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Making decisions on wealth strengthens family bonds, report finds

Morgan Stanley and Campden Wealth research on ultra-high net worth families in North America highlights the benefits of formal procedures when deciding on investments

Relationships within families can be strengthened by wealth decision-making, especially when formal procedures are in place, research suggests. 

The newly released study by Campden Wealth and Morgan Stanley, Family Decision-Making, found that 44% of members of ultra-high net worth (UHNW) families thought that decision-making had a positive effect on family relationships, while just 19% suggested it had a negative effect.

David Bokman, head of UHNW Resources for Morgan Stanley said, contrary to what might be expected, formal wealth decision-making “is proving to be beneficial for family relationships”.

“Advisers can be helpful in bringing families past the obstacles to that formal decision-making by being objective,” he said.

The research found that decisions related to investments tended to be more formalised than non-investment decisions, such as those linked to philanthropy. As a consequence, investment decision-making tends to be regarded as being more effective than non-investment decision-making, although only 44% of families have a written investment policy.

The research, based on a quantitative survey of 59 members of North American families with net worth greater than $35 million, plus in-depth interviews with 15 family members, also indicated that advisers can play an important role in wealth decisions: they are seen as influencing financial goals in 89 % of cases. 

In two-fifths of families (41%), a professional financial adviser is tasked with overall asset allocation, while 38% of respondents said that a family adviser or family office executive is used. 

In a third of families, advisers have executive decision-making power over tactical matters.

Dominic Samuelson, Campden Wealth’s chief executive, said financial advisers “play a very important role in family decision-making”.

“In seeking to service them as best they can, financial advisers should look to gain as wide an understanding into families as possible and think about their complete needs,” he added.

Advisers are recommended to demonstrate to families the value of formal decision-making procedures, including the use of family mission statements.


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