax” on these accounts through the Income in Respect of a Decedent (IRD) deduction, designed to ensure that assets used to settle a decedent’s estate tax liability were not subject to income tax as well.

Recent legislative changes have altered how that deduction works—and may make Roth conversions more attractive.

The One Big Beautiful Bill and Its Impact

In July 2025, Congress passed the One Big Beautiful Bill (OBBB), which, among other provisions, placed a limitation on the tax benefit of itemized deductions. For high-income taxpayers, the tax benefit of itemized deductions in 2026 and onward will be reduced from 37% to 35%. Filers attempting to deduct an amount equal to their highest taxed income will unpleasantly discover they owe residual tax.

Beginning in 2026, beneficiaries who receive distributions from tax-deferred accounts will no longer receive the full benefit of the IRD deduction that offsets income tax attributable to distributions. As a result, a larger portion of inherited retirement assets may ultimately be lost to taxation.

Why Roth Conversions May Deserve a Second Look

Completing a Roth conversion can help mitigate this limitation by eliminating your beneficiaries' reliance on the IRD deduction. This can substantially simplify your beneficiaries’ tax profile, particularly for those who must withdraw the inherited assets within a short time.

By converting, you may be able to reduce your beneficiaries' income tax exposure on retirement assets. In many cases, this can preserve more after-tax wealth for future generations.

Beneficiaries of Existing Inherited IRAs Should Also Double-Check

If you are a beneficiary receiving distributions from inherited tax-deferred accounts and you have been taking advantage of the IRD deduction, it might make sense to accelerate your withdrawals before the new limitation rules come into effect.

Key Factors to Evaluate

An account conversion or accelerated drawdown is not suitable for everyone. Several variables must be weighed carefully in collaboration with your advisors and tax professionals:

  • Current and future tax brackets: If you or your beneficiaries expect to be in a higher tax bracket later, paying taxes now may be advantageous.
  • Tax attributes: a conversion or acceleration of income may allow you to utilize loss carryforwards, creating a more tax-neutral outcome.
  • Liquidity to pay conversion taxes: The ability to pay taxes from non-retirement funds helps preserve the full value of your converted assets.
  • State tax exposure: Moving in or out of a higher or lower-tax state can change the analysis. Certain states may also have state-level estate taxes.
  • Charitable intentions: Planned gifts may offset estate taxes upon your passing or taxable income recognized from a conversion (although charitable gifting in the year of a conversion will also be subject to the same itemized deduction limitation).
  • Your longevity: The decision to convert could be very different depending on whether you are in your 60s or 80s.
  • Beneficiary circumstances: Different beneficiaries are subject to different mandatory distribution timelines on inherited accounts. Consider the potential amount of deferral available. If you have multiple beneficiaries, consider splitting your tax-deferred accounts between them so that no single beneficiary has income taxed at their highest marginal tax bracket (so the itemized deduction limitation won’t apply).

Next Steps

Completing a Roth conversion or accelerating the distribution from an inherited tax-deferred account allows you and your beneficiaries to take advantage of current tax treatment while providing clarity and efficiency for your estate plan.

It is possible that Congress may adjust or clarify this rule in the future; however, given its other competing interests, proactive planning remains the most reliable way to protect family wealth from unnecessary taxation.

Final Thoughts

The intersection of estate tax law, retirement accounts, and recent legislative changes has created new challenges—but also opportunities. A Roth conversion could help minimize the long-term tax impact on your estate and your beneficiaries by removing reliance on a deduction that will soon be limited.

Before acting, work closely with your advisors, CPA, and estate attorneys to model potential outcomes based on your income, residency, estate value, and long-term goals. While the right approach depends on each family’s circumstances, understanding and acting on this unique planning window may help preserve a greater portion of your legacy for those you intend to benefit.

Written by Vikram Ganu, Senior Vice President and Director of Tax at Whittier Trust.

If a Roth conversion or accelerated drawdown seems like a potential opportunity for you, let’s start the conversation now. Visit our contact page, and Whittier Trust can help develop a plan that adjusts your tax profile in response to upcoming legislative changes.

From Investments to Family Office to Trustee Services and more, we are your single-source solution.

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Nov 21st

Sandip Bhagat Breaks Down the Resilience and Sustainability of the U.S. Economy on Nasdaq TradeTalks

Whittier Trust's Chief Investment Officer joined Nasdaq experts and the Head of Macroeconomic Research & Market Strategy at Guggenheim in an in-depth conversation on earnings growth tailwinds, the implications of a bifurcated economy, and whether or not we're in an AI bubble.

Although the first half of 2025 was rattled by trade fears, uneven consumer strength, and a narrowly led economy, the latest data shows those headwinds may be dissipating with resilient consumer spending still driven by the top 10%, steady unemployment numbers, the promise of imminent fiscal stimulus, and a strong earnings season clearing the way for the reliable earnings-driven stage of the bull market.

Watch now as Sandip shares his latest market insights and outlook for 2026 in a discussion with Jill Malandrino, Max Cabasso, Michael Normyle, and Patricia Zobel on Nasdaq TradeTalks.

YouTube video

To learn more about our views on the market or to speak with an advisor about our services, visit our Contact Page.

