The Citizen (Gauteng)

Safeguardi­ng family wealth

LEGACY: NOT JUST ABOUT MANAGING MONEY

- Moneyweb

A ‘constituti­on’ or set of rules that go beyond a will can help to prevent division in families.

Some families are in the fortunate position where sufficient wealth has been generated to leave a legacy. For these families, while the focus is on preserving and sustaining their wealth into the future, of greater concern is managing the family in a way that preserves the family unit’s integrity.

“Every family has their own dynamics, but in our experience, these are very often compounded by wealth,” says Matthew Fleming at Stonehage Fleming.

The firm conducts a survey, roughly every two years to understand the issues facing families.

Its latest report, “Four Pillars of Capital: Practical Wisdom and Leadership for Changing Times”, outlines the challenges in wealth transfer across generation­s.

A family’s tangible assets are just one part of a broader legacy and – like four legs of a table – each has a role.

Financial capital – the tangible assets, businesses and properties comprising a family’s wealth;

Intellectu­al capital – the skill, knowledge, experience and wisdom that a family can apply to its wealth management, its contributi­on to society and collective wellbeing;

Cultural capital – that which brings a family together (or not) by identifyin­g shared perspectiv­es and themes in the way its members conduct their lives; and

Social capital – the way in which a family relates to and engages with society and the communitie­s in which it lives.

It’s this social capital that the younger generation is grappling with, says Fleming.

“They are very aware of growing inequality and the disconnect that many people are feeling from capitalism.

“There is a growing belief that wealth can only be created and preserved through generation­s if it is used to make a positive contributi­on to the community, as well as providing for a family’s financial needs.”

The report notes that the gulf in perception­s and values between the generation­s is significan­tly greater than in the past, which has an impact on long-term planning objectives.

However, intergener­ational relationsh­ips are less hierarchic­al than before, which makes discussion on previously taboo topics, like money, easier.

‘Softer issues’ more complex

Increasing­ly families are also coming to realise that capital preservati­on is the easy part of managing wealth.

Far more complex are the “softer issues”, including succession planning, family leadership and engaging the next generation.

“Families realise that instead of the leadership baton simply being passed on to the eldest son, family leadership should be about meritocrac­y and that training is essential,” says Fleming.

Stonehage Fleming’s local offices also provide support to families who have come into money more recently.

“These can include local business people, as well as sports stars and other talented individual­s,” says Johan van Zyl, local office chief executive.

“While the wealth creator may say they do not want to rule from the grave, having a “constituti­on” or set of rules that go beyond a will for the management of wealth can help to prevent division in families.”

 ?? Picture: Shuttersto­ck ?? PROSPERITY. There’s growing belief that wealth can only be created and preserved through generation­s if it’s used to make a positive contributi­on to the community, and provide for a family’s financial needs, says Matthew Fleming of Stonehage Fleming.
Picture: Shuttersto­ck PROSPERITY. There’s growing belief that wealth can only be created and preserved through generation­s if it’s used to make a positive contributi­on to the community, and provide for a family’s financial needs, says Matthew Fleming of Stonehage Fleming.

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