cory, Author at Beacon Family Office

Impactful Giving: Elevating UHNW Families & Their Philanthropic Goals

Affluent families possess a unique opportunity to shape society’s future through their philanthropic goals and endeavours. The ability to deploy significant funds towards causes you care about is a powerful tool for change. However, the landscape of philanthropy is shifting. Gone are the days when simply writing a check to a favourite charity was enough. Today’s philanthropists are expected to be active participants in driving social change, leveraging their financial resources, influence, networks, and expertise.

To maximise the impact of your family’s philanthropic endeavours, it’s crucial to develop a clear vision of the change you want to see in the world. This vision should be rooted in your family’s values and informed by a deep understanding of the complex issues you aim to address. It should also be flexible enough to adapt to changing circumstances and emerging opportunities.

Building a Lasting Philanthropic Legacy

Creating a lasting impact through your philanthropy starts with clearly identifying your family’s “why” and understanding your core values and how you want to contribute to shaping the world. Start by asking yourselves: What change do we want to see in the world? What values drive our decision-making? How do we want our family to be remembered? Your answers to these questions will shape both the “what” of your giving and the “how.”

For instance, if your core value is empowering others, you might choose to focus on education. But more than that, you might structure your giving to prioritise initiatives that give beneficiaries a voice in program design and implementation. Once you’ve identified your “why,” consider how to engage future generations in your philanthropic efforts. This ensures that your impact continues long after you’re gone.

To build your philanthropic legacy, spend time reflecting on and articulating your family’s core values and philanthropic goals. Involve younger family members in your philanthropy from an early age, allowing them to develop their own philanthropic identities. Document your philanthropic journey, including successes, failures, and lessons learned, to guide future generations.

Embracing Failure and Uncertainty in Philanthropy

One crucial shift in modern philanthropy is the recognition that failure is inevitable while also being valuable. As a philanthropic family, you must be willing to take calculated risks and learn from setbacks. This approach allows for innovation and the discovery of truly transformative solutions. Consider the case of the Gates Foundation’s initial efforts in education reform. Their first attempts at improving U.S. public schools didn’t yield the expected results. However, instead of abandoning the cause, they used these experiences to refine their approach, leading to more effective programs in the long run.

Embracing uncertainty also means being flexible in your giving strategy. The world is constantly changing, and new challenges emerge regularly. By remaining adaptable and open to new ideas, you can respond more effectively to evolving needs and opportunities. To incorporate this mindset into your family’s philanthropy, set aside a portion of your philanthropic budget for high-risk, high-reward initiatives. Establish clear metrics for success, but be willing to adjust them as you learn. Create a culture of transparency and learning within your family foundation or philanthropic organisation.

Aligning Giving with Family Values

For ultra-high-net-worth (UHNW) families, philanthropy is about creating a lasting legacy that reflects your family’s values and vision for the world. Strategic philanthropy involves aligning your giving with your family’s core beliefs and long-term goals. Start by engaging in meaningful conversations with your family members about what matters most to you collectively. What issues resonate with your family history or personal experiences? What kind of impact do you want to have on the world?

Once you’ve identified your family’s philanthropic priorities, consider how to maximize your impact in these areas. This could entail conducting extensive research to understand the root causes of the issues you care about, identifying gaps in current funding or approaches that your family is uniquely positioned to address, and developing a long-term strategy that transcends annual giving to achieve long-term impact.

The Power of Collaborative Philanthropy

In recent years, a transformative shift has occurred in the world of philanthropy. Forward-thinking families and foundations are increasingly recognizing that even with substantial resources, tackling complex global challenges requires a collaborative approach. This new paradigm of philanthropy emphasises joining forces with other donors, nonprofits, governments, and businesses to amplify impact and drive systemic change.

Consider the success of initiatives like Co-Impact, a collaborative philanthropy platform that brings together donors from around the world to support large-scale social change. By pooling resources and expertise, Co-Impact has been able to make significant strides in areas such as education and healthcare in developing countries. This approach allows individual families to contribute to efforts far larger than what they might achieve alone.

Another example is the Blue Meridian Partners, a partnership of philanthropists working to improve the lives of young people and families in poverty. By collaborating, they’re able to make larger, more targeted investments and provide comprehensive support to high-performance nonprofits.

For your family, embracing collaborative philanthropy might mean:

Seeking out philanthropic networks or giving circles aligned with your values and goals.
Exploring opportunities to co-fund initiatives with other families or foundations.
Using your influence to convene diverse stakeholders around issues you care about.
Invest in building the capacity of your nonprofit partners to collaborate effectively.

By adopting a collaborative approach, your family can leverage its resources more effectively, learn from others, and contribute to solutions that address the root causes of complex social issues. This strategy not only amplifies your impact but also positions your family as a catalyst for collective action in the philanthropic community.

As your family embarks on this philanthropic journey, remember this: As UHNW individuals, you are uniquely positioned to shape our society’s future through your philanthropy. But with this comes a profound responsibility. The question is: How can your family best leverage its resources and influence to create meaningful, lasting change? Are you fully equipped to navigate these challenges and maximise your impact?

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The impact of your decisions will resonate far beyond your lifetimes, shaping the society that future generations will inherit. If you find yourself seeking guidance on your philanthropic journey, Beacon Family Office is here to help. Reach out to us for a consultation.

ABOUT THE AUTHOR

As the Senior Wealth Advisor at Beacon Family Office at Assante, Cory Gagnon has supported successful family enterprises to preserve, protect and transition their wealth since 2011.

Cory’s personal objective as a Wealth Advisor is simple. He is committed to supporting families to take control of the areas of their lives that truly matter to them. This commitment revolves around using specific tools and strategies that enable families to take action with confidence which will support them through life’s critical transitions.

