Succession and wealth transition plan: "I don’t need to worry about that yet…”

Jonathan Needham, Head of Trust and Succession Planning for Société Générale Private Banking, shares his succession planning tips to better plan for the future.

Having been in the private client wealth management industry for nearly 40 years I have heard this phrase so many times and each time has it proved to be plain wrong. You go on holiday, you plan. Your children’s education, you plan. You move house, you plan. You get married, you plan.  So why is it unreasonable to suggest that one should plan the succession and transition of your family wealth?  The simple answer is that the transition of family wealth absolutely needs to be planned. One of the major consequences of the recent pandemic has been to reinforce awareness of our own mortality. However, it has not yet had the effect of ensuring that families plan better for the unexpected (or indeed plan at all). If you do not plan you have little or no influence over the outcome. Using a simple analogy every time we sit behind the wheel of a car we put on a seat belt, make sure the car is fuelled and have a clear idea of the route to our end destination and an idea of any hazards in our path. In other words, we simultaneously plan and mitigate risk as far as is reasonably possible. Simply put, we plan for the unexpected in the hope it will never happen but we can then deal with it, if it does. For nearly four decades I have seen families destroy (or at least seriously dilute) family wealth, allow dysfunction to occur within family lines and in some cases seen the structure of the family completely and irreparably breakdown. The causes of this are frequently known in advance and the warning signs missed. Add to this the complexity of human emotion and 21st century life with blended families, same sex marriages, civil partnerships, cross-border taxation and divorce rates at all-time highs, then the level of complexity has exponentially increased. In one piece of research^[1] I picked up recently, 84% clients regard their wealth transfer planning as being equally or more complex than two years ago. 50% of clients feel they would benefit from more advice in this area and significantly, 28% of clients believe their advisor has not engaged adequately with the next generation and broader family in these significant discussions. This will be tremendous news for the many dispute resolution partners in law firms across the globe, but these are simple things to solve (no disrespect to the partners!) and investing time in developing a well thought plan is time well spent and may help you avoid many of the pitfalls.