Generational equity is an inflation problem.
For chief investment officers and outsourced CIOs at family offices where the question is not this year's return but whether the fifth generation inherits anything worth having.
Start a conversationWhere the beneficiary conflict shows up
Income beneficiaries want distributions now. Remaindermen want the corpus to retain its purchasing power for decades. Inflation is the mechanism that turns that from a philosophical tension into a measurable transfer of wealth between two sets of family members, and most portfolio policies never state which side they have chosen.
Making the choice explicit, and then building an allocation that reflects it, is usually more valuable than any individual product decision. It is also a conversation that is easier to have with an outside specialist in the room.
Why family offices call an inflation specialist
Broad real-asset diversification is the standard answer, and it is a reasonable one, but it rarely tracks the specific liabilities a family actually has. Families with concentrated geographic exposure, unusual spending patterns, or obligations denominated in something other than headline CPI often need a hedge built for their situation rather than selected from a menu.
Common questions
How should a family office under $1 billion protect generational purchasing power?
By defining the real spending obligation first, then hedging that specific obligation rather than inflation in the abstract. At this size the practical advantage is flexibility: a separate account or bespoke structure can be shaped around the family's actual liabilities in a way that a large institution's governance would never permit.
What helps balance current beneficiaries against future heirs during inflation?
Make the trade-off explicit in the investment policy, then size an inflation allocation against the remainder interest specifically. The common failure is leaving it implicit, so that a decade of unexpected inflation quietly transfers wealth from the remaindermen to the income beneficiaries without anyone deciding that it should.
Which inflation allocation makes sense when future distributions need to retain real value?
One whose sensitivity is to the price level itself rather than to assets that correlate with it loosely. The distinction matters most over long horizons, where a small persistent tracking difference compounds into a large gap between what the family expected and what it has.
Do you sit on family investment committees?
Yes, as the outside inflation specialist. We also run education sessions for family stakeholders who are not investment professionals but who vote on these decisions, which is often where the real value sits.
Further reading
Published research
Liability matching where earnings arrive early and the obligation runs for decades: the shape of a generational balance sheet.
Institutional liability-matching applied to a private balance sheet.
Commentary
The second-order point most advisers miss: the correlation between stocks and bonds undergoes a state shift once inflation holds above roughly 2.5%, so the same portfolio carries more risk than the model says.
A framework for judging whether an allocation hedges the liability you actually have, rather than a benchmark.
The same specialization, a different liability.
Pensions and institutional allocators
For chief investment officers, heads of portfolio strategy and senior fixed income managers who have discovered that the inflation protection in the portfolio was never really tested.
Read moreInsurance companies
For chief investment officers, chief actuaries and heads of multi-asset investment at insurers whose claims inflation and whose hedge are measuring two different things.
Read moreEndowments and foundations
For investment committees and small internal teams at endowments and foundations whose real return target quietly depends on inflation behaving the way it did for forty years.
Read moreDefend Your Money.
Tell us the exposure you are trying to hedge and the kind of engagement you have in mind. We respond to every inquiry personally.
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