ABOUT THE AUTHOR

As the Senior Wealth Advisor at Beacon Family Office at Assante, Cory Gagnon has supported successful family enterprises to preserve, protect and transition their wealth since 2011.

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Generational Wealth: How UHNW Families Shape Past, Present, and Future

Ultra-high-net-worth (UHNW) families have long helped to shape economies, industries, and societies. With their substantial wealth and influence, these families are often at the forefront of innovation, philanthropy, and economic development. This article explores the journey of these influential families, from their historical roots to their present-day impact, and contemplates their future role in a constantly shifting global economic setting.

The Beginnings of Families with the UHNW

The accumulation of significant wealth within families is not a recent phenomenon. Throughout history, certain families have amassed substantial resources through various means. In ancient times, royal families and aristocrats held vast amounts of land and assets. As economies developed and new opportunities arose, ambitious families found different ways to build and grow their wealth.

The 18th and 19th centuries saw significant economic changes in many parts of the world. During this time, some families were able to take advantage of new economic opportunities to build considerable fortunes. These families often played important roles in the development of industries and trade.

For instance, the Rothschild family, which rose to prominence in the late 18th century, played a crucial role in shaping European finance. Their banking empire financed railroads and industrial projects across multiple countries. In the United States, the Rockefeller family, led by John D. Rockefeller, built their fortune through the oil industry, fundamentally altering the American economy and energy landscape. The Morgan family, with J.P. Morgan at the helm wielded enormous influence over American banking and industry, helping to stabilize financial markets and shape corporate structures.

In more recent decades, technological advancements have created new avenues for wealth creation. The rapid growth of the technology sector has provided opportunities for entrepreneurs and investors to build substantial wealth, sometimes quite quickly. This has contributed to the ongoing evolution of the ultra-high-net-worth landscape. Notable examples include Jeff Bezos, who founded Amazon in 1994 and became one of the wealthiest individuals in the world within two decades. Similarly, Mark Zuckerberg launched Facebook in 2004 and quickly joined the ranks of UHNW individuals. These tech-driven fortunes represent a new generation of UHNW families, often characterized by rapid wealth accumulation and a different approach to philanthropy and wealth management compared to older dynastic wealth.

The Evolution of Wealth Management

As wealthy families have evolved, so too have their approaches to managing and preserving assets. For previous generations, wealth preservation often meant simply holding onto assets and passing them down through the family. However, modern affluent families have adopted more sophisticated strategies.

Today, many establish family offices to manage their wealth professionally. These offices often employ teams of financial experts, lawyers, and advisors to handle investment strategies, tax planning, and philanthropic efforts. The focus has shifted from mere preservation to growth and impact.

Additionally, diversification of assets has become a key strategy for many. Instead of concentrating wealth in a single industry or region, families now spread their investments across various sectors and geographical areas. This approach not only helps to mitigate risk but also allows them to capitalize on global opportunities.

The Future for UHNW Families

As we look to the future, families with significant resources face both opportunities and challenges. Rapid technological advancements and global economic shifts are creating new avenues for wealth creation but also introducing new risks and complexities.

Many UHNW families are increasingly focusing on sustainable and impact investing, aligning their wealth with broader social and environmental goals. This shift reflects a growing awareness of the responsibility that comes with significant wealth. For example, the Pritzker family, known for their Hyatt hotel empire, has been at the forefront of impact investing. Through their Pritzker Innovation Fund, they support initiatives addressing climate change and promoting sustainable energy. Similarly, the Gates family, through the Bill and Melinda Gates Foundation, has been a pioneer in strategic philanthropy, focusing on global health, education, and poverty reduction. These examples demonstrate how UHNW families are leveraging their resources to address pressing global challenges. Succession planning and intergenerational wealth transfers have become critical issues. As assets pass to younger generations, there is often a shift in priorities and approaches to wealth management and philanthropy.

From the industrial barons of the past to the tech billionaires of today, the story of UHNW families is one of constant evolution and adaptation. As we move forward, the role of affluent families in shaping our world will likely continue to be significant. The challenge for these families will be to balance their personal interests with their broader responsibilities to society. How they navigate this balance may well determine not just their own legacies but also the future direction of global economies and societies.

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Every family with significant wealth has a unique story - a series of decisions to make, innovations, and legacies that have shaped their current position. As you've read about the evolution of UHNW families through history, you may find yourself wondering about your own family's journey. What chapters of your story are yet to be written? How will future generations view the decisions made today? For a thoughtful discussion on navigating your family's wealth legacy, consider reaching out to Beacon Family Office.

ABOUT THE AUTHOR

As the Senior Wealth Advisor at Beacon Family Office at Assante, Cory Gagnon has supported successful family enterprises to preserve, protect and transition their wealth since 2011.

ABOUT THE AUTHOR

As the Senior Wealth Advisor at Beacon Family Office at Assante, Cory Gagnon has supported successful family enterprises to preserve, protect and transition their wealth since 2011.

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Shaping Legacy: Key Competencies for Next-Generation UHNW Family Leaders

The transition of wealth leadership from one generation to the next is a critical process that shapes the future of family legacies. It’s about ensuring the next generation is fully prepared to manage, grow, and responsibly steward the family’s wealth.

The complexities involved in the ultra-high-net-worth (UHNW) wealth transition are numerous. They range from understanding intricate financial structures to navigating family dynamics, from preserving family values to adapting to rapidly changing global economic landscapes. In fact, in Canada alone, more than $1 TRILLION is set to transfer from baby boomers to Gen X by 2026. Given these challenges, it’s crucial to recognize that specific requirements must be met for the next generation to successfully assume leadership over shared wealth. Let’s explore these essential requirements in detail and explore how you can cultivate them within your family.

