There are very different generational attitudes to philanthropy in families. While previous generations saw philanthropy as “giving money to non-profits”, the rising generation of wealthy individuals has broadened and redefined the term, considering it to be “the action of transforming others’ social well-being through generosity”.

The rising generation is more engaged and involved in philanthropic endeavors, and do so at earlier ages than their predecessors. They’re also motivated by the value propositions behind sustainable and impact investments, and often drive such initiatives with their own or family businesses. Those of inherited wealth can experience a sense of unease or outright guilt fueled by societal judgment over their wealth, which may drive giving priorities.

A family office can take a holistic approach to the family’s financial and personal life. This can mean more time to spend with family or commit to philanthropic interests, which can also bring the family closer.

Generational families that endure for 100+ years share a number of factors. Near the top of that list is a shared commitment to community, service and philanthropy.

Consider This: Which generations in your family are involved in philanthropy decisions? Do you have a philanthropy strategy that sets priorities and the process for allocation? Do key family stakeholders across multiple generations know the answer to the question “why our family gives”?

Original articles: https://www.denverpost.com/2019/10/13/on-philanthropy-bruce-deboskey-the-secret-sauce-of-thriving-100-year-families/, https://www.forbes.com/sites/francoisbotha/2020/01/23/why-do-families-give-the-5-spheres-and-motivations-around-philanthropy/#5b02a5b07dc0, https://www.forbes.com/sites/whittiertrust/2020/04/01/a-family-office-can-give-you-back-your-personal-time/#1b1726ea20ee, https://www.marketcurrentswealthnet.com/interviews/family-philanthropy-a-new-book-qa-with-mitzi-perdue/, https://www.forbes.com/sites/francoisbotha/2020/07/29/how-the-worlds-next-generation-of-ultra-wealthy-are-redefining-what-it-means-to-give-back/#5eab0d8d5aad

Actionable Generational Wealth Succession. For more in-depth, thought-provoking discussion points and commentary on family and business, sign-up to gain access to the archives of my Familosophy newsletter: www.transitionbook.co/member-area/

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Abraham Lincoln famously said: “Don’t swap horses in the middle of the stream”. Is a global pandemic the best time to change leaders? Or is it better to avoid dramatic changes during uncertain times?

While we’d like to be well prepared, and knowing that succession planning is a process rather than an event, families may find themselves needing to accelerate the process at these times. Unplanned transitions don’t have to inevitably end in disaster, but when they happen, they do rely on a concerted effort by other family members and stakeholders.

The current business conditions necessitates that family businesses take stock, review and stress-test existing structures. While it is never easy to have discussions around death and succession, it is essential to avoid conflict in the unfortunate event of a loss within a family no matter what the external situation. The lockdown has been a catalyst to prompt families to reflect on succession planning in a wider sense.

A true succession plan is about fostering open communications and getting your family on the same page about its values and goals of both the incumbent and rising generation. A good succession plan leaves a positive legacy and unites the family around common goals and values.

Consider This: Has the pandemic brought forward discussions about succession in your family? Has it uncovered existing stresses in the succession process (or lack of)? Have you set realistic goals about the timeframe for an effective succession?

Original articles: 

https://hbr.org/2020/04/should-a-crisis-change-your-ceo-succession-plan, https://www.finews.asia/services/advertorials/31663-butterfield-singapore-brian-balleine-covid-19-corona-wealth-planning-succession-family-study, https://hbr.org/2020/05/steer-your-family-businesses-through-an-unplanned-transition, https://www.thenational.ae/business/money/why-now-is-the-time-for-gcc-family-businesses-to-review-succession-planning-1.1027184, https://www.bloombergquint.com/business/world-s-wealthy-are-spending-the-pandemic-weighing-succession, https://www.kiplinger.com/personal-finance/how-to-save-money/family-savings/601068/wealthy-families-need-more-than-a, https://cnaluxury.channelnewsasia.com/experiences/succession-estate-planning-asia-wealthy-families-12929668

Actionable Generational Wealth Succession. For more in-depth, thought-provoking discussion points and commentary on family and business, sign-up to gain access to the archives of my Familosophy newsletter: www.transitionbook.co/member-area/

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How to deal with family members by marriage poses significant challenges to wealthy families. Should they be allowed to work in the family business? If so, should there be a ceiling on their authority (stock, voting rights, etc)? Do they have a seat/voice at family meetings? What if the only person in the rising generation with the skills to be involved in the family business is a child-in-law? What to do when a marriage is on the rocks (and the child-in-law has a role)?

