Inside a Century of Wealth Stewardship with Matt McCarte

Today we welcome Matt McCarte, Managing Director and Head of Wealth Management of Pitcairn: a century old family office with $8.3 billion in assets under advisement, located in suburban Philadelphia. We'll be exploring Pitcairn's approach to wealth management and strategies behind guiding ultra high net worth families in preserving their legacy. Welcome to the podcast, Matt.

Matt McCarte  00:29

Julia, thank you for having me. I'm excited to be here.

Julia Smollen  00:33

So Pitcairn has celebrated its 100th anniversary last year. Would you please tell us about the history of your firm, how it started and what it's really evolved into?

Matt McCarte  00:43

Sure yes, last year was an exciting year for us. It was quite a milestone. We're very proud of our history and longevity. But in terms of background on Pitcairn, we really started as a family office back in 1923 by the sons of a Scottish immigrant, John Pitcairn. John Pitcairn was a tremendously successful entrepreneur in in many different endeavors, most notably PPG, Pittsburgh Plate Glass, which I think many folks have heard of. Some years later, his sons quickly realized the numerous advantages to pulling together their their collective resources, and created the Pitcairn family office. And over many, many years, the family office grew. And in the late 80s, we actually founded a Trust Company, Pitcairn Trust Company, and began to welcome all families. So we opened up our doors in the late 80s and have been growing ever since now, we work with roughly 110 families all over North America and beyond, and have about $8.3 billion in advised assets. We have a presence in New York and Virginia and Florida, and we're based right now in Philadelphia. It's been a wonderful a wonderful run so far. We're looking forward to the next 100 years.

Julia Smollen  02:06

Can you tell me about Pitcairn's unique, shared single family office model, and how it's different from other wealth management firms like private banks or brokerage firms?

Matt McCarte  02:17

I think what makes us a bit unique in the space is we are truly a family office. If you think about our history and our evolution, we we began as a family office, and we remain a family office. This has been our business, and has been our business for over 100 years now. We work with, in terms of the families we work with, they're they're most often multi generational, ultra high net worth families that have very complex, wealth structures, and they are looking for us to help them navigate that complexity. And it's, it's something that we feel, that we, we are expert at, and can add ton of value and perspective, given our given our history and holistic mindset. We think about internally. We have investment advisory group that partners with our families on all things investment. We are 100% open architecture firm, so we are fully aligned with the success of our clients. We have no product to sell. We are committed to to education and family engagement. So we have a group headed up by Amy Hart Klein, who is our Chief Knowledge Officer. And the family engagement group is is critical in helping educate our families around financial literacy, thinking about engaging the next gen on a multitude of subjects and creating that that holistic feel. And then we have our family office group who are responsible for delivering all sorts of family office services that that one would expect, from taxes to estate planning, philanthropy, reporting, all those, all those things that a family would join a family office for. And all those services are coordinated by a relationship team, a seasoned relationship team, who have a just a holistic mindset around planning. So we do feel that is a bit unique in our industry, going a little bit deeper. From an ownership structure standpoint, we are owned by the Pitcairn family and employees, and most recently, a family who has joined us as a client and a capital partner. So we're not owned by private equity and have no obligation to to Wall Street. So that ownership structure is also very much aligned with with the families that we that we serve.

Julia Smollen  04:37

And these families are ultra high net worth families, a lot of them. And talking about generational wealth transfers, what are some key considerations Pitcairn takes into account when advising these ultra high net worth families to ensure their legacy is preserved.

