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Family Offices Lack Written Successions Plans

By Alex Padalka September 13, 2017

Despite their focus on family wealth, the majority of family offices don’t have written succession plans, although most are taking steps to remedy the situation, according to a recent report from UBS.

Sixty-nine percent of family offices surveyed by UBS last year said they expected a generational wealth transfer in the next 15 years. But only 32.7% of family offices have taken the time to put succession plans in writing, according to this year’s survey of top brass at 262 family offices worldwide conducted by UBS and Campden Wealth Research.

A full 45.7% do not have a succession plan at all, although a third of them are working on one, while 14.6% say they have a verbal agreement only, according to the report.

The figures are particularly troubling given that just 30% of generational transfers are actually successful, Sara Ferrari, head of the global family office group at UBS AG, says in a statement accompanying the report.

But many family offices understand the gravity of what Ferrari calls “an existential issue.” To prepare the next generation, 57.9% of family offices are offering them work experience at the family office itself while 44.3% place them at an outside financial institution such as an investment bank, according to the report. And 30.7% provide the next generation with dedicated investment training while 37.9% involve them in impact investing or philanthropy, the survey found.

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Getting the younger generation involved in impact investing is driven in part by the younger generation’s own perceived interest. Last year, the firm found that families with children born after 1980 are likely to boost impact investing, and this year’s survey found that more than 40% of family offices expect to add to their allocations in impact and environmental, social and corporate governance investments.