Financial Acumen and Business Savvy

To effectively lead in wealth management, the next generation must develop a deep understanding of family wealth structures and investment strategies. To achieve this, consider implementing a structured educational program that covers various aspects of wealth management, including asset allocation, risk management, tax planning, and estate planning. This education should be ongoing and evolve as your family’s wealth structure changes.

Ensuring the next generation has in-depth knowledge of the family business operations is vital. Consider implementing rotational programs that allow them to work in different business units. This exposure will provide a comprehensive understanding of how each part of the business contributes to its overall success.

Moreover, involve the next generation in strategic planning and decision-making processes. This involvement could start with observing board meetings and gradually progress to presenting business proposals or leading specific projects. Such experiences will build their business acumen and prepare them for future leadership roles.

Developing Leadership and Governance Capabilities

Strong leadership skills and emotional intelligence are fundamental to effective wealth management. These skills aren’t innate; they require consistent effort and real-world application to develop.

Invest in comprehensive leadership training programs for your next generation. These should cover a range of topics, from strategic thinking and decision-making to team management and organizational behaviour. However, do not stop at theoretical training. Provide opportunities for the next generation to apply these skills in real-world scenarios. This could involve leading specific family office initiatives or spearheading charitable projects.

In family wealth, communication and conflict resolution skills are particularly crucial. Family dynamics can be complex, and the ability to navigate disagreements constructively is vital for maintaining family unity and effective wealth management. Consider organizing workshops or role-playing exercises focused on these specific skills. Understanding wealth governance structures is another critical requirement. Educate the next generation on your family’s constitution, wealth distribution policies, and decision-making processes. This education should cover not just the what and how but also the why behind these structures.

Practical Experience and Gradual Responsibility

Hands-on experience in wealth management and decision-making is invaluable. Consider creating structured internships or entry-level positions within your family office or businesses. These roles should be substantive, with real responsibilities and accountabilities. Implement a system of gradual increases in responsibilities and authority over family assets. This could start with managing a small investment portfolio and progress to larger, more complex responsibilities over time. This gradual approach allows for learning from both successes and mistakes in a controlled environment.

Exposure to external perspectives and best practices is equally crucial for developing well-rounded stewards of wealth. Encourage work experience outside of the family business. This external exposure can bring fresh ideas and perspectives back to the family wealth management strategy.

Facilitate participation in industry conferences and networking events. These platforms provide opportunities to learn about industry trends, connect with peers facing similar challenges, and gain insights from experienced wealth management professionals.

While these requirements are essential for preparing the next generation for wealth leadership, they don’t guarantee success. The world of wealth management is constantly evolving, and perhaps the most important quality you can instill is adaptability. Continuous learning should be emphasized as a guiding principle. Adapting to new economic realities, technological advancements, and societal changes is crucial for preserving and growing family wealth.

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As you prepare for the next generation, ask how will your wealth continue to be a force for positive change in their hands and for generations to come. Connect with Beacon Family Office today and let us help you figure things out.

ABOUT THE AUTHOR

As the Senior Wealth Advisor at Beacon Family Office at Assante, Cory Gagnon has supported successful family enterprises to preserve, protect and transition their wealth since 2011.

ABOUT THE AUTHOR

As the Senior Wealth Advisor at Beacon Family Office at Assante, Cory Gagnon has supported successful family enterprises to preserve, protect and transition their wealth since 2011.

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The Three Pillars of Successful Family Enterprises

Family businesses are unique, merging personal bonds with professional goals to forge a dynamic mix of strength and complexity. This interesting, unique blend can lead to greater success, but it also presents distinct challenges that require careful navigation. As a wealth steward in a family enterprise, you might wonder: Why do some family businesses flourish through generations while others falter? The secret lies in strategic planning that encompasses three vital pillars: family, ownership, and business. Let’s delve into how these elements intertwine to build a lasting legacy.

The Family Strategy: Cultivating a Shared Vision

At the heart of every successful family enterprise is a strong family foundation. This starts with defining your family’s values and vision. What principles guide your decisions? What does it mean to be part of your family? By articulating these core beliefs, you create a blueprint that guides your business through generations.

Establishing governance and traditions is equally important. How will you make decisions as a family? What customs will you uphold to strengthen your bonds? These structures provide stability and continuity, especially during times of transition.

Nurturing relationships and managing conflicts is perhaps the most delicate aspect of family strategy. Open communication and a clear code of conduct can help navigate disagreements constructively, ensuring that family ties remain strong even in the face of business challenges.

The Ownership Strategy: Balancing Growth and Legacy

As enterprise owners, you’re tasked with setting the direction for your enterprise’s future. This involves a clear portfolio and risk management goals. Are you in growth mode or harvest mode? What are your risk tolerance levels? By answering these questions, you align your business activities with your family’s long-term objectives.

Implementing effective governance structures is crucial for maintaining accountability and aligning interests across your family enterprise system. A well-functioning board of directors can provide valuable oversight and guidance, ensuring that management decisions serve the best interests of both the family and the business.

Aligning family involvement with business needs is a delicate balance. A clear family involvement policy helps manage expectations and creates a framework for family members to contribute meaningfully to the business while respecting meritocratic principles.

The Business Strategy: Driving Sustainable Performance

Your business strategy is where your family vision meets market realities. Developing a competitive advantage and a long-term vision is essential. What unique value does your business offer? How will you adapt to changing market conditions while staying true to your family values?