Nov 12th

The Leadership Imperative

Identifying and onboarding your next-generation executive.

A role in the family business isn’t necessarily a birthright. It is, however, a responsibility, and one that requires careful consideration on both sides. It’s possible your children don’t have the same talents and ambitions as you, but they may bring other interests and skills to the table. More importantly, your employees are counting on the company’s continued success and longevity. A potential role should be aligned with the individual’s unique goals and the long-term needs of the company.

Your child may be a “chip off the old block,” but it is unfair to assume they will be successful in the same ways you have been. Family expectations can cause undue pressure all around, possibly pushing people into positions that aren’t beneficial for the company or the individuals. You may wonder if it’s even possible for your successor to live up to your standards. Conversely, many young people are overconfident and may think the entrepreneurial “secret sauce” is already in their genes, not realizing how much work is required.

Knowing that each situation is unique, we have witnessed enough of these exchanges to have formed some helpful tips. Here are five strategies to help you prepare the next generation for the opportunity to lead your family business.

Start Young

It’s never too early to expose children to the business. However, your initial approach should be informal. You don’t want to create the expectation or assumption that your offspring will become CEO someday. The goal is simply to gauge each child’s interest and encourage open dialogue about the potential role they might play.

It’s important to be honest and discuss all possibilities without any expectation that your child will continue the family legacy. The goal is to empower (not pressure) them into a role that fits. Encourage them to start with internships or summer jobs. Remember, there are plenty of roles other than CEO that might be the best fit for them. You want to create a space where you can have open discussions about their interests, knowing those interests are likely to change with maturity and experience.

A good place to start is by looking for opportunities to take your child to work. One of my clients at Whittier Trust shared how when her kids were young, her son loved watching factory operations, while her daughter was intrigued by negotiations with vendors. Early on, each of them displayed curiosity that would later become more apparent interests aligned with their personalities.

Tell Your Story

That same client was also open with her kids about owning and operating a business. She wanted to be sure they understood the risks, rewards and personal sacrifices of entrepreneurship.

Talking about your origin story and lessons learned can be an approachable way to teach the next generation, while also assessing their thinking and problem-solving skills. How were you inspired to start your business? Who helped you? What opportunities did you seize along the way? What setbacks and failures did you overcome? After all, no career follows a perfectly straight path.

Sometimes we forget to tell those closest to us about the milestones that have shaped us. Storytelling can be a powerful way of including family in the business and understanding where they might fit.

Use Philanthropy as a Training Ground

Another way to build valuable skills that may apply to your family business is to involve your children in your family’s philanthropic efforts. Philanthropy draws on the same skills used in business, just applied in a different context. Making decisions around charitable giving is a safe way for family members to learn business concepts and gain experience in vital skills, such as reviewing financial statements, managing cash flow and analyzing the strengths and weaknesses of an organization prior to making an investment. It can also enhance your company’s values and reputation.

Philanthropy helps teach values in addition to skills. Another client recently told me their whole family discusses which organizations they’re going to contribute to and why. She said, “Each of our teenagers has to explain their thought process and confidently support their position.” This simple exercise helps the family to connect in a meaningful way, while providing a platform for younger generations to demonstrate their critical thinking skills and receive feedback from their elders.

Your financial advisors can be useful partners in setting up a family foundation, donor-advised fund or other philanthropic account. At Whittier, for example, we work with families to set charitable objectives that allow younger members to demonstrate increasing levels of responsibility and accountability.

Weave Mentoring Into Everyday Life

Never underestimate the value of kitchen table talk. Even a casual chat can give your family member a window into your work while letting you see how they think and respond. One client described a challenge he was facing at work over a cup of coffee with his daughter, then asked her, “If you were in my shoes, what would you do?” He was thrilled to report back that he’d had a big success with one of the creative ideas she’d proposed.

Non-family members can also be critically impactful mentors. Look for valued staff, friends and consultants who not only could be willing shepherds for your progeny, but also want to be.

A non-family mentor may also be the person most likely to run the business in the future. Creating bonds between your heirs and future company leadership before the idea of succession is in play can circumvent the awkwardness or frustration that may occur if a child feels passed over for the position. If the future leader has mentored your heir, there’s a better chance of mutual respect and support. This might naturally evolve into having an outside hire, such as a COO, succeed you in managing the business while your family members take on other meaningful roles within the company.

Prevent Sibling Rivalry

Wealth distribution can be a tricky topic when a family business is involved. For example, a child working in the business may receive a larger share of revenue than their siblings when the business is sold. It’s important to have honest and transparent conversations about wills and trusts with the whole family.

As a witness to many of these conversations, I strongly urge you to consider having your advisors and attorneys assist as facilitators. An experienced advisor can apply the lessons of past generations to help you usher in the next.

Published in Family Business Magazine.

Written by Ashley Fontanetta, Senior Vice President, Client Advisor at Whittier Trust. Based in our Pasadena Office, Ashley specializes in philanthropic planning and administration.

If you’re ready to explore how Whittier Trust’s family office can work for you, start a conversation with a Whittier Trust advisor today by visiting our contact page.

From Investments to Family Office to Trustee Services and more, we are your single-source solution.

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