There are no clean-cut answers to these questions and not even best practice, because each family is different. It comes down to a few general guiding principles, together with the family’s own culture and beliefs regarding the role of children-in-law (some families have blood line rules that have existed for generations and challenging them is near impossible).

Here are some of my favourite aphorisms:

• You enter a family by birth or marriage, and leave by death or divorce (and divorce is not as final as death).
• If a child-in-law doesn’t have an actual voice at the table, their partner may be their proxy voice.
• Don’t hire whom you can’t fire (applies to any business, and any person)
• What works or doesn’t work in another family is no guide to what will work or not work in your family.

Rather than be reactive, develop and articulate your own family’s guiding principles and then setup governance to ensure they are applied as equally and fairly as possible.

Consider This: Does your family have a culture regarding how in-law children are treated? Have you ever had to fire a family member? How do you deal with pillow talk about family business/wealth? Do you have any (formal or informal) induction process for in-laws?

Original articles: https://www.forbes.com/sites/francoisbotha/2019/11/30/when-families-welcome-new-family-members–cultures-what-to-consider/#766fa5ca3f1e, https://www.jdsupra.com/legalnews/family-matters-can-a-family-business-78318/?, https://www.chroniclelive.co.uk/special-features/look-family-businesses-divorce-17022880, https://www.heraldtribune.com/business/20191028/nepotism-is-keeping-it-all-in-family

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The family office space is constantly evolving. This is driven in part by the investment flavour of the month, global economic/political trends, wealth transition within families, the family follow-me-go-round (families looking at what others are doing), and the general competitive environment amongst FO offerings.

Essentially, a family office is a set of services used by a wealth family to manage its wealth and other associated needs. There are no rules for how a FO can or should operate; it ought to be driven by demand and need. The other important issue is market segmentation: the FO needs of a family with 5B+ of assets are very different to those of a family with 500M, and these differences are qualitative as well as quantitative.

Because the SFO and MFO models have expected structures and associated constraints, new service models are being developed, like the virtual family office. Offerings like this evolve to meet demand, and are needed because so many families are global, because technology can deliver such an offering in a distributed and secure manner, and because no single solution can incorporate the best of everything.

Consider This: Do you have/use a family office? Do you know why? Have you mapped the set of services you need against your set of providers and scored/benchmarked them? Have you considered the changes that your family may face over the next 5-10 years and whether the set of services you have now will meet your ongoing needs over that period?

Original articles:
https://www.forbes.com/sites/francoisbotha/2019/10/11/why-family-office-advisors-are-fast-becoming-extinct-and-how-to-avoid-it/#6547275049cf, http://www.campdenfb.com/article/family-office-principals-unconvinced-next-generation-readiness-succession, https://www.forbes.com/sites/robclarfeld/2019/10/28/what-is-a-family-office-and-do-i-need-one/#34c6e8395da1, https://www.forbes.com/sites/francoisbotha/2019/10/30/family-office-insights-10-trends-that-will-affect-family-offices-in-2020/#5a9ad1123fb8, http://www.campdenfb.com/article/big-shifts-family-office-succession-and-recruitment-2020, http://www.businessworld.in/article/Multi-Family-Office-Over-Single-Family-Office/04-01-2020-181434/, https://www.forbes.com/sites/francoisbotha/2020/01/08/opportunities-abound-within-the-family-office-space/#57a083828693, https://www.fa-mag.com/news/russ-prince–innovations-in-the-family-office-model-53377.html

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“How to transition the family business to the next generation?” The answer depends on (a) who is asking (incumbent or rising generation) and (b) when (in the life-cycle of the business) they are asking. More often than not, the question is raised too late – when the incumbent generation is thinking of retirement, when there are already unstated expectations from both generations, and when there is already latent conflict.

