Family office approach
Family office approach
Podcast
24.6.2024
When we talk about asset succession, we are primarily talking about the so-called NowGen, which currently bears all the responsibilities for wealth , and the NextGen, which is to be introduced to this.
At FINVIA, we often meet clients who have already thought about involving their descendants in the investment of their assets, but are reluctant to take the first steps due to uncertainty. What many do not know: This is a gradual process that can be actively initiated and supported by the family office. This requires expertise and experience as well as the empathy to understand and bring both sides together.
In order to recognize what this means and what exactly the tasks of the family office are, a few basics must first be clarified.
What makes wealth succession such a complicated issue is the emotional impact it has on everyone involved. Although everyone handles it differently, experience has shown that there are challenges on both sides that should be addressed in advance.
The passing generation, i.e. those who have built up and looked after the family estate over many years, are faced with a major task: handing over responsibility - albeit not immediately - is a step into the unknown. Not only are they confronted with having to redefine their future role, they also have to avoid disputes and keep the family together as well as wealth . Last but not least, they do not want to expect too much of their successors, especially their own children, and want to protect them from mistakes and negative influences from third parties.
In contrast, the new, still inexperienced generation is exposed to the high expectations and hopes of their parents and mentors. They also shy away from conflict within the family and the risk of not being able to live up to these expectations. The pressure to perform increases the longer the family fortune exists and the more responsible people have previously managed it. In the worst-case scenario, this fear can have a paralyzing effect and lead to extremely risk-averse decisions, which can ultimately be a self-fulfilling prophecy. After all, although investment risks can be kept low, they can never be completely avoided.
One of the most frequent questions from our clients is when it makes sense to integrate their successors into the asset structure. Although there is no universal answer to this question, two guidelines can help determine the point in time:
The principle is simple: those who start learning early have a better chance of success. The idea is not to overburden your children with a high level of responsibility, but to start the process slowly at a young age. For example, the completion of school or vocational training can be a decisive factor.
At the same time, it should be noted that not everyone has the same level of maturity at the same time. On the one hand, upbringing has an influence on how people deal with financial matters later in life, while on the other hand, some people are naturally more understanding than others. It is therefore important to know the person and understand their needs in order to provide them with the best possible support.
Although the next generation can be shaped by upbringing from an early age, on average both factors are fulfilled in the early to late 20s, but can vary from case to case.
Just like the choice of time, the design of the process is completely individual - but the fundamental starting point is always the discussion with the asset owner, i.e. NowGen. In this meeting, we assess the current situation and discuss the goals, values and responsibilities for the future and whether initial steps have already been taken. The concerns mentioned above play a major role here so that we can address them effectively. Finally, we clarify what form of support is desired from the family office. While some prefer close support and guidance, others prefer to use the expertise available for occasional reflection and as a safety net for their own planning.
Once the aforementioned points have been clarified, an in-depth exchange with the next generation on the same issues and concerns follows. From this, we identify important similarities and differences that can be addressed in open communication between all those involved. This point marks a special milestone in the process, as it sets the course for the future handling of assets and the next steps. As many emotions, expectations and fears come together here, the family office can act as a mediator and reduce the potential for conflict in the long term. As the third instance, our main task is to preserve assets, which makes us neutral partners for both sides.
The result is a plan that defines the gradual assumption of asset-related responsibility. This can mean, for example, initially involving the NextGen in regular dialog with the family office and other partners such as tax advisors or lawyers. This gives them an initial insight and gradually builds up an understanding of asset classes and strategies. In addition, the next generation can complete an internship with us if they wish, through which we train them in various areas such as liquid investments, real estate or private equity. Building on this, tasks and investment decisions can be handed over and professionally supported.
Finally, as a family office, we are happy to put you in touch with people who are in the same situation or have already completed it. In this way, both wealth holders and successors can network with each other and share experiences and insights into their personal development.
How long the process takes from the initial kick-off to complete takeover varies and depends on many factors. While some only need a few months, for others a period of several years is not unusual.
What makes the family office a valuable partner for wealth succession is above all its neutrality, expertise and experience. With a clear focus on the preservation and strategic management of the family estate, it is closely familiar with the values and decision-making guidelines of the owners. At the same time, it is able to efficiently absorb and implement new impulses from the next generation.
The process of wealth succession is an emotional and complex undertaking for both the NowGen, who has spent many years building up the family estate, and the NextGen, who has to live up to high expectations. Nevertheless, we are increasingly seeing that the open exchange between the generations leads to valuable insights and ideas on both sides that open up fresh perspectives.
We therefore welcome our clients' initiative to involve their descendants in the asset structure at an early stage. Through individual consultations, structured planning and practical training, we support the gradual transition and ensure that both generations can achieve their goals together.
Family office approach
24.6.2024
Christian Neuhaus
Passing on the family wealth to the next generation is a highly emotional process for both sides. So how can it be planned to avoid disputes and prepare everyone involved in the best possible way? FINVIA founder Christian Neuhaus explains how the family office supports the generations as a neutral partner in wealth succession.