Matt McCarte 04:56

What are the most important things that we'll do when working with ultra high net worth families Julia is really make sure that the leading generation, the first generation, there are so many different terms to describe that generation, that the patriarch the matriarch, but really, getting a really good understanding around their asset picture, and making sure they understand their asset picture. Again, many of these families have ultra complex well structures that are that are difficult to understand, and they were created out of necessity. So making sure they have a strong sense of their wealth structures is so is so important. And then really lending our perspective, many of our families are very curious, and for good reason, about what other families are doing. Similarly situated families, how much are they thinking about letting the next generation know about their wealth structure, how much wealth to pass down, when to pass it down, so helping families understand some of the some of the history that and perspective that we've had in working with these families can be so critical to their success. Also, you know, really getting to to engage with the rising Gen. So that would be the second gen, the third gen. Again, you know, a lot of a lot of industry terms to describe generations, but we call them rising Gen and I think a lot of folks do, but engaging with them on on things such as financial literacy, and then even more focused initiatives such as creating rising Gen cohorts, where rising Gen family members from different families can come together. We help coordinate those, those efforts, and have had a couple of successful cohorts, programs that many families have joined. We're also, we're also very interested in helping families create customized learning plans so family engagement at at very different levels, where we would engage with family members and create a customized plan for the rising Gen so that he can understand their wealth structure, so they can understand what it means to be a good steward, a good beneficiary, perhaps a good trustee. So helping families just really understand their picture and and sure that their that their legacy is is preserved from generation to generation.

Julia Smollen  07:27

You're working with a lot of different families, a lot of different types of families, I assume, with a lot of different dynamics within those families. Are there any common issues surrounding generational wealth planning that you've run into common areas of contention?

Matt McCarte  07:43

Yeah, it's such an important question. Julia, I think there, there has been an evolution in in our industry, around around planning, wealth planning, I think there's a concept of living in the plan that is, that is certainly real. I think when we look across our families and the families that we serve, there are many ways to establish an estate plan, and at some point the next generation has to live in that plan. And so starting with goals and objectives, with the with the with the leading Gen, and helping them really make sure they understand both the qualitative aspects of the plan that they're that they're setting up, while you're addressing goals and objectives and concerns. I think understanding the impact on future generations around the plan they're setting up now is such an important part of success and family harmony. So I think when you look at common issues that that certain families might encounter, it's around things like transparency, having the next generation understand what they what their picture will look like years down the line, I think is a very common issue that surrounds families of that are that have complexity and are, you know, have assets that takes a lot of planning to make sure a thoughtful transition occurs.

Julia Smollen  09:18

And you mentioned estate planning there. Is- It's also a big piece of what you you do to help your clients, what considerations come into place when planning a robust estate plan, and how can financial advisors ensure their clients understand and implement them effectively?

Matt McCarte  09:38

I think the most important place to start is really around what the family is trying to accomplish. Estate planning, everyone knows is, is a necessary part of financial planning. It's, it's meant to preserve assets from from unintentional tax consequences. No one, no one wants to have an unintentional beneficiary their estate plans, such as the IRS. So estate planning is a critical element of a family success, so understanding what their goals are, certainly minimizing tax implications is a is a common goal across all of our families. But I think more importantly, it's really making sure that assets are moved to the next generation in a thoughtful way, or perhaps to to charity, which is also a big component of the estate plans of many of our families. So thinking through how an estate plan is structured to accomplish the client's goals is, is the most important aspect. So really having a deep discovery with the client on their goals, their objectives, what they what they feel is success. What they feel like might not be success. So many families are are mindful of passing down too much too fast. Some families are concerned about their own ability to sustain their lifestyle if they move assets down too quickly. So they're looking for flexibility. They're also looking for guidance around transparency. So there has been, again, an evolution in our industry. Years ago, it the common theme was, create trusts, put the assets in the trust, and move it down to the next generation, avoid taxes and repeat. There's been a, again, a nice evolution, a welcomed evolution in our industry, where there's been much more transparent transparency from from how it was done 50, 60, years ago to even 20 years ago. There's a real push to make sure the the next generation is aware of the plan and is is knowledgeable, so they can make like decisions that they're empowered to, to move forward with their own financial lives, because they have a good understanding of of the estate plan that has been established so very important considerations. And you know, we're looking now, there is a, certainly a push to review estate plans, because there is sun setting that's going to occur in the estate tax landscape at the end of 2025 so many families are starting to really take a careful eye towards their current plan and how they might want to use up the remaining lifetime exemption, if they've used any at all. So we're encouraging our families to take a take a close look and think about what the near term future might look like.