The key ingredients to a successful family business transition are open communication between the generations working in the business and with other family stakeholders (current and future owners), a shared vision both for the future of the business and for the family itself, and a good governance structure.

Those things are the foundation required for succession. They come before identifying the right family member to occupy any particular management position.

Most families don’t set the foundations first, but that doesn’t mean all is lost. A process of vision alignment, improving communication and establishing strong governance can get things on track and reduce the risk of the latent conflict blowing up.

Consider This: Has your family business thought about succession? Have your imagined or visualised what succession looks like (for both the incumbent and rising generation)? Do both generations have a clear understanding of what will happen and when?

Original articles:

 https://www.forbes.com/sites/forbescoachescouncil/2019/10/16/the-10th-commandment-of-family-business-succession-create-family-unity/, https://knowledge.insead.edu/family-business/the-key-to-making-succession-work-in-family-business-12546, https://www.propertycasualty360.com/2019/09/26/six-lessons-to-successfully-moving-a-family-business-to-the-next-generation/?slreturn=20190907000035, https://www.asianjournal.com/life-style/lifestyle-columnists/family-unity-is-critical-for-business-continuity-part-2-of-2/, http://www.campdenfb.com/article/bringing-next-generation-family-business, https://www.forbes.com/sites/forbesbostoncouncil/2019/09/16/how-to-transition-a-family-business-to-the-next-generation/#2d9ab33c173d

Actionable Generational Wealth Succession. For more in-depth, thought-provoking discussion points and commentary on family and business, sign-up to gain access to the archives of my Familosophy newsletter: www.transitionbook.co/member-area/

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“How do I transfer wealth to my children without spoiling them?” That would be the most common question I am asked, and for most people, stands at the heart of the challenge of wealth transition.

But often this question masks what parents really want, e.g. “how do I get my children to do/be what I want?” That question is not about wealth, but about parental power and control. And when parents say “I don’t want to rule from the grave”, often they actually do, but just don’t want to make it quite so obvious.

There are no simple answers, nor even a set of tactics that can be applied. Rather, these questions are the starting point of a family relationship journey, which can lead to a stronger and more robust family that understands its purpose and shared values, and is well governed.

As much as wealth creators and incumbent controllers of family wealth want to control the future of their family, an important part of the journey is learning how to let go, which is often needed to help your children to become everything they can be.

Consider This: Do you (incumbent generation) have a clear understanding of your family’s (wealth) goals? Is there consensus on this amongst those now in control of the wealth? What steps have you taken to (a) find out what the rising generation want, and (b) communicate what you want to them?

Original articles: https://www.forbes.com/sites/rochellemclarke/2019/11/22/top-holiday-conversations-for-families-in-business/#6f82c4a52486, 

https://www.forbes.com/sites/forbesfinancecouncil/2019/11/25/keep-thanksgiving-about-thanksgiving-by-connecting-wealth-and-purpose/#642db627799c, 

https://www.thinkadvisor.com/2019/10/02/how-a-ubs-exec-gets-families-to-open-up-about-wealth-transfer/, 

https://www.nytimes.com/2019/11/06/your-money/tips-to-ease-family-inheritance-tensions.html, 

https://www.theatlantic.com/family/archive/2019/10/big-inheritances-how-much-to-leave/600703/, 

https://www.wsj.com/articles/trying-to-control-your-heirs-behavior-from-the-grave-often-backfires-11571623620

Actionable Generational Wealth Succession. For more in-depth, thought-provoking discussion points and commentary on family and business, sign-up to gain access to the archives of my Familosophy newsletter: www.transitionbook.co/member-area/

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A while back this viral meme swept the internet. “OK, Boomer” is/was the response of younger people to complaints by older people about their behaviour and attitudes.