When we talk about asset succession, we are primarily talking about the so-called NowGen, which currently bears all the responsibilities for wealth , and the NextGen, which is to be introduced to this.
At FINVIA, we often meet clients who have already thought about involving their descendants in the investment of their assets, but are reluctant to take the first steps due to uncertainty. What many do not know: This is a gradual process that can be actively initiated and supported by the family office. This requires expertise and experience as well as the empathy to understand and bring both sides together.
In order to recognize what this means and what exactly the tasks of the family office are, a few basics must first be clarified.
What makes wealth succession such a complicated issue is the emotional impact it has on everyone involved. Although everyone handles it differently, experience has shown that there are challenges on both sides that should be addressed in advance.
The passing generation, i.e. those who have built up and looked after the family estate over many years, are faced with a major task: handing over responsibility - albeit not immediately - is a step into the unknown. Not only are they confronted with having to redefine their future role, they also have to avoid disputes and keep the family together as well as wealth . Last but not least, they do not want to expect too much of their successors, especially their own children, and want to protect them from mistakes and negative influences from third parties.
In contrast, the new, still inexperienced generation is exposed to the high expectations and hopes of their parents and mentors. They also shy away from conflict within the family and the risk of not being able to live up to these expectations. The pressure to perform increases the longer the family fortune exists and the more responsible people have previously managed it. In the worst-case scenario, this fear can have a paralyzing effect and lead to extremely risk-averse decisions, which can ultimately be a self-fulfilling prophecy. After all, although investment risks can be kept low, they can never be completely avoided.
One of the most frequent questions from our clients is when it makes sense to integrate their successors into the asset structure. Although there is no universal answer to this question, two guidelines can help determine the point in time:
The principle is simple: those who start learning early have a better chance of success. The idea is not to overburden your children with a high level of responsibility, but to start the process slowly at a young age. For example, the completion of school or vocational training can be a decisive factor.
At the same time, it should be noted that not everyone has the same level of maturity at the same time. On the one hand, upbringing has an influence on how people deal with financial matters later in life, while on the other hand, some people are naturally more understanding than others. It is therefore important to know the person and understand their needs in order to provide them with the best possible support.
Although the next generation can be shaped by upbringing from an early age, on average both factors are fulfilled in the early to late 20s, but can vary from case to case.
Just like the choice of time, the design of the process is completely individual - but the fundamental starting point is always the discussion with the asset owner, i.e. NowGen. In this meeting, we assess the current situation and discuss the goals, values and responsibilities for the future and whether initial steps have already been taken. The concerns mentioned above play a major role here so that we can address them effectively. Finally, we clarify what form of support is desired from the family office. While some prefer close support and guidance, others prefer to use the expertise available for occasional reflection and as a safety net for their own planning.
Once the aforementioned points have been clarified, an in-depth exchange with the next generation on the same issues and concerns follows. From this, we identify important similarities and differences that can be addressed in open communication between all those involved. This point marks a special milestone in the process, as it sets the course for the future handling of assets and the next steps. As many emotions, expectations and fears come together here, the family office can act as a mediator and reduce the potential for conflict in the long term. As the third instance, our main task is to preserve assets, which makes us neutral partners for both sides.
The result is a plan that defines the gradual assumption of asset-related responsibility. This can mean, for example, initially involving the NextGen in regular dialog with the family office and other partners such as tax advisors or lawyers. This gives them an initial insight and gradually builds up an understanding of asset classes and strategies. In addition, the next generation can complete an internship with us if they wish, through which we train them in various areas such as liquid investments, real estate or private equity. Building on this, tasks and investment decisions can be handed over and professionally supported.
Finally, as a family office, we are happy to put you in touch with people who are in the same situation or have already completed it. In this way, both wealth holders and successors can network with each other and share experiences and insights into their personal development.
How long the process takes from the initial kick-off to complete takeover varies and depends on many factors. While some only need a few months, for others a period of several years is not unusual.
What makes the family office a valuable partner for wealth succession is above all its neutrality, expertise and experience. With a clear focus on the preservation and strategic management of the family estate, it is closely familiar with the values and decision-making guidelines of the owners. At the same time, it is able to efficiently absorb and implement new impulses from the next generation.
The process of wealth succession is an emotional and complex undertaking for both the NowGen, who has spent many years building up the family estate, and the NextGen, who has to live up to high expectations. Nevertheless, we are increasingly seeing that the open exchange between the generations leads to valuable insights and ideas on both sides that open up fresh perspectives.
We therefore welcome our clients' initiative to involve their descendants in the asset structure at an early stage. Through individual consultations, structured planning and practical training, we support the gradual transition and ensure that both generations can achieve their goals together.
About the author
Christian Neuhaus
Christian Neuhaus is one of the founders of FINVIA.
After gaining his first professional experience at UBS Sauerborn, where he was a member of the investment committee, the business graduate joined HQ Trust GmbH, the multi-family office of the Harald Quandt family, in 2011 together with some of the current FINVIA founders. Here, he advised complex large assets on asset structuring until 2016. He was then involved in setting up the digital asset manager LIQID - an associated company of HQ Trust GmbH, to which he eventually returned to help develop the digital strategy.
