February 27, 2023

Family Office Services for HNW & UHNW family wealth transfer

Research carried out over a 20 year period identifies that for high net wealth (HNW) individuals and ultra-high net wealth (UHNW) family groups, approximately 70% of family wealth transfers fail [1]. The main reason is overwhelmingly a breakdown of trust and communication within the family, while not adequately preparing heirs is the most common secondary cause.

In this article, I overview the purpose of a Family Office and how these highly specialised family wealth services are providing solutions as the Government estimates $3.5 trillion in family money is in the process of being transferred to Generation-X and their Millennial offspring.

Family relationships can be complex and when coupled with significant wealth, it stands to reason not everyone is going to get along all the time.

Family Office services for high net wealth individuals and ultra-wealthy family or multi-family groups are different from, but often aligned with, traditional financial planning, accountancy and legal services but on a completely different scale and with a different mindset.

For example, financial planning goals usually include wealth creation and retirement planning, whereas Family Office services tend to focus more on wealth preservation and legacy planning.

Similarly, financial planning strategies include stock broking and wealth management whereas Family Office services consider each of these matters in the context of multi-generational succession, growth of the family’s overall pool of assets, financial stewardship, family governance, succession and wealth transfer.

Family Office services are 360-degree, and in the current intergenerational climate, are in demand. This highly specialised area of expertise includes an innate professional arms-length pragmatism necessary for managing relationships and increasing the odds of successful wealth transfer. One of many complex keys is to focus on preparing family members for the transfer of both financial and non-financial assets.

There is inherent complexity as you’d expect, and success begins with establishing sound foundations. These include accurately identifying which family members and stakeholders make up the family group, identifying the family group’s achievements and carefully articulating the family legacy.

Naturally, all the family’s objectives and wealth purpose must be clearly understood and documented.

Family Office services also include options for retaining and growing existing businesses, determining expectations for how those businesses will be owned in future and implementing change management processes for transferring ownership. Providing training and education for the financial empowerment of younger generations who will inherit family wealth and become the custodians of family wealth is a priority.

However, Family Office services extend well beyond traditional wealth and asset management.

Actively managing family wealth across multiple diverse assets classes and understanding family group investment policies and approach to philanthropy can be a demanding requirement and long-held views can be challenged as new family members take leadership roles.

Matters relating to family heritage, managing reputation and contributing to community underpin a family legacy.  This also involves ongoing education and mentoring family members, employees and other stakeholders so that future high standards of family group leadership and management standards are maintained.

A recent survey, revealed over two-thirds [2] of HNW and UHNW investors have unmet advice needs and planning for intergenerational wealth transfer advice and support is in demand.  Over 70% of HNW and UHNW individuals and groups expected to leave most of their wealth to their family.  Interestingly, 40% will rely solely on their accountant for intergenerational planning advice [2].

Generally speaking, this is a tall order for even the most experienced accountant, as such matters require not only accountancy and taxation knowledge, but also financial and legal knowledge best provided by a team of advisers with an extensive and diverse management skillset.

Next steps

Naturally, matters of succession, estate planning and HNW and UHNW transfer requires significant expertise now and into the future.

There’s a lot at stake and for very wealthy individuals and family groups, not least family harmony and unity. Getting intergenerational wealth transfers wrong isn’t an option.

May I invite you to contact me for a discussion about your Family Wealth circumstances and how professional Family Office services could assist you to take control of your current financial services and pave the way for a successful future intergenerational wealth transfer.

For more information and to arrange a discussion time, please contact Craig Barry, Resources Unearthed on +61 (0) 7 3007 2000 or email contact@resourcesunearthed.com.au.

Read more about Craig here

Resources Unearthed is a solutions hub that provides integrated financial, legal, property and accounting and business advisory services for executives, professionals and business owners in the mining and resources sectors.

[1] The Williams Group Study 2019, www.thewilliamsgroup.org

[2]:  Investment Trends, “The High Net Worth Investor 2021”.  A survey report published by Praemium Australia.


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