When families assess their wealth, it’s not only about the assets they possess but also about the legacies they want to leave behind. The interwoven tapestry of family wealth, business, and tradition requires careful handling. This is where the knowledge and experience of a financial advisor and the concept of a family office can be of great help.

1. The Need for Professionalism Over SEW

Kosmidou & Ahuja (2019) highlighted the pivotal role of professionalization in innovation. Socioemotional wealth (SEW) emphasizes the emotional value that family members associate with their family firm. But what happens when this SEW is missing? Here lies the value proposition of financial advisors. Their external perspective, coupled with professional acumen, compensates for this gap, guiding families toward sustainable innovation.

2. Reconstructing the Traditional Path

For family-run businesses, the age-old adage has been to prioritize tradition. But as Harrington & Strike (2018) mention, it’s time for a paradigm shift. Merit should take precedence over tradition. Economic rewards should reflect an individual’s contribution rather than lineage. Financial advisors play an instrumental role here, ushering in a culture of holistic wealth planning. Their approach is not just about managing assets; it’s about reimagining how family businesses perceive value and success.

3. The Centrality of Succession Planning

The continuity of a family’s legacy often hangs in the balance of successful succession planning. It’s a recurrent theme in family business literature, emphasizing the advisor’s role in this aspect (Strike, Michel & Kammerlander, 2018). Financial advisors, with their holistic financial planning approach, streamline this transition, ensuring the torch is passed seamlessly to the next generation.

4. Knowledge Transmission – The Bedrock of Legacy Planning

Grubman & Jaffe (2010) propose an interesting model for advising families – leveraging knowledge resources. Financial advisors can direct families to select readings, videos, or other materials. With a relationship manager by their side for coaching and discussions, families not only acquire knowledge but also the tools to apply it, ensuring the legacy is built on a foundation of informed decisions.

5. The Role of Most Trusted Advisors (MTAs) in Bridging Logic Gaps

Every firm operates on business logic. Concurrently, every family thrives on family logic. These logics don’t always align, especially when a firm’s focus is process-driven. The bridge between the entrepreneurial spirit and familial harmony is the MTA. They mediate, ensuring the ‘can-do’ spirit doesn’t clash with the familial ‘let’s take a step back and reflect’. Moreover, emotional attachments can cloud judgment. When the principal is emotionally invested, but the rest of the family isn’t, disputes can arise. Here again, the MTA steps in, acting as an unbiased moderator, ensuring both sides are heard, and common ground is found.

6. Liabilities – The Often Overlooked Half of the Wealth Equation

Assets are just one side of the coin. Liabilities, often the more intricate part, require astute management. As Sommer & Lim (2022) observe, even the most confident of clients, well-versed in managing assets, may falter when it comes to liabilities. Financial advisors, with their vast experience, can aid families in managing these liabilities, ensuring the wealth pool remains untainted.

In Conclusion

Family offices, holistic wealth planning, and succession planning are not just financial terms; they embody the values and principles that protect a family’s legacy. Financial advisors, with their extensive knowledge and experience, are the trusted guides who help families navigate this intricate landscape, ensuring that their legacy endures the test of time.