Family Office Insights: Building future leaders — 6 ways to help ensure the next generation is ready to guide a family’s legacy
A formal development plan can help younger family members acquire both the technical and soft skills they will need to become key decision-makers for the family.
Autheurs
Hope is not a plan when it comes to transitioning leadership in an ultra-high-net-worth family. While parents and grandparents may be optimistic that younger generations could one day possess the wisdom and prudence to be effective stewards of the family’s wealth, some planning may be needed to make sure that happens. Following are a number of steps families can consider to help younger members be ready to take the baton of leadership when it is handed to them.
- Enroll younger family members in formal training programs.
Around the world, a number of programmes are offered to help family members learn more about the details of managing family wealth. This training is often delivered at higher educational institutions like business schools. It typically covers an array of topics, running the gamut from investing and family governance practices to cybersecurity and effective technological solutions for wealth management. Even if the family relies on a network of experts for support with all these issues, the training will help younger family members have informed conversations with outside advisors.
2. Assign a mentor to each younger family member who is a likely candidate for a future leadership role.
The best way for anyone to learn any new subject or area of expertise is to have someone seasoned at it take them under their wing. Inviting a younger person to shadow them for tasks such as attending family investment committee meetings or checking in with external tax, legal or financial advisors can provide insights to all the responsibilities leaders in the family have.
Seeing the senior member in action will also provide a valuable perspective on how to handle issues like resolving conflicts between family members and providing proper direction to advisors from various professional disciplines.
This type of guidance works best if it happens more than sporadically. Mentors may want to schedule regular meetings with their mentees. Those conversations will also help mentors better understand their protégé’s strengths and weaknesses. Those insights can be used to establish a plan of development for the younger family members so they can build skills they might currently lack.
3. Create a plan for gradually increasing engagement with leadership responsibilities.
Even for the most charismatic family members, the skills that are needed to be an effective leader are not acquired overnight. Families can adopt the same strategies that businesses use to nurture leadership skills. You can assign the younger family members what are effectively “junior” roles and also, over time, provide them exposure to as many areas of managing the family wealth as possible. For example, you might ask a younger family member to plan, schedule and help develop the agenda for an upcoming family meeting or oversee a community-involvement project for family members. You will want to ensure that the next generation can assume increasing levels of responsibility. In doing so, you will also want to enable them to exercise some degree of autonomy. If the family is considering expanding its philanthropic efforts, for example, you could establish a committee from the next generation and charge them with identifying the best-possible recipients of the family’s support.
4. Encourage them to network with peers.
You can create opportunities for younger family members to network with peers or suggest they develop a plan to foster those interactions. The networking events could range from informal get-togethers for conversation to more formally planned workshops and seminars that can be held online or in-person for just an hour or two, or even, with an in-person event, over the course of a weekend retreat. Attendees could include younger members of various branches of the family or peers from other families. Formal presentations could be provided by outside experts or younger family members who have had particular success with a topic the organizers plan to cover at a session. The topics addressed could range from emerging technologies in wealth management to sustainable investing or innovative approaches to philanthropy.
5. Foster a commitment to ongoing personal growth.
Taking on a leadership role for the family, of course, requires more than developing an understanding of technical subjects like investing. Ongoing training can help younger family members acquire the “softer” skills that effective leaders need. Workshops on issues like conflict resolution, negotiation strategies, emotional intelligence, active listening and even stress management can help family members better address all the issues they will be handling as leaders for the family. Of course, older members can also serve as models in the pursuit of continuous self-development if they embrace a commitment to lifelong learning.
6. Help ensure that younger generations fully understand the family’s mission and purpose for their wealth.
A family legacy can be fostered through storytelling. Even for those who might be naturally reticent, it can be helpful to regularly share anecdotes and life experiences that illustrate what the family’s attitude about their wealth is, what the family mission is, and why the family supports the causes it does. Beyond those informal conversations, more planned discussions could also be held at events like family meetings that outline all the specific ways the family acts on its mission. Inviting younger family members to participate in some of those activities, like a budget planning session for family projects, will enable them to develop a much deeper awareness of how the family carries out its vision.
Conclusion: Older family members also have to be ready for the handover
Taking the time to consider all the ways you can prepare younger generations will greatly increase the likelihood they are prepared to take on leadership roles in the family. It is also important to remember that it is not only the younger family members that have to learn and grow. Older members also must be ready to turn over the reins. That process may entail a gradual transitioning of responsibilities to younger family members who have demonstrated they are ready and capable to take on certain tasks.
The younger generations will be more invested in grasping these opportunities when they are given assignments that are meaningful and appealing, while also providing a clear path toward increasing leadership in the family. At the same time, it falls upon the younger family members to demonstrate they are willing to embrace their new roles with a commitment to succeeding in them. Fostering trust and support in both directions across the older and younger generations of a family can help ensure a successful transition of leadership that will preserve the family’s legacy and enable it to continue to thrive.
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