Readers of this newsletter may know my attitude to the whole “generation wars” narrative – it’s a load of crap and we shouldn’t get caught up in it. Older people have been complaining about younger people for as long as there have been multiple generations on this earth, and research points to the reasons why we do this (see link below).

However, there is one thing commentators haven’t picked up about the “OK, Boomer” phenomenon. The problem with memes is that they are short, simplistic, and importantly they are conversation stoppers. When we throw up a meme, it’s like saying “I agree/disagree, here is my curt response, and there is nothing more to say on the matter”.

When it comes to intergenerational conflict, that is the worst way to respond, because what we ought to be doing is building bridges and enabling better communication and understanding between groups of people who look at the world (and express their opinions) in very different ways. This can’t be achieved with meme wars and throw away lines. The issues are complex and nuanced, and require bilateral efforts – yes, both generations need to work toward communicating better and understanding each other. It’s not easy, it won’t happen overnight, but with effort, it can happen.

Consider This: (Directed at older family members) Do you know what a meme is? Do you know why younger people like to communicate using memes, emojis, and social media? (Directed at younger family members) Can you imagine a time before the internet and social media? What do you think your parents and grandparents were like when they were your age? How do you think they related to their parents back then?

Original articles: https://www.theguardian.com/commentisfree/2019/nov/05/millennials-baby-boomers-gen-z-lets-stop-with-these-nonsense-buzzwords, https://www.psychologytoday.com/us/blog/the-science-behind-behavior/201911/3-psychological-drawbacks-the-popularity-ok-boomer, https://www.vox.com/podcasts/2019/11/22/20978050/ok-boomer-tik-tok-meme-generational-divide-podcast, https://www.mediavillage.com/article/ok-boomer-and-the-lure-of-demographic-warfare/, https://www.vox.com/2019/11/19/20963757/what-is-ok-boomer-meme-about-meaning-gen-z-millennials,https://www.al.com/life/2019/11/what-ok-boomer-says-about-the-generational-divide.html, https://www.vox.com/science-and-health/2019/11/12/20950235/ok-boomer-kids-these-days-psychology

Actionable Generational Wealth Succession. For more in-depth, thought-provoking discussion points and commentary on family and business, sign-up to gain access to the archives of my Familosophy newsletter: www.transitionbook.co/member-area/

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Women are at least 50% of the population, yet historically have been poorly represented in the wealth industry – as custodians and managers of family wealth, in family business, and as advisors. But that is changing on all fronts.

The percentage of wealth in the world held by women is steadily growing – as a result of inheritance (females generally outlive their husbands), divorce and entrepreneurship. In the Middle East, 20-40% of wealth is held by or for women. In Asia, there has been a surge of wealth creation by female entrepreneurs. A new female-led multi family office in San Francisco is taking a different approach to wealth management by incorporating socially-minded investment and personal branding.

Males and females have different investment strategies: for women wealth is a means to an end, while many men see the accumulation of wealth as a goal unto itself. We raise girls to be savers and boys to be risk-takers. Finally, there is significant talent within the female members of wealth families which is waiting to be unlocked, and potentially wasted if not given the right opportunities.

Consider This: What roles do female members have in your family (business, wealth management, philanthropy)? What if anything is holding them back? Are there cultural barriers in your family to their advancement? Are they sufficiently educated to be effective wealth custodians?

Original articles: https://www.worth.com/a-new-kind-of-family-office/, https://international-adviser.com/women-changing-the-wealth-landscape-in-the-middle-east/, https://www.ft.com/content/9bb4d056-d928-11e9-9c26-419d783e10e8

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The rising generation stands to inherit significant wealth, and families are spending much effort and expense to ensure that they are well prepared to become effective custodians of that wealth. However, it’s important for families to also consider the services required to help manage that wealth: advisors.

In any family, at some point in time, the wealth will shift from one generation to another. When someone inherits wealth, it becomes ‘theirs’. This contrasts with advisor relationships which ‘belonged’ to their parents, and can be much harder to fully transition. Many advisors are older and cannot connect to younger heirs. On the other side of that equation, some wealth inheritors are uncomfortable dealing with someone who was their parents’ advisor for many years, and want a fresh start to help them individuate and put their stamp on things.

