Family Governance and Surplus Wealth
Sustaining Family Fortunes
Family Governance and Surplus Wealth: Sustaining Family Fortunes de-mystifies the topic of family governance and shows advisers and families how governance can assist with the challenges of managing and transitioning surplus wealth.
Family governance, which refers to the structures and processes families use to organise themselves and guide their relationship with their wealth, is a key tool in the transition of ownership and wealth between the generations, but it is neither well understood nor explained, particularly in the context of surplus wealth.
Family Governance and Surplus Wealth: Sustