2024 Week 37

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

by BlogRising GenerationTransition Planning

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.

Picture of ABOUT THE AUTHOR

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.

Picture of ABOUT THE AUTHOR

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.

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Make a Difference with Giving Tuesday

Raising Heirs with Purpose Through Philanthropy

by BlogLearning DevelopmentPhilanthropyRising GenerationSocial Impact
Make a Difference with Giving Tuesday

Raising Heirs with Purpose Through Philanthropy

For ultra-high-net-worth (UHNW) families aiming to develop responsible leadership in the next generation, raising heirs with a sense of purpose rather than entitlement or family expectations is critical. Instead of simply passing down wealth and influence without guidance, you can intentionally use philanthropy to set the tone for future generations’ involvement in stewardship.  

This intentionality allows your rising generation to gain insight into social issues, understand how their privileges can positively impact others, and develop leadership skills in stewarding family wealth responsibly. With thoughtful guidance and participation, they gain the competence and fulfillment that come from using their privileges to create positive change. By guiding heirs to lead with wisdom and compassion, you equip the next generation to build on the legacies of social responsibility. While this guidance will look different for each UHNW family, the following provides insights for laying the foundation of purposeful philanthropy for the next generation.

Engaging Your Heirs in Philanthropy Early

Exposing your heirs to philanthropic work as they grow up enables them to understand firsthand the power and privilege tied to your wealth, shaping their perspectives on social responsibility early on. Granting them visibility into your family foundation’s grantmaking process, for example,  provides critical education on societal issues and how thoughtful allocation of funds can drive change. This hands-on engagement builds confidence and the fundamental knowledge needed to guide effective philanthropy.

As they move into adulthood, managing subsets of family wealth and deepening their participation in charitable giving better prepares them for the complex decision process that lies before them. Advising on grantee selection, conducting site visits, and monitoring funds teaches analytical and interpersonal skills, which are crucial to their forthcoming executive roles.

Funding Your Rising Generation’s Social Ventures

For heirs demonstrating readiness to spearhead their own philanthropic and social impact projects, providing capital to turn passion into reality offers an unparalleled leadership opportunity. Allocating resources for your heirs to launch or fund ventures aligned with their vision empowers innovation while retaining accountability through governance structures.

Requirements such as quarterly reporting to your family foundation boards build financial and communication abilities vital for helming the family enterprise one day. Win or lose, venture investments give your heirs real-life experience in navigating risk and realizing a concept from ideation to activation—honing entrepreneurial skills that benefit enterprises holding the family’s wealth.

Tying Philanthropy Engagement to Leadership Preparation

With their legacy, reputation, and family wealth at stake, UHNW families must be deliberate in assessing and propelling heirs into governance roles across enterprises. Using philanthropy as a training ground permits “low stakes” evaluation of heirs against key performance indicators correlated with leadership readiness for you.

Those who meet milestones and continue to show interest may then move on to steward higher-value trusts or operational roles within core family enterprises. In this way, strategically linking philanthropy engagement to capability assessments charts a course for qualified and engaged heirs to methodically earn the privilege of upholding the family legacy. It also provides mechanisms for remedial education, if needed. With objective insights into leadership readiness, the outgoing generation can thoughtfully shape the trajectories of purpose-driven heirs.

Measuring integrity, judgment, accountability, and other character qualities in the context of community impact initiatives facilitates an objective analysis of the rising generation’s aptitude for stewarding wealth responsibly. Granting board appointments and oversight responsibilities based on demonstrated temperament and skills creates pathways for the next generation to rise to the occasion.

There may always be the risk of inadvertently endowing your heirs with a sense of entitlement rather than a sense of purpose and accountability. However, with your intention and a clear path to engaging the next generation through philanthropy, you have a greater likelihood of instilling a sense of purpose, dedication, and confidence in them.

Listen to our Legacy Builders Podcast

If you’re curious to learn how to leverage philanthropic impact as leadership preparation for rising generations, connect with Beacon Family Office. Here, we can help you navigate questions such as, “Are your family’s future leaders set up for the purpose of privilege?” and “What will become of your family’s wealth and influence once passed on to the next generation?” To dive into these and other questions, schedule an initial introductory call with us today.

Lifestyle: Surrounding Yourself with Positive People

Why Multi-Generational Families Must Bridge the Generational Gap

by BlogFamily DynamicsRising Generation
Lifestyle: Surrounding Yourself with Positive People

Why Multi-Generational Families Must Bridge the Generational Gap

Each generation is made up of important events that shape the overarching identity, leaving a lasting impression, especially on young people as they grow up. When we look back at history, we can see how major events have changed the worldviews and identities of entire generations.