Building a solid talent management and succession strategy ensures your business has the leadership it needs to thrive in the future. This is more than just preparing for the next chief executive – it involves nurturing talent at all levels of the organization and creating a culture where people want to work.

Leveraging “familiness” as a unique resource can set your business apart. Your family’s history, reputation, and values can be powerful assets. Identify these unique resources and invest in them to create a sustainable competitive advantage.

Your family enterprise is more than a business – it’s a legacy. Aligning your family, ownership, and business strategies lays the groundwork for long-term and sustainable success.

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What would securing your family enterprise's future mean to you? Schedule a conversation to learn how these three pillars can support you.

ABOUT THE AUTHOR

As the Senior Wealth Advisor at Beacon Family Office at Assante, Cory Gagnon has supported successful family enterprises to preserve, protect and transition their wealth since 2011.

ABOUT THE AUTHOR

As the Senior Wealth Advisor at Beacon Family Office at Assante, Cory Gagnon has supported successful family enterprises to preserve, protect and transition their wealth since 2011.

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Uniting Legacies: The Art of Merging Two UHNW Families

It’s not an uncommon phenomenon for two ultra-high-net-worth (UHWN) families to merge when there is a union between family members. Driven by a variety of factors, these unions may arise from the desire to consolidate wealth in specific industries, diversify assets across sectors, or tackle larger philanthropic endeavours. In some cases, they are a strategic approach to preserving wealth and influence for future generations. Often, they are simply the natural progression of personal relationships between heirs of different families and are then tied through marriage.

However, merging UHNW families is a complex process as they often operate with sophisticated systems comparable to those of large corporations, encompassing intricate policies, rules, expectations, and traditions developed over generations. When two such entities unite, they face challenges in aligning values, integrating financial strategies, and managing both internal family dynamics and external perceptions. These unions have the potential to reshape industry landscapes, influence global markets, and have an impact on social and political spheres, in addition to the families involved.

For those navigating the elaborate process of merging UHNW families, there are three critical areas that must be addressed. These crucial aspects form the foundation for a successful merger, addressing the questions that many families grapple with: What strategies can we employ to merge our financial assets while preserving our collective social capital? How do we manage public perception and stakeholder relationships during this transition? And perhaps most importantly, what methods can we use to honour our distinct family histories while building a cohesive future together? The following sections delve into these critical areas, offering insights and strategies to guide UHNW families through the complex journey of unification.

Financial Integration and Wealth Management

The integration of financial assets and wealth management strategies in UHNW family unifications requires balancing the preservation and enhancement of each family’s social capital. This process involves combining philanthropic efforts, board memberships, and social commitments while maintaining long-standing relationships with various institutions and key stakeholders.

Investment strategies in these family relationships must account for both financial goals and social impact. Families need to reassess how their combined portfolio affects their public image and sphere of influence. Governance structures, typically managed through family offices, must be reconfigured to ensure fair representation and efficient oversight of both financial and social assets. In our own experience, we’ve observed that successful unions often hinge on how well families integrate their social capital alongside their financial assets.

Creating a cohesive strategy that maximizes the unified family’s resources while honouring individual family histories is crucial. This often requires objective, professional guidance to help navigate this intricate and complex process, strengthening the newly formed family’s collective influence and enduring legacy.

Managing External Perceptions and Relationships

When UHNW families merge, it inevitably draws attention from various external parties. Effective communication with business partners, social networks, and media outlets becomes crucial. Developing a coherent narrative about both the family’s rationale and anticipated benefits is essential to maintaining trust and minimizing misconceptions. This may involve appointing a dedicated communications team, crafting a detailed announcement timeline, and engaging with trusted advisors to address potential concerns from stakeholders.

Redefining philanthropic endeavours and social responsibilities is another key component in managing external relationships. Each family typically has its own set of established charitable interests and community engagements. A thorough evaluation of these existing commitments is necessary to formulate a philanthropic strategy that reflects the values of both families while potentially exploring new areas of social impact. This process, while challenging, offers the potential for increased influence, diversified wealth strategies, and expanded philanthropic impact.

Preserving Individual Identities Within the New Unity

In the process of merging UHNW families, maintaining the distinct identities of each family while creating a new, unified entity is crucial. This challenging task requires careful consideration and strategic planning to ensure long-term success. The objective is to construct a shared vision that not only respects but also incorporates the rich histories, values, and future aspirations of both families.

Cultivating an environment of mutual respect and understanding forms the foundation of this process. It’s important to facilitate open and honest conversations about each family’s background, core principles, and long-term goals. These discussions can take various forms, such as structured family meetings, informal gatherings, or collaborative philanthropic initiatives. Such interactions provide opportunities for family members to share their perspectives, concerns, and hopes for the future.

Five areas that often require a practical strategy to achieve the balance of individuality and a new identity include:

A New Family Charter: Create a new or updated family charter that outlines shared values and goals while acknowledging and respecting each individual family’s traditions.
Mentorship: Establish mentorship programs between generations – including between families – to pass down family histories and values.
Philanthropy: Develop joint philanthropic projects that reflect the values of both families in their giving initiatives.
Leadership Structure: Implement a rotating leadership structure in family governance to ensure equal representation.
Family Events: Organize regular family events that celebrate and honour the unique heritage of each family.

By implementing these strategies and maintaining open lines of communication, families can work towards building a unified identity that honours their individual legacies. This approach not only strengthens family bonds but also creates a more resilient and adaptable family structure capable of navigating future challenges and opportunities.

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Wondering how to preserve individual legacies while building a stronger combined future in this family setup? Connect with Beacon Family Office to explore how each of your unique family’s strengths can create a combined legacy.

