H.S.H. Prince Philipp von und zu Liechtenstein and H.S.H. Prince Max von und zu Liechtenstein talk about sustainability and the principles of successful investing.
H.S.H. Prince Philipp: Well firstly, wealth means that one has the resources to do something. Primarily, that is a challenge but also a motivation and an obligation to utilize the possibilities that are associated with wealth in a constructive manner. We are a large family. Some family members are active in business, others in politics, the academic world or in other areas – there are no restrictions. What really counts is that each family member utilizes the potential of our and his wealth in a positive way.
H.S.H. Prince Max: It helps to set clear goals in life and then to consider how one can use wealth to reach those goals. Over many centuries, our family has actively participated in politics, business and social projects. We want to preserve the possibility for future generations also to make a positive contribution in all these areas. In the meantime, sustainability has become a blanket term. In essence, however, it involves offering the next generations the same possibilities that oneself has enjoyed. And here I’m referring not only to one’s own family but also to society and the environment as a whole.
H.S.H. Prince Max: We invest with a long-term horizon and apply an extremely disciplined approach to capital investments. We are firmly convinced that risk should be sensibly diversified, that means not putting all one’s eggs in one basket. The financial markets react emotionally and are only efficient to a certain extent. Investors can exploit such inefficiencies, if they possess the appropriate expertise. Consequently, we try to identify the leading asset manager for each asset class and each investment instrument, irrespective of whether that person works in our bank, or is an external manager and receives a mandate from us. Of course, we are not always successful. But it is important to learn from mistakes and take the necessary consequences. If I consider the long-term investment performance of our own assets, then I have to say: by and large we’ve done a pretty good job.
H.S.H. Prince Max: One important trend that is still gaining a great deal of momentum is the global shifting of economic power from the West to the East and the corresponding upturn in Asia. We saw this trend coming at a very early stage. Today, around a third of our staff work in Asia. In Hong Kong and Singapore, we have two attractive platforms in this growth region, which will continue to be important for investors. Another trend is the increasing polarization of society in our Western democracies. This trend is being exacerbated by the current economic crisis. This is not only dangerous for society, it could also lead to disruptions on the financial markets.
H.S.H. Prince Philipp: Another pressing issue could be inflation. Unfortunately, it has to be expected that the public debt, which has piled up in many countries, will be reduced either via inflation or, even worse, by imposing restrictions over the power of disposal of private wealth. As keywords here I can mention capital export restrictions or compulsory loans. Against this backdrop, one should diversify into tangible assets and examine what portions of one’s wealth should be sensibly placed in countries with a high degree of legal certainty and solid public finances – countries such as Switzerland and Liechtenstein.
H.S.H. Prince Philipp: Families should clearly and explicitly regulate such important financial issues as succession, inheritance and beneficial use in so-called family governance agreements. For this purpose, we offer exclusive platforms at which families and their advisors can exchange views and ideas on such questions. Time and again, I’ve noted how immensely valuable this exchange is for all participants, including us.
H.S.H. Prince Max: We have, in the meantime, become a large multi-family office with a clear focus on wealth management. Today, our expertise in traditional and alternative investments has attained a scope and depth, which is almost unique in our industry. Other families and investors can benefit from this experience by either investing in the same strategy as the Princely Family, or using this as a benchmark. They can also take advantage of specific areas of our expertise.
The interview was published in the portrait of LGT Group. For you to download - please go to: Publications