Case Study: Institute for Private Investors

Academic Director

  • Professor Richard Marston

Goal

  • To help private investors manage wealth more effectively for their families

Results

  • 490 graduates from 29 countries
  • Many families have sent multiple members to the program to give them a common framework in making financial decisions.

Becoming Wise About Wealth — Institute for Private Investors (IPI): Private Wealth Management for Investors

Like many members of the Institute for Private Investors, when a veterinary scientist sold the family business he and his wife had created, he realized he had become the CEO of a business he didn't understand: make his own money management firm. "I didn't know that world," he said in a recent interview at the IPI office in New York. "We live in the middle of the country, in a small city, and had to make the transition from individual mutual fund investing to portfolio management." At first, he said, "I made some mistakes, so I went to a couple conferences to learn how to become an investor." At one, when he asked where he could learn more, a panelist suggested the Institute for Private Investors.

As he and his wife educated themselves, they realized they wanted even more: a firm foundation in private wealth management — not just for themselves but to pass on to their children.

"A lot of families can't talk about money," the principal said, but they wanted their family to learn as much as they had. "As the first generation, we came in ignorant, but we're long-range planners," he said. "We have three well-educated children, all married. Any one of them might pick up the pieces, but they weren't educated in the area of investments. We wanted to educate them all so that there are no second-class citizens." The family sent three members to the IPI's inaugural five-day program on private wealth management at the Wharton School in 1999. After attending the first year, the family made a strategic decision. Not only would their own three children attend the Private Wealth Management Program at Wharton; so would their spouses.

Program participants learn through lectures by Wharton faculty and interactive casework. A "living" case study compels participants to come to terms with a wide range of investment issues that directly impact all families that have significant wealth. Learning is enhanced by the continual exchange among participants who have a common bond — responsibility of significant wealth.

Now, every August when the family gets together, their shared experience at Wharton "has allowed us to upscale our discussions," the principal said. "We have a common subject to talk about — openly. Even our daughter-in-law, the artsy one, wants to talk to me about money management. The way the information is presented could be useful for anything from balancing a checkbook to managing your retirement. It's that fundamental. The principles are the same, whether you're a widow with $200,000 or the Yale endowment."

Thanks to the Wharton Private Wealth Management Program, the family learned enough to feel comfortable making investment decisions that occasionally go against accepted opinion. "If I hadn't gone through Wharton, I wouldn't understand enough of the institutional thought process to challenge it," he said. Today, he's responsible as a volunteer for the investments of 11 endowments worth more than $300 million and serves as an independent director of 40 mutual funds. "I listen to these big names talk, and Wharton has given me the basic information to challenge them. It's been a huge benefit to our family and our nonprofit organizations," he said, proudly showing a balance sheet very much in the black three years into a bear market.

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