ABOUT THE AUTHOR

As the Senior Wealth Advisor at Beacon Family Office at Assante, Cory Gagnon has supported successful family enterprises to preserve, protect and transition their wealth since 2011.

ABOUT THE AUTHOR

As the Senior Wealth Advisor at Beacon Family Office at Assante, Cory Gagnon has supported successful family enterprises to preserve, protect and transition their wealth since 2011.

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Creating Effective Governance in a Family-Owned Business

Family businesses are often a testament to the entrepreneurial spirit, shared values, and commitment to their legacy. Many families take pride in their entrepreneurial heritage, which has guided their success across generations. Given that family members are likely to work together toward the same legacy vision, keeping the business in the family may seem like a natural and easy choice.

Underneath this seemingly idyllic surface, family businesses must face a critical question:

Can our family dynamics withstand the realities of running a business together, or are we risking both our enterprise and our relationships by maintaining the status quo?

This question is one we’ve seen families grapple with time and again. We’ve seen how the pressure to uphold a family legacy can stifle innovation and how unaddressed issues can paralyze decision-making. Fortunately, we’ve also witnessed how family dynamics can drive remarkable success and resilience. On one hand, the desire to honour tradition and preserve what has worked in the past can sometimes lead to a reluctance to embrace change or new opportunities. This can potentially hinder a company’s ability to adapt to evolving markets.

However, it’s equally important to recognize that family businesses often benefit from a unique long-term perspective and shared values. The deep understanding of the business that comes from growing up within it can lead to insightful innovations that outsiders might miss. Additionally, the trust and familiarity among family members can sometimes enable rapid, decisive action when opportunities arise.

In essence, the key lies in recognizing both the potential pitfalls and the inherent strengths of the family business model and developing governance structures that maximize the benefits while mitigating the risks.

Navigating Unspoken Tensions in Family Businesses

In family businesses, one challenge is how different family members often have personal objectives and values that may be in conflict with the business goals. As the family unit grows and evolves, each member develops their own unique personality, interests, and pursuits. Some feel a strong connection to the family business, aspiring to contribute to its success. Others, however, yearn for different paths altogether.

These differing aspirations can lead to interpersonal conflicts and power struggles within the family. Siblings vie for leadership roles, while cousins may clash over business direction and strategy. Generational gaps exacerbate tensions—the younger generation seeks innovation and adaptation, while the older generation may resist change, not to mention the differences that may arise in social causes to support through their family philanthropy.

Moreover, the weight of expectations placed on family members can be overwhelming. Balancing the legacy of previous generations, maintaining family harmony, and ensuring business success take a toll on individual well-being and relationships. The fear of disappointing family or being perceived as the “weak link” adds stress, anxiety, and resentment.

The Vital Role of Family Governance in Ensuring Continuity

Family governance serves as a structured framework for decision-making, conflict resolution, and accountability within family businesses. By navigating challenges and maintaining alignment between family and business interests, effective governance plays a pivotal role in sustaining continuity.

Family governance is fundamentally about the establishment of clear rules, roles, and processes that govern the involvement of family members in the business. These elements include:

Rights and Responsibilities: Clearly defining the rights and responsibilities of family members ensures transparency and equitable treatment.
Employment Criteria: Setting criteria for employment and advancement within the company promotes merit-based decisions.
Dispute Resolution Mechanisms: Establishing effective mechanisms for resolving disputes ensures smoother operations.

Moreover, a well-established governance framework helps to align the interests of the family with those of the business. This ensures decisions are made with the long-term success of the enterprise in mind. This alignment is critical for building a culture of stewardship where family members view themselves as stewards of family wealth committed to preserving the business legacy.

Family Council: The Cornerstone of Family Governance

The family council is the central component of successful family governance. This key governing body serves as the primary link between the family and the business, representing the interests of all family members and ensuring that their voices are heard in the decision-making process.

The composition of the family council should reflect the diversity of the family, with representatives from different generations, branches, and levels of involvement in the business. This inclusive approach helps to build trust and foster a sense of shared ownership and responsibility among family members.

The family council’s primary responsibilities include overseeing the implementation of the family constitution and other governance policies and providing guidance and support to family members as they navigate their roles within the enterprise. To effectively fulfill these duties, family council members must be well-equipped with the knowledge, skills, and resources. In addition to its operational responsibilities, organizing educational programs, mentoring initiatives, and leadership development activities can help prepare the rising generation. This commitment to ongoing education and development is essential for ensuring that the family remains adaptable, resilient, and well-positioned for the challenges and opportunities that lie ahead.

Ultimately, to ensure family business continuity, there must be a way for ongoing reflection, adaptation, and growth. Effective governance provides the structure, processes, and accountability needed to align family and business interests and resolve conflicts. Staying together in business isn’t a one-time decision. It’s an ongoing commitment that requires careful nurturing and unwavering dedication from all family members to thrive personally and professionally.

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Effective governance helps align your family values with business goals for greater long-term success. If you'd like to explore strategies tailored to your family enterprise, we're here to help. Let's connect and discuss your unique challenges and opportunities.

ABOUT THE AUTHOR

As the Senior Wealth Advisor at Beacon Family Office at Assante, Cory Gagnon has supported successful family enterprises to preserve, protect and transition their wealth since 2011.

ABOUT THE AUTHOR

As the Senior Wealth Advisor at Beacon Family Office at Assante, Cory Gagnon has supported successful family enterprises to preserve, protect and transition their wealth since 2011.

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Building a Thriving Family Business Through Human Capital

Financial performance and a seamless transfer of leadership between generations are common indicators of success in family businesses. However, a crucial element to this seamless transfer is often overlooked—human capital. Human capital refers to each family member’s physical and mental well-being, as well as their ability to pursue individual happiness and fulfillment.

