Aligning family goals with financial actions

In the complex realm of securing generational financial success, recent insights from the 2023 Citi Group Global Family Office Survey reveal a concerning misalignment between family concerns and their corresponding actions. This disconnect poses significant challenges in preserving wealth and achieving long-term financial stability across generations.

Key Findings: Family Concerns vs. Actions

Top Family Concerns: The survey highlights three primary concerns among families:

1. Preserving asset values (68%)
2. Preparing the next generation for responsible wealth ownership (60%)
3. Ensuring a shared vision and goals for the family (52%)

These concerns are set against the backdrop of external factors like inflation, interest rate fluctuations, and geopolitical dynamics, such as US-China relations, influencing financial markets and economic stability.

Family Office Focus: Despite these concerns, family offices primarily concentrate on wealth (74%) and investment management (55%). This focus often overshadows crucial aspects like fostering family unity and continuity, which only receives a 21% focus.

The Gap in Preparation and Communication: A stark insight emerges when considering the research by Roy Williams and Vic Preisser on Generational Financial Failure, which attributes 85% of failures to poor communication and inadequate preparation of heirs. Currently, only a minority of families have formalized approaches like family constitutions (32%), leadership succession plans (28%), and next-generation education programs (21%).

Philanthropic Considerations: While families acknowledge the impending generational shift in philanthropy, their actions have yet to fully adapt to this transition. There’s an emerging trend to integrate philanthropy with overall wealth planning, yet this still requires more focused attention.

The Inconsistencies at a Glance

• Predominant focus on wealth and investment management, with less emphasis on family unity and continuity.
• Persistent concerns about preparing the next generation and establishing a shared family vision.
• Uneven progress in the professionalization of family office operations.
• A notable lack of comprehensive leadership succession planning.

The Critical Question: Why the Focus on Short-Term Gains Over Long-Term Legacy?

Despite clear awareness of the threats to securing generational financial success, many families remain entrenched in resolving immediate issues, often at the expense of their long-term legacy. The crucial elements of family unity, effective communication, trust building, and preparing the next generation are key to establishing multi-generational financial success. Yet, the inclination towards short-term thinking continues to overshadow these essential long-term goals.

Closing Thoughts

The journey to generational financial success is multifaceted, requiring a balanced approach that integrates immediate financial management with long-term strategic planning and family dynamics. As families navigate this terrain, aligning their actions with their expressed concerns will be pivotal in securing a sustainable and prosperous legacy for generations to come.

Survey