Private View Blog: How the Bill and Melinda story transformed wealth management

Celebrity couples behaving badly – one of the world’s oldest stories – have always been good for the box office. Whether we’re talking about thespians Richard Burton and Elizabeth Taylor, musicians Sonny and Cher or royals Prince Charles and Princess Diana, the combination of luxury lifestyles, infidelity and eventual bitter divorce have contributed to the irresistible formula.

The difference between these previous pairings and those of the latest couple in the news – Bill and Melinda Gates – is however significant. Unlike the actors, singers and royalty enjoying their luxury lifestyles and properties, this 21^st century fixture were more focused on giving their money away to deserving causes.

The work of the couple’s $50bn philanthropic foundation, which has funded worldwide educational and health causes over the past 20 years, was listed as one of their key achievements, along with raising “three incredible children” in a Twitter post from Microsoft co-founder Mr Gates announcing the split.

Private banks have seen the Gates as their poster couple of entrepreneurs turned philanthropists. They pioneered the search for a “purpose” for a family’s wealth. This is now the hook routinely used by relationship managers keen to deepen dialogue with the top tier of clients. Moreover, exploring families’ needs in philanthropy and impact investments is seen by wealth managers as the best way to understand their clients’ mindset and the gateway to selling them more services, as the relationship strengthens.

They also wrote the rules on a fairly blank canvas, setting the standard for other entrepreneurial families. “Bill and Melinda Gates, and their foundation, have been pioneers in 21^st century philanthropy,” says Cath Dovey, co-founder of the Beacon Collaborative, a hub for philanthropists. “They have been instrumental in developing much of the best practice in the field on the themes of responsibility, accountability, transparency, diversity and collaboration.”

While many families have failed to step into the maelstrom of public debate, highly polarised on whether philanthropy actually benefits society, the couple have been happy to negotiate these conflicting pressures. Their leadership has been instrumental not only in these moral issues, but also in investment principles.

Their funding of pandemic research – an area where governments cut spending because they perceived risks to be so low – has proved a game-changer during the crisis. They have consistently been in the vanguard of trends moving towards the mainstream, including ESG and impact investing. They have also partnered successfully with legendary investor Warren Buffet.

Family offices in particular have looked to the couple as providing an example of how to fashion their strategy. “The Gates Foundation chose to allocate risk capital to some high profile but under-resourced targets,” comments Charlotte Thorne, founder of multi-family office Capital Generation Partners. “These targets were identified by a group of scientists working in the field of human health and wellbeing. It’s typical of the Gates Foundation to take this approach – to use experts to identify goals and then to allocate resources to those goals in the expectation that some investments will fail and others will succeed.”

The technology background of both partners – who met in the workplace at Microsoft – is also credited with much of the foundation’s success. “They have taken a fresh, results-oriented approach, taking advantage of technology and social networking and a new passion for measuring impact. This Silicon Valley or ‘tech’ mindset has had a big influence on today’s philanthropy and some of that can certainly be traced back to BMGF,” comments Hannah Shaw Grove, chief marketing officer at Foundation Source, a management services provider for wealthy families.

“While the mid-life transition from industry titan to philanthropist is not entirely new or unique, the way the Gates did it has provided a path for entrepreneurs who have amassed significant wealth and are ready to redirect their energy to changing the world.”

It is vital, however, to acknowledge the very different roles which Mr and Mrs Gates played in their collective success. Mr Gates’ transformation of workplace culture is seen as particularly significant.

“We got summoned to his Microsoft campus, and it was unlike anything we had ever seen before,” recalls April Rudin, CEO of wealth management marketing consultancy the Rudin Group. “The buildings were all low-rise and it was very egalitarian. We are used to seeing the big boss with the plushest office in the highest tower. But Bill’s office could not be distinguished from the rest of the campus, it was on ground floor level, amidst a structure optimised for efficiency, teamwork and collaboration, not dysfunctional hierarchy.”

The success of philanthropic endeavours, on the other hand, owes more to the input of Mrs Gates. “When Bill was making all that money at Microsoft, he never thought about philanthropy. It’s all about the wife,” says Ms Rudin. “Women are more often the drivers of philanthropy, as on balance, they care more about planning, family and children. The men do not think about these initiatives until they get married.”