Investing in the members who are the company’s lifeblood is what we mean by human capital within the context of the family business. This means recognizing that each family member brings unique talents, perspectives, and aspirations. Further, when we invest in the growth and well-being of the business successors, we can create a stronger, more resilient family-owned enterprise. While there are many ways to nourish the rising generation of family leaders, let’s explore three common ones that go across multiple industries and types of family business endeavours.

Encouraging Individual Growth and Fulfillment

When individuals feel their growth is supported, they are more inclined to engage more fully, offering innovative ideas and insights. These ideas often aid the business in overcoming obstacles and challenges or capitalizing on opportunities. Valuing and cultivating each person’s distinct talents fortifies the family’s collective resilience, enabling them to navigate the nuances within the business and family dynamics.

Thus, it’s crucial to cultivate an atmosphere that bolsters personal ambitions and provides avenues for members to follow their interests while still supporting larger family values. For instance, a family enterprise might fund educational initiatives or skill-building programs tailored to individual aspirations, be it advanced studies, acquiring new competencies, or venturing into new fields.

Building Independent Identities in Family Business

In family businesses, it’s important for family members, especially the rising generation, to build their own identities, separate from the business’s wealth. If they define themselves solely by their business, they might feel pressured to pursue certain career paths, such as taking on an unwanted leadership role. This can result in a loss of confidence if the business faces difficulties.

To help them discover their own identities, it’s key to encourage activities outside the business, like hobbies or volunteering. Open talks about the pressures of being in a family business are also necessary. Together, families can find a balance between what the individual wants and what the business needs.

A stronger and more emotionally resilient family is an asset to any family business. When people know who they are and what’s important to them, they can better resolve family business issues and add real value to the business.

Recognizing the Value of Work and Self-Worth

Family businesses must understand how work affects an individual’s self-esteem. It’s important to help each person find fulfilling work, whether it’s in the family business or elsewhere. It should be clear that all kinds of work contribute equally to the family’s collective skills and knowledge.

This could mean offering chances to try different jobs within the business or backing their interests outside of it. Building a culture that celebrates everyone’s efforts, no matter their role, is also key.

By supporting family members in their career choices and valuing their efforts, family businesses can foster a respectful and appreciative environment. This cultivates a more dedicated team committed to the future success of both the business and the family.

Nurturing human capital through personal and professional growth opportunities is crucial for the success of a multi-generational family business, as it ensures their longevity and prosperity. It is through deliberate investment in fulfilling each member’s fundamental needs, which span physical, emotional, and psychological aspects—such as feeling loved, having a sense of belonging, and finding purpose—that the business propels forward.

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Understanding the need to nurture the rising generation is one thing. The next step is putting it into practice. If you’re ready to learn more about how to better support your rising generation, connect with Beacon Family Office today.

ABOUT THE AUTHOR

As the Senior Wealth Advisor at Beacon Family Office at Assante, Cory Gagnon has supported successful family enterprises to preserve, protect and transition their wealth since 2011.

ABOUT THE AUTHOR

As the Senior Wealth Advisor at Beacon Family Office at Assante, Cory Gagnon has supported successful family enterprises to preserve, protect and transition their wealth since 2011.

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How Family Offices Are Adapting Their Wealth Strategies Globally

The global economic landscape has undergone significant changes in recent years, bringing with it challenges and opportunities for ultra-high-net-worth (UHNW) family offices seeking to preserve and grow their wealth. They must navigate a complex chain of economic factors, geopolitical risks, and market volatility. In this context, asset allocation has become more critical than ever as family offices strive to build resilient and diversified portfolios that can withstand the tests of time. This leads us to ask – globally, how are family offices adapting their wealth strategies?

For this, we turned to the UBS Global Family Office Report 2024. Here, we were not surprised to find that one of these strategies involves creating a diverse asset allocation strategy. Let’s explore what this can look like, along with what to consider when thinking of your own asset allocation and wealth strategy.

The Shift Towards Portfolio Rebalancing and Risk Management

According to the UBS Report, family offices made significant adjustments to their strategic asset allocation in 2023. One notable shift was the increased allocation to developed market fixed income, which rose to 16% in 2023, up from 12% in 2022, marking the largest increase seen in five years. Conversely, family offices reduced their exposure to real estate from 13% in 2022 to 10% in 2023. These changes reflect a growing emphasis on portfolio rebalancing and risk management.

The move towards fixed income can be seen as a response to the heightened market volatility and uncertainty that have characterized recent years. Family offices are increasing their allocation to this asset class in order to stabilize their portfolios and reduce potential downside risks. At the same time, the reduction in real estate exposure may be a reaction to the sector’s volatility and the potential for asset price corrections in certain markets.

Balancing Traditional and Alternative Assets

The UBS Global Family Office survey, which covered North America, Europe, Asia-Pacific, Latin America, the Middle East, and Switzerland, offers useful information about the typical asset allocation of family offices globally. The data reveals a diverse mix of traditional assets, such as equities (28%) and fixed income (19%), and alternative assets, including private equity (22%), real estate (10%), and hedge funds (5%).

This balanced approach to asset allocation suggests that family offices across these regions are seeking to diversify their portfolios by combining traditional and alternative assets. In doing so, they can potentially benefit from the stability and liquidity of public markets while also tapping into the higher return potential of private investments. However, it is essential to recognize that alternative assets also come with their own set of risks, such as illiquidity and higher fees.

The report also highlights some regional variations in asset allocation. For example, North American family offices tend to allocate a higher proportion of their portfolios to private equity (35%), compared to the global average, while Latin American family offices have a higher allocation to fixed income (34%). These differences suggest that the specific needs and objectives of UHNW families may vary depending on the economic factors and market conditions in their respective regions.

