Succession planning is one of the most crucial aspects of family office management, a process which involves preparing for the transfer of leadership and ownership from one generation to the next.

Despite the importance of succession planning, a surprising number of family offices fail to adequately plan for this transition. According to the Global Family Office Report 2019, produced by UBS in partnership with Campden Wealth Research, only 54% of family offices had a plan in place. This is a concerning statistic, given the potential impact that a poorly managed succession can have on the long-term viability of a family office.

Fortunately, many heads of family offices are beginning to recognize the importance of succession planning. According to Northern Trust’s recent survey, 64% of family office CEOs expect a succession event in the next three to five years. This indicates that many family offices are taking steps to prepare for the future, but there is still much work to be done. 

Here are a few key considerations for any succession plan:

1. Start planning early: Succession planning should begin well in advance of any anticipated transition. Ideally, families should begin planning for succession as soon as possible, preferably when the family office is first established.
2. Clearly define roles and responsibilities: The planning process should involve a thorough review of the roles and responsibilities of each family member and staff member involved in the family office. This includes identifying potential successors and providing them with the training and experience they need to be successful in their new roles.
3. Communicate openly and transparently: Communication is key. All family members and stakeholders should be involved in the planning process and kept informed of any decisions or changes that are made.
4. Consider tax and estate planning implications: Succession planning can have significant tax and estate planning implications, so it’s important to work with a team of advisors to ensure that all legal and financial considerations are taken into account.

While this can be a complex and challenging process, it is essential for the long-term success of any family office. To learn more ways to develop a strong and proven succession plan, be sure to check our in-depth article.