Help investors protect themselves over the long term


A member of Pitcairn’s management team, Rick Pitcairn focuses on long-term, global investment strategies designed to deliver better results for affluent families. He is the chief architect of Pitcairn’s open architecture investment platform and a leading authority on the use of tax overlay and unified managed accounts in trust structures and for the ultra-high net worth investor. .

Russ Alan Prince: What sets Pitcairn apart from the family office competition?

Rick Pitcairn: Pitcairn defines itself as a true family office, meaning that we provide all the essential services to the ultra-wealthy clients we serve. Whether it’s educating the next generation, issues of family governance, or sophisticated investment strategy and tax planning, Pitcairn’s ability to engage in a more holistic discussion of the challenges facing facing wealthy families is what sets us apart. In fact, next year Pitcairn will celebrate its 100th anniversary, which is truly a remarkable milestone to achieve in this industry, and a testament to the company’s longevity and success in advising wealthy families.

Prince: How do you work with families to protect their heritage over the long term?

Pitcairn: At Pitcairn, we have worked hard to design a business that is 100% on the same side of the table as the families we serve. This position allows us to remain objective and to analyze and sort out the many opportunities that the financial center brings to these families and to maximize the probability that the family achieves its objectives and preserves its heritage. This alignment, over a period of time, creates a bond of trust that allows Pitcairn to advise on the range of issues that beset a family and design strategies that achieve superior results.

Prince: What is your investment philosophy?

Pitcairn: The core of Pitcairn’s investment philosophy is that executing a well-constructed diversified portfolio that relies on long-term equity ownership is the best way to grow wealth and preserve it through generations.

One of the characteristics of the UHNWI segment is that they normally have extremely long investment time horizons. It is not uncommon for our clients to view their portfolios in a multi-decade context. We believe that such a long-term mentality is a significant advantage in all markets, but particularly in today’s market. History teaches us that if we get all the good returns the markets can offer over time, we can take all the bad returns they generate and still end up far ahead of trading strategies that carry execution risk. high and high tax burdens.

Prince: What is the biggest threat posed by inflation to markets, the economy and investors in general?

Pitcairn: A certain level of inflation is not a bad thing for our economy or our markets; runaway inflation is out of control. One need only study the history of countries that have faced chronic high inflation to see how damaging this type of environment can be. We are facing our first wave of serious inflation since the 1970s, and that makes today’s environment unprecedented and dangerous.

A balanced look at the situation, however, shows that this current inflation could be episodic rather than endemic. Current supply chain challenges and tight food and energy markets may prove temporary. Furthermore, while global geopolitics may retreat from the globalization of trade, which has been massively deflationary, the wave of technological change, another driver of deflationary forces over the past 30 years, will continue. Time will tell how effective policymakers are at controlling the current cycle of inflation, but for now, this remains the biggest threat we see.

Prince: What should investors be doing right now to protect themselves?

Pitcairn: The last three leaders of the Federal Reserve told us that the Fed had the tools to control inflation and that deflation was, for them, a bigger concern. Well, now we have the opportunity to experience the effectiveness of these tools.

The Fed’s ability to achieve its objective of controlling inflation is a hotly debated topic. Some see the Fed successfully controlling inflation and achieving a soft economic landing; others think the Fed tends to delay and then over-correct, aggressively tightening rates as the economy slows, causing recession and stock market disruption. Time will tell if the Fed can avoid this kind of negative scenario while keeping inflation under control.

We are not traders. We are strategic investors. We believe in investment discipline and if you have a properly constructed diversified portfolio, you have a portfolio that will perform relatively well in an environment of modestly rising inflation. While such a portfolio will obviously fluctuate with market conditions, over the longer term it will maximize your chances of investing success.

Russ Alan Prince is the executive director of Private heritage magazine and content director for High-Net-Worth Genius. He consults family offices, quick-and-rich entrepreneurs and selected professionals.

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