Julia Smollen  12:48

And there's an expectation that 40% of advisors are expected to retire in the next decade, kind of shifting towards, you know, hiring and retaining talent. I imagine that working with ultra high network clients is top of mind when you're hiring. How do you go about finding and developing the next generation that can work with these types of clients and families?

Matt McCarte  13:14

Such an important question, and we take a very careful eye towards hiring, and many firms do and should, because it's so important and so important to culture and to the success of our families and our firm. So when we are looking to hire and retain, we're looking for a very specific type of person, given what we do and the types of families we help. Certainly, our employees need to have deep technical experience and expertise, and so, of course, we want, we want them all to have the alphabet soup, so we have CFPs and CFAs and CAIA's and all of those good designations. So that's, that's kind of goes without saying, but we're also looking for people that have the high qualitative touch. We're looking for people with high EQ emotional intelligence, which is, which is so important for the families that we that we work with. You may or may not be familiar with Danny Meyers book setting the table, and he talks about the 51 percenters, it's a concept that and a mindset that we've really adopted here. So when we look to hire and we look to retain, we're looking for for people that are that are genuine and authentic, and that is, that is so important. We're looking for people that, by their nature, are curious, deeply curious. We're in an industry where you have to stay sharp, you have to stay informed, and that is a critical part of of our of our advisor teams, of course, we want them to to have a strong work ethic, but probably more importantly, is a is a high degree of empathy. Um. Our families, they go through difficult times like everyone does, and so recognizing a challenging period for a family really helps build and and and deepen strengthen relationships and for for the long term, many of our families, I've been with the firm now for for just over 26 years, and I've had families that I've worked with since I started. So those are the types of families we work with, and building relationships is such an important part, and it's truly what what our clients value. And so we are very mindful and intentional on how we hire, and we're looking for people who can continue that, that that culture,

Julia Smollen  15:42

You've been doing this for a while, kind of, to wrap up, what about this still excites you?

Matt McCarte  15:50

Yeah, I have to say, I come to work every day with with a smile on my face. I've been doing this again for quite a long time, and I've been doing it here for for over 26 years. And I I truly enjoy working with with our families. They are they are fantastic people. They they're business creators. They've are super supportive of philanthropy. They're supportive of their communities. And it's been so rewarding, really, to to see them successful. We have clients who who run all different types of businesses, and it's it's so interesting to see, and rewarding to see, to see them have great success in their in their communities, their their employees, their stakeholders are such an important part of what they do. And think about the dollars they've contributed to things like hospital, hospitals and preservation, environmental preservation, trusts and the arts, it's really just a staggering dollar, and watching them and helping them achieve success is just truly rewarding. And we, we have the benefit of having clients, client families that we feel like we work with, as opposed to clients you work for. And there's, there's a bit of a difference there, and it's so important for for our clients to be a good fit for us, and for for Pitcairn to be a good fit for our clients, and when we achieve that, it's just a wonderfully rewarding experience. And you know, additionally, I would say that I've had the benefit of working with some fantastic people here, over my, over my, over my time, and it's been just a, just a great, a great experience. And I value our culture. Culture, I know, is a term that gets thrown around a lot, and I really like to think that that it's lived here and it will continue to be so, and it's why you stay at a place for as long as I have, and just really looking forward to the future and all that it holds.

Julia Smollen  17:57

Thank you so much for joining us, Matt. We appreciate you being on the podcast.

Matt McCarte  18:01

Julia, thank you so much.

Julia Smollen  18:03

To learn more about Pitcairn, please visit Pitcairn.com Please follow us for timely updates on X, LinkedIn and Facebook, all at Advisorpedia. For everyone at Advisorpedia and the Power Your Advice podcast team, this is Julia Smollen.