The advisor community is well aware of this impending wealth transition, and are developing their own strategies to deal with it. Some have developed their own succession plans, or are selling out to larger firms. Like their clients, they too need education in shifting generational trends and how to build deeper and multigenerational connections to their client families to reduce the risk of losing the family’s business when the wealth transitions.

Consider This: Have you reviewed the relationships between your family and its trusted advisors (lawyers, accountants, wealth managers, family advisors)? Have you had 3-way discussions (two gens of family + advisors) to consider the impact of wealth transition in the advisor relationship context?

Original articles: 

https://www.ftadviser.com/investments/2019/09/26/advisers-risk-becoming-out-of-touch-with-next-generation/, 

https://www.forbes.com/sites/forbesfinancecouncil/2019/10/16/five-reasons-advisor-succession-plans-fail/#736cad5866a9, 

https://www.nytimes.com/2019/09/13/your-money/wealth-advisers-mergers-clients.html, 

https://www.wealthprofessional.ca/the-frontline/should-succession-planning-be-regulated-305962.aspx

Actionable Generational Wealth Succession. For more in-depth, thought-provoking discussion points and commentary on family and business, sign-up to gain access to the archives of my Familosophy newsletter: www.transitionbook.co/member-area/

#familyoffice #wealthmanagement #conflictresolution #strategicmanagement #successionplanning #workfromhome #governance #leadershipdevelopment #familybusiness #entrepreneurship

A family office is usually structured around the individual needs and preferences of the family involved, and an increase in private wealth is fostering the creation of more and more single family offices (SFOs).

The space is shifting rapidly, and with it comes the changing face of the family office and new definitions of what this means. One pervasive mistake is not developing a deep understanding of the goals, objectives and agendas of the wealthy family. Some multi family offices (MFOs) and even SFOs are using a cookie-cutter approach, which works against the whole idea of a family office.

Rather, family office purpose, mission and vision statements should be crafted according to the family’s service needs. These can act as the foundation for strategic decision making, and link to measurable results.

Virtual FOs are rapidly proving to be a superior alternative to traditional MFOs as they offer a greater level of flexibility. In addition, private MFOs are forming, which enable groups of families to pool their resources and leverage co-investment opportunities.

Consider This: Have you considered whether/how a family office could be beneficial to your family? If you already have one, how do you review its performance and whether it is meeting the needs of the family? How often do you review the arrangement, with consideration of how the family’s needs evolve over time?

Original articles: https://www.forbes.com/sites/francoisbotha/2020/01/28/could-now-be-the-right-time-for-the-virtual-family-office-how-banks-can-support/#7ee89aa65438, https://www.fa-mag.com/news/family-office-2020-going-strong-53779.html, https://www.forbes.com/sites/francoisbotha/2020/02/12/emerging-forms-of-the-family-office/#1b28b6ba2fc4, https://www.spearswms.com/rise-of-the-virtual-family-office/, https://www.fa-mag.com/news/russ-prince–a-critical-mistake-to-avoid-when-setting-up-a-single-family-office-54630.html, https://www.bmmagazine.co.uk/business/bobby-gill-on-family-offices-how-to-protect-wealth-for-successive-generations/, https://www.forbes.com/sites/francoisbotha/2020/03/09/considering-a-family-office-how-to-choose-a-fitting-form/#4ca91a5215a5, https://www.forbes.com/sites/francoisbotha/2020/07/03/6-best-practices-for-single-family-offices/#65d94e26336f

Actionable Generational Wealth Succession. For more in-depth, thought-provoking discussion points and commentary on family and business, sign-up to gain access to the archives of my Familosophy newsletter: www.transitionbook.co/member-area/

#familyoffice #wealthmanagement #conflictresolution #strategicmanagement #successionplanning #workfromhome #governance #leadershipdevelopment #familybusiness #entrepreneurship