Succession planning among family offices worldwide is moving at a glacial pace despite families standing on the precipice of a huge transfer of wealth, the new Global Family Office Report warns.
Less than half (43%) of global families surveyed by Campden Research said they had in place a method of developing new leaders to take control and sustain family wealth and business. For The Global Family Office Report in 2016, Campden Research asked respondents when they expected their next generation to take over and nearly 70% said within the next 10–15 years. The same year, family offices ranked succession planning as their number one governance priority.
However, the 2018 report found an increase of only one percentage point within those families with plans now intact. Virtually half (49%) of families surveyed admitted they did not have a succession plan at all.
“As the next generational transition nears, which will spur a seismic shift in wealth globally, it is important to maintain a keen focus on planning for the future, to help ensure a smooth and successful transition,” the report said.
The need for succession planning was particularly acute in Asia-Pacific, where only 39% of family offices said they had a succession plan in place—the lowest proportion of any region.
Less than half (42%) of families in North America said they had succession plans, which surprised researchers “given the sophisticated legalistic nature of the region.”
Perhaps unsurprisingly, given their multigenerational longevity, European families were the most likely (47%) to have a succession plan in readiness.
Next-generation family members were taking a more active role within the family office, indicating the transfer was already in progress. Among the next generation of family members, three in 10 (29%) family offices now held management or executive roles, while 23% sat on the board.
Over the next 30 to 40 years, $30 trillion in financial and non-financial assets is expected to pass from Baby Boomers to their heirs in North America alone, according to Accenture.
“Recognising the importance of succession planning with regard to the smooth transition of business ownership and wealth inheritance from one generation to the next, and the accepted wisdom that it traditionally takes up to 10 years to effectively arrange and implement a succession plan,” Dominic Samuelson, chief executive of Campden Wealth, said.
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