Building an Adaptable Asset Portfolio

Looking ahead, family offices must be prepared to adapt their asset allocation strategies to the evolving economic landscape. Several key factors are expected to shape the investment environment in the coming years, including interest rates, inflation, and geopolitical risks. Highlighted in the UBS Report, it’s stated that 73% of family offices believe that the U.S. will experience positive real interest rates for an extended period.

Globally, as central banks grapple with the challenge of normalizing monetary policy, family offices will need to keep a close eye on interest rate movements and their potential impact on different asset classes. Rising inflation is another concern, as it can erode the purchasing power of wealth over time. Geopolitical risks, such as trade tensions and regional conflicts, can also have significant implications for global markets and investment flows. The UBS report reveals that 58% of family offices are concerned about the potential impact of a major geopolitical conflict on their financial objectives over the next 12 months.

To more effectively navigate the above, family offices are adopting a range of strategies. Some are increasing their allocation to real assets, such as infrastructure and commodities, as a hedge against inflation. Others are focusing on sectors and regions that are expected to benefit from long-term structural trends, such as the transition to a low-carbon economy or the rise of emerging markets. In fact, over a third of family offices plan to increase their allocations to North America (38%) and Asia-Pacific (35%) over the next five years.

Ultimately, the key to success in this environment is to maintain a flexible, diverse, and adaptive approach to asset allocation. Family offices that can quickly respond to changing market conditions and rebalance their portfolios accordingly will be advantageously set to preserve and grow their wealth in the years ahead.

The UBS Global Family Office Report 2024 provides a wealth of insights into how UHNW family offices globally are proactively adapting their asset allocation strategies. The objective of these family offices is to construct enduring and diversified portfolios through the implementation of risk management and portfolio rebalancing, the smart allocation of traditional and alternative assets, and staying attuned to key economic and geopolitical indicators.

Family offices that can stay informed about the latest trends and projections to make informed decisions for their unique needs and objectives will be best positioned to protect and successfully transfer their multi-generational wealth.

If you are curious about how these global trends may be relevant to your family portfolio or are seeking new asset strategies, book an initial conversation with Beacon Family Office.

The Significance of Asset Allocation for Business-Owning Families

One way many Ultra-High-Net-Worth (UHNW) families define success is through the enduring legacy they create. It’s a testament to the tireless effort, unwavering dedication, and strategic decision-making that transformed their family business into a thriving enterprise. But amidst the triumphs and challenges of running a family business, it’s easy to overlook one crucial aspect that can determine the long-term stability and prosperity of this legacy: asset allocation. When a significant portion of your family’s wealth is tied up in business, it can leave you vulnerable to the unpredictable tides of the market and the economy.

Imagine a ship setting sail on a vast ocean with all its cargo stowed in a single hold. If the waters remain calm and the winds are favourable, the journey may be smooth sailing. But what happens when a storm hits and the waves threaten to overturn the vessel? Just as a wise captain would distribute the cargo across multiple compartments to maintain balance and mitigate risk, a wise UHWN family steward must consider the strategic diversification of the family’s assets.

Understanding Asset Allocation

Asset allocation is the foundation of a well-balanced investment portfolio. It involves distributing your investments across different asset classes in a way that aligns with your financial goals, risk tolerance, family values, and time horizon. Each asset class has its own characteristics and responds differently to market conditions. For example, stocks are generally considered to be higher-risk, typically offering the potential for higher returns, while bonds are lower-risk but provide more modest returns.

Diversifying your investments offers several key advantages. If one asset class underperforms, others may compensate, helping to stabilize your returns over time. This is crucial for business-owning families because a variety of outside factors, such as the state of the economy, industry trends, and competitive pressures, can impact your company’s success.

In addition to risk reduction, diversification has the potential to enhance returns. Depending on market conditions – and other factors – different asset classes tend to perform well at different times. By investing in a mix of assets, you can potentially capture gains in various market environments and avoid the pitfalls of a concentrated investment strategy. This can help you build wealth over time and achieve your long-term financial goals.

Reinvestment Temptation and Future Business Success

There is an inherent allure to reinvest the majority of one’s profits back into the business, particularly when the returns on investment surpass those of expectation. However, while reinvesting in your company is important for growth, it’s equally crucial to allocate a portion of your wealth to other asset classes.

A real-life example of a business owner who found success through diversification is billionaire investor Warren Buffett, Berkshire Hathaway’s CEO and Chairman. One of the timeless investment lessons he shares in his annual letters to shareholders is about diversifying your investment.

He notes that while focusing on a few high-quality investments can be a successful strategy, it also exposes investors to heightened risk if those investments fail to perform as expected. Furthermore, Buffett stresses the importance of maintaining liquidity and flexibility in one’s financial position. By allocating a portion of your wealth to more liquid assets, such as stocks or bonds, business owners position themselves to have resources available to seize new opportunities or navigate unexpected challenges should/when they occur.

Liquidity for Ownership Succession

Having outside assets is particularly important when it comes to ownership succession planning. As a UHNW business family, you likely have a vision for the future of your company, whether that involves passing it down to the next generation or eventually selling it to a third party. In either case, having diversified assets can provide the necessary liquidity to facilitate a smooth transition.

Consider the scenario of passing your business on to your children. If most of your wealth is tied up in the business, your heirs may struggle to raise the necessary funds to buy out other family members or pay estate taxes. This can lead to financial strain and potentially force the sale of the business under unfavourable conditions. By having a portion of your wealth in liquid assets outside of the company, you can help guide a more seamless transfer of ownership and protect your family’s legacy.