These defining junctures become lenses through which emerging generations perceive the world, shaping their values, beliefs, and identities. Yet embracing such transformative change is not without its challenges. Diverse outlooks often give rise to tensions between generations, necessitating thoughtful consideration and recognition to bridge gaps in values, mindsets, and motivations that may naturally arise.

This transformation is highly pronounced within affluent families. Today’s rising generation faces a unique juxtaposition of forces: one urging them to drive positive societal change and another compelling them to preserve and extend the legacies of their family enterprises. At times, these forces harmonize seamlessly, aligning family values with societal impact. However, there are moments when these pursuits collide, demanding careful navigation and thoughtful reconciliation to ensure a harmonious intergenerational legacy that endures through time.

The Evolution of Family Culture: Embracing Change Together

As each generation takes its seat at the family table, it brings with it a treasure trove of diverse perspectives and experiences. This infusion of different worldviews and outlooks is what keeps the concept of family culture vibrant and ever-evolving. What might have once been a set of well-established traditions and unchanging values has now become a dynamic pattern that adapts to the shifting sands of time.

Imagine sitting down for a family dinner where grandparents share stories of their childhood before instant connection was a reality; where parents discuss their experiences growing up where the face of the workplace underwent extreme changes; and where the now rising generation brings unique experiences, passion about social causes, and ideas to the conversation. This family gathering is a microcosm of the broader family culture. Here, the past, present, and future seamlessly intersect. It’s at this very crossroads that the magic of family culture unfolds, where the wisdom of the past converges with the energy of the present, and where the dreams of the future take shape.

In this way, family culture is not a static relic of bygone days but a living, breathing entity, a reservoir of shared experiences that is in constant evolution. It’s a testament to the enduring strength of family bonds and the resilience of human connection in a world that is ever-changing.

The Family Mission: Bridging the Past and the Future

In a world where individual pursuits often take centre stage, the notion of a shared family mission might initially strike you as a sentimental nod to family traditions. Yet there’s a reason why successful generational families continue to thrive from one generation to the next. In this fast-paced era of rapid change, their family mission has remarkable significance.

A family mission isn’t just a set of words etched in stone. 

It’s a compass that guides your family’s journey through the shifting landscape of life. It’s the map to the family’s greater North Star (their vision) that helps generations find their way in a world where the path forward is often uncertain. It’s not about ignoring individual aspirations but rather about weaving those aspirations into a collective goal that enriches the lives of everyone in your family.

The mission is what charts a course through the generations, connecting the wisdom of the past with the goals of the future. It’s a powerful tool for aligning family members around shared values, goals, and a vision for what your family stands for in the world. In an age where the pace of change can be overwhelming, a well-defined family mission becomes an anchor—a source of stability and purpose that can guide your family through times of change.

Forging Unity Amidst Generational Shifts

In the midst of an era defined by evolving ideologies and transformative events, the paradox facing the rising generation has become an imperative point of consideration for families navigating the complexities of generational transition. As younger members step into more visible leadership roles, the tension between societal impact and familial legacy becomes an intricate thread woven into the fabric of family dynamics. Neglecting to address this intricate dance could potentially widen the chasm between generations, intensifying intergenerational divides that hinder progress and unity.

Recognizing the significance of this paradox, it is paramount for families to actively engage in open dialogue and deliberate action. Failure to do so risks allowing differences to fester and erode familial cohesion. Those who nurture understanding and shared values while fostering education to bridge generational disparities stand a higher likelihood of sustainable success. By embracing the changing tides while anchoring themselves in the bedrock of mutual respect and collective purpose, families can not only weather the currents of change but also create a resilient foundation for future generations to build upon. This dedication to collaboration not only serves the present but also lays the groundwork for a harmonious intergenerational legacy.

Hence, the creation and clear communication of a family mission become all the more crucial as the world continues to evolve at a pace no one is accustomed to. Time invested in the evolution of family culture is time well spent. It serves as an occasion for contemplating the larger panorama and forging deeper connections. This pursuit encourages younger family members to hone their ideals and priorities, infusing a fresh perspective into the family’s trajectory. Consequently, an inspiring mission can directly bolster both the family enterprise and the legacy it engenders. While demanding, this endeavour can steer the course of the business and create a more engaged cohort of rising-generation family members and enterprise leaders.

Listen to our Legacy Builders Podcast

Unlock the path to harmonizing societal impact and family legacy. Step into the transformative journey of intergenerational collaboration with the Beacon Family Office. Delve into our specialized knowledge in family learning, wealth education, and fostering a unified family culture. Connect with us, and together, we'll navigate generational gaps, nurture understanding, and cultivate shared values for a resilient and impactful legacy.