Mark Estcourt talks about the importance of families and their professional advisors to remain focused on planning for succession.
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Although nearly 70% of the family office community will soon undergo a generational transition, only 54% currently have a succession plan in place, according to the research from the Global Family Office Report 2019 by Campden Wealth with UBS.
Given the potential risks associated with not planning for the future, families and those who support them would benefit from getting the ball rolling now.
The high rate of failure in wealth transfers reflects the difficulty of succession. Successful leadership transitions are continuous in nature and updated routinely.
Many multi-generational legacy families say that they prepare for generational transitions decades in advance.
The most forward-thinking families have plans for both long-term (planned) succession and contingent (short-term) succession.
They also address all of the relevant issues: economic, fiscal and human, and involve key advisers, influencers, family members and colleagues.
Some tips for a successful transition are:
- Review the overall legacy plan and specific succession needs
- Define the future leadership model and identify critical succession issues
- Identify the skills and attributes needed for future leadership
- Define and implement a fair and effective selection process for leaders
- Educate future leaders in advance of their service
- Develop a system for leadership performance reviews
- Prepare for and execute a clean transfer of leadership
- Post-succession, support the new leader and begin preparing for the next succession
This is an issue we have been advising our clients to prioritise for some time, and it is not easy to get right. Succession often spans a series of complex issues involving business, investments and family relationships. Written plans are important, but they should be considered as part of a broader process of preparing future leaders to take control. The key is to start early.
Mark Estcourt is the CEO and Founder of Cavendish Family Office
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