Similarly, if you decide to sell your business, having diversified assets can provide flexibility and negotiating power. You’ll be able to approach potential buyers from a position of strength, knowing that you have the financial resources to wait for the right offer and terms. This can help you maximize the value of your business and ensure a successful exit on your own terms.

At Beacon Family Office of Assante Financial Management Ltd., we work with many UHNW business-oriented families, and there’s one thing they all have in common. They are passionate about their business and want to continue to see it grow and succeed. We suspect that you are no different – passionate and committed to success. Because of this, remember that your asset management abilities have a significant impact on the expansion and success of your business, in addition to your determination and diligence.

If you’re curious about how asset allocation fits into your family business or wealth transfer, connect with us today.

Outgoing Leaders: The Overlooked Element of Succession Planning

In many of today’s family businesses, outgoing leaders are often faced with unclear expectations and roles as they begin to transition out of the company. This ambiguity can leave them feeling undervalued and uncertain about their place in the family, business, or even their community. They may experience a sense of loss as they transition away from central decision-making roles, sometimes leading to feelings of depression or a lack of value.

Addressing these challenges requires a proactive and empathetic approach from the larger family. Recognizing the emotional complexity of the succession process and providing support to outgoing leaders will help create a more positive and successful transition for both the incoming and the outgoing leader.

Redefining the Outgoing Leader's Role

To effectively address the challenges faced by outgoing leaders, they, along with the other leaders in the family business, must work together to redefine their roles within the family and the business. Doing this brings a number of benefits to both the outgoing leader and the family business itself.

For the outgoing leader, it offers a pathway to continued relevance and fulfillment, empowering them to continue to contribute to the family’s success in a meaningful way. This can help alleviate the emotional challenges associated with the transition, allowing outgoing leaders to maintain a strong sense of connection and purpose within the business operation. This can come in many forms. A few that we’ve witnessed with our clients include becoming a mentor to the incoming leader(s) or focusing more on the family’s philanthropic efforts outside of the business itself.

For the family business, having the outgoing leader serve as a steward of continuity during the leadership transition from outgoing to incoming ensures that the family’s values, vision, and mission are preserved and carried forward, a crucial element in maintaining the family’s legacy.

This approach recognizes the inherent value of outgoing leaders and provides them with a clear sense of purpose and direction as they transition into this new phase of their lives. This redirection of purpose often leads to a more positive and productive succession process.

Leverage their Wisdom for Continuity Planning

One effective strategy for facilitating a purposeful and seamless transition for the outgoing leader is to involve them in ongoing family governance and continuity planning efforts. Similar to redefining their role, this involvement brings benefits to the individual and the business.

The outgoing leader has been at the helm of the family business, steering it through challenges and opportunities. They have a deep understanding of the business’s operations, culture, and industry in which it operates. Their knowledge and experiences are invaluable when planning for the future. For instance, they can help identify potential risks that the enterprise may face and suggest strategies to mitigate them based on how they’ve overcome challenges in the past. This could range from operational risks, such as chain of command disruptions, to strategic risks, such as changes in market dynamics or the regulatory environment. This experience can help the organization prepare for such scenarios with tangible processes, ensuring business continuity even in the face of future disruptions.

Through mentoring, they can share their perspective and lessons learned to help new leaders understand how to run the business. This mentorship can be key in preparing the new leaders to take on their roles effectively. For example, the outgoing leader can share their approach to decision-making, problem-solving, and team management, among other things. This can equip the incoming leaders with the skills and perspectives needed to steer the company towards future success.

The participation of departing leaders in continuity planning can assist in the facilitation of a seamless transition. They can help the incoming leaders understand the current state of the company, its strategic direction, and the challenges it faces. They can also help to communicate the change to the rest of the organization, ensuring that everyone is aligned and on board with the transition. Open communication is a sure fire way to minimize risk and disruptions during leadership’s transition from the outgoing generation to the rising generation of leaders.

Celebrate their Legacy and Contributions

Taking the time to recognize and commemorate the contributions made by departing leaders to family business matters. This recognition validates their efforts and reinforces the importance of their ongoing involvement in the organization’s legacy.

One way to celebrate their impact is through storytelling. Sharing stories of how this leader overcame challenges can inspire other people—leaders, family members, and other employees alike. These narratives can be captured through various means, such as written memoirs, video interviews, or even dedicated events where the outgoing leader can share their experiences with the family and key stakeholders.

Another approach is to establish a legacy project or initiative in their honour. This may manifest as a philanthropic foundation, a scholarship initiative, or a specific enterprise venture that is aligned with their principles and vision. By creating a tangible representation of their legacy, the family demonstrates their appreciation for the outgoing leader’s contributions while ensuring their impact continues to resonate within the organization.

Succession planning is a critical aspect of organizational management, ensuring the seamless transition of leadership roles. While so many efforts often focus on preparing the incoming leader, many overlook how to support the outgoing leader. This is equally important to invest time and energy in because their efforts have shaped the organization to date. Their departure can be a time of reflection and gratitude, acknowledging their invaluable contributions and the legacy they’re entrusting to the next generation. This appreciation honours the outgoing leader, setting a positive precedent for future leaders as it emphasizes the organization’s values and commitment to recognizing individual contributions.

Transition is never an easy time. It can be exciting and nerve-wracking, full of multiple moving parts and personalities. One thing to be certain of is that when there is communication, involvement, purpose, and celebration of opportunities, it becomes a time to embrace change where people thrive. If your family is beginning the succession planning process and is curious about ways to ease this transition, book an initial conversation with Beacon Family Office as your first place to start.