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Jonathan Gage: Everyone’s going to pay for Ukraine

In March’s edition of The Lede, we spoke to Keystone Family Advisers founder Jonathan Gage about Ukraine, stagflation, succession, and the art of nudging – as well as how families and family businesses can navigate change effectively.

Jonathan Gage, Keystone Family Advisers

Jonathan Gage is Founder and Director at Keystone Family Advisers. He has over two decades of experience of advising wealthy families at leading companies, including Lloyds, Fleming Family & Partners, UBS Wealth Management and Barclays Wealth. Keystone provides wealthy families and individuals with advice and guidance on navigating change.

You’ve spoken about the need for families to be more business-like. What do you mean?

Jonathan: Keystone is an independent entity, facilitating an objective view. It is about two things: the business of family and, then, the family business itself. The business of family comes down to leadership and accountability, which themselves come down to governance, transparency and the way you have conversations. The family business element is about promoting a long-term strategic outlook and ensuring finances are sustainable.

Succession, for example, is not a once-and-for-all conversation, but a constant process of taking stock of who’s qualified to lead for the long-term. This can be difficult when there’s a founder who has a big personality, who often needs convincing to move to the next stage in their journey and allow succession to evolve.

There are also family situations that can get very emotional, where there’s a real need for objectivity – when a patriarch or matriarch dies suddenly without planning what would happen to their assets, for example, or when there are warring siblings?

Here being business-like is about trying to keep families functional, because it’s when they get dysfunctional that wealth is destroyed. We try to take the emotion out of these situations, create a framework of trust where people can come together, and gently nudge them to think about things slightly differently.

Nudging sounds easier said than done. How do you convince clients when you’re telling them something they don’t want to hear?

Jonathan: Nudging is all about politely and gently challenging. It’s leading from behind. People can feel entitled and defensive, so while you can present the facts and your advice from a legal or accountancy point of view, they have to elect to follow it themselves. For that you need to communicate a common purpose.

Sometimes families, no matter how bright and successful they are, need help establishing what that common purpose is, which means you need to talk to everyone to see where they are coming from and what’s important to them. But when you have a common purpose, you can nudge them. Of course, the criticism of this diplomatic approach is that it can be too subtle – that’s when the kid gloves need to come off.

We’re barely a month into the Ukraine war. How have these dreadful events affected client priorities?

Jonathan: The world changed on 24 February. It’s so evil, and that’s not a word I’ve used before. But everyone’s going to pay for the cost of Ukraine, whether that’s in higher energy prices, or because Putin – and Covid – just brought an end to globalisation.

We’re already seeing the cost of living crisis partly as a result, but that’s really just a modern way of talking about stagflation, where you have low growth and endemic inflation. There will be cost-push wage increases and I suspect an increase in union power. The government will have to increase interest rates.

The problem is that in the 1970s and 80s, policymakers worked on the assumption that you needed interest rates at inflation plus 2 percent to control inflation, which would give an interest rate figure this year of something like 10 percent. But if you look at the level of debt – public, personal and corporate – we’re not going to be able to get anywhere near that without bankrupting the economy. Central banks’ hands are tied, so I think we’ll see a need for some different approach, like quantitative easing was different in 2008-9.

For families, this means the priority is having sustainable finances, so they need to look very carefully at their asset allocation and debt exposure.

What is your advice for someone starting out as a professional advisor to private clients?

Jonathan: Acquire some wisdom first. The modern world values wisdom less than it did – it values information instead – but wisdom matters, and requires a bit of experience. It also requires never thinking you have nothing to learn. The moment you think you know it all, you’re dead. Wisdom then equips you to understand what matters to your client and what their sense of legacy is.

It’s also important to look after your wellbeing, get some exercise and sometimes stand back and observe. There’s a pressure that we should always be doing, but if you resist that and allow yourself just to contemplate, then it’s surprising what you can come up with. And finally, put a smile on your face. It’s not a sign of weakness, it’s a sign of resilience and strength.


About Jonathan Gage

Jonathan Gage is founder of Keystone Family Advisers, which provides families and family offices with considered and impartial counsel on issues ranging from family assets to governance to investments to inheritance.

About The Lede

This article was originally published in The Lede, Transmission Private’s monthly newsletter that tracks the future of reputation management. Featuring interviews with leading private client advisers from the worlds of law, finance, and accountancy, sign up today to receive the newsletter in your inbox every month.

Transmission Private publishes a monthly newsletter that tracks the future of reputation management for private clients.

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Transmission Private publishes a monthly newsletter that tracks the future of reputation management for private clients.