R ESE AR CH


SUCCESSION


Change at the top


Global principals and the next generation are slowly taking steps to ensure the family fortune lives beyond its founder, but there’s still work to be done. We find out why failing to plan for succession is planning to fail


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he death of family members is hardly a topic most are falling over themselves to discuss, and this partly explains why less than half those surveyed in The Global Family Office Report 2017 (GFOR) have a full


succession plan in place. While 69% expect a wealth transfer to the next


generation within 15 years, only 47% say they have a plan in place to achieve this.


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Family office adviser Kathryn McCarthy says there is


a “startling” reluctance to discuss money and mortality with the next generation. “They do not want to worry the kids, and they do


not want to spoil their ambitions,” McCarthy says. “They protect the children from the wealth instead


of exposing them to what they will one day have, and encouraging education and training.” Sara Ferrari, head of global family offices at UBS,


says families are beginning to realise the extent of the challenges associated with wealth transfer, though 16% have no plan, and almost 30% say theirs is a work-in- progress. “Only 30% of generational transfers are successful,


so this is an existential issue,” Ferrari says. The degree to which families expect the next


generation to be involved in the family office varies, with 36% expecting next gens to take hands-on control, and 31% saying the office will be run by non- family professionals with next-generation oversight. Others plan to disestablish the family office, or join a multi family office, and 12% were unsure. McCarthy, who has more than 30 years’ experience


working in and running family offices, says the habit of putting off planning is often passed from generation to generation. Families need to break the habit and communicate. “The G2s (second generation) do not get a lot of input from the patriarch… Then the G2s will not talk


ISSUE 72 SUPPLEMENT | 2017


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