BEST PRACTICE


“This is something that needs


dealing with sensitively, it needs discussion,” he says. “There needs to be a sense of


fairness and meritocracy, and this can sometimes be about dealing with more personal issues within a family too.” Another business-related issue is


whether the focus is to be on one business or whether there is to be a family stable of businesses. For example, someone might be clearly entrepreneurial, but not interested in the family business. Should they be encouraged to be totally independent, or should they be helped to start up a business that then comes into the family’s portfolio? This is something especially relevant in a time when technology and social media start-ups are common and taking over from traditional industrial family businesses.


safe swimming


The same conversations around identifying a governance structure, and then applying the appropriate skills, experience, and interests, also apply when it comes to managing and conserving a liquid pool of capital through several generations. “The same principles of having


Russell Prior, head of family governance and family enterprise succession, at HSBC Private Bank


guidelines apply with liquid wealth,” says Prior. “[The aim is to define the] objectives for


the purpose of the wealth, and then [build] consensus over wealth preservation as opposed to consumption in terms of houses, education, lifestyle, etc.” Rachel Harrington, a director at the UK’s


Coutts Institute, says she tries to work with an entire family not just the ‘head’ of the family. “Parents often [try] to prevent the children


from having a free ticket, but their children can worry about being in the shadow of someone successful. [Children worry] about forging their own path in life, about knowing who their real friends are, and mostly, not losing the wealth.”


Rachel Harrington, a Director at the UK’s Coutts Institute


James Holder, head of Northern Europe and head of family office for Europe, Middle East and Africa, at Citi Private Bank


Harrington says that with inherited


or liquid wealth the sense of its purpose is even more important to avoid it all being lost. In this respect, providing a training ground or education for the next generation is key.


Skilling up


Preparing the next generation to take over as custodians remains crucial. There might be the expectation that family members need to become sensible guardians of the wealth and to manage it on a board or within a family office, says Harrington.


“This is where philanthropy has a role as it offers


an entry point into learning all about how wealth is managed. It acts as a training ground to equip the next generations with the skill and experience they need to manage family wealth in line with set-out objectives.” Prior says a piece of preparation often overlooked in


both a business and liquid wealth sense is timing. The current generation needs to hand over control to the next generation in good time for them to learn how to do the job properly. Good governance in this sense means the family


needs to get to a stage where the business or the wealth is gradually handed over with an element of dual control that then leads to control, but with


26


CAMPDENFB.COM


ISSUE 75 SUPPLEMENT | 2019


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