When I Die
17th June 2019
As a family office I am currently working with a client who all too often starts his sentences with the words ‘when I die’. So often, in fact, that at one stage I had to ask him if he was terminally ill. Fortunately, he is not, but what will happen to his business, family and their wealth once he is no longer here is obviously a concern to him. Most families that are in business are concerned with the long-term survival of their corporate affairs across several generations. In reaction to these concerns a whole industry has developed to provide solutions: lawyers, tax advisors, counsellors and various other professions.
The mistake that wealthy families in business often make is that they see these costly arrangements as the starting point to securing the future of their businesses, wealth and their descendants, whereas in fact these arrangements come at a later stage. The first and indispensable step is to make sure that family cohesion comes first as it is the family and its members who will provide the strong base on which multi-generational businesses and wealth will survive in the longer term. This may seem like stating the obvious, but the number of families in business that get this wrong is surprisingly high, and it is a well-established and unfortunate trend that businesses and wealth survive two or three generations at most. One of the reasons for this is because it can be quite difficult starting and managing a successful business and raising a functional and united family at the same time. Wealth creation is long, hard work. Nonetheless, when it comes to the sustainability of family businesses and family wealth, there is no alternative to family closeness coming first.
So how is a functional and united family developed? Creating such a family takes time and is challenging, and it is about many things that certainly do not include neither work nor money. It is about being a compassionate father, or a loving mother. It involves being a loyal brother or sister, or perhaps a devoted son or daughter in law. It is about family members having genuine respect for each other, as opposed to the superficial type of respect that is feinted just to ensure you stay in someone’s will. It means staying close to relatives who are not members of the immediate nuclear family, such as cousins. United and stable families share love and affection and the members care deeply for one another. They also share a strong set of common values that leads to the one factor that is the very foundation of families in business that survive for several generations: trust. Without trust a family business, along with any wealth it has generated, is almost certainly doomed to fall apart, normally within a short time after the first generation has passed. For the dysfunctional family wealth is the fuel that is poured over the fire of mistrust that practically assures its self-destruction.
Once there is in place a united family that is trustful and shares a set of common values then you can form a family council and write a family charter. It is then that you can set up family business governance as well as take legal and tax advice. It is then that you can look at inheritance and succession for the next generations. And the natural place for all of this to happen is the family office. A family office is much more than a place that looks after investment and real estate portfolios. The family office can and should be the fruit of a family that is united in values and deeds. The family office will ultimately be the vehicle that will help ensure longevity for the whole family enterprise - the wealth and the businesses. I run a family council and after numerous and difficult family meetings a senior family member thanked me for helping hold the family together. This is a prime example of how a family office can support the perpetuation of a family, its businesses and its wealth.
Families that set up and manage businesses often think and speak about leaving behind some sort of legacy for future generations. This is often envisaged as a business empire or a pot of considerable wealth. Yet the real legacy we leave behind are the next generation, our children. Devoting ourselves to their happiness, health and education is the bedrock on which the longevity of a family enterprise is built, so that ‘when I die’ there will be continuity.
Amer Al-Baho is the Director of a Family Office based in Mayfair that he established in December 2014. He studied at Oxford University and received his PhD in International History from the London School of Economics and Political Science in 1997. After a successful10-year career in the oil & gas industry, the entrepreneur in him decided to change career paths, moving from Italy with his young family and returning to London to enter the world of banking and finance with UBS in 2007. It was a move that proved well worth the many challenges he faced as it established him as a reputable wealth advisor and strategic relationship manager for high net worth individuals. His strengths of building long-lasting relationships and creating wealth have helped him to provide a unique family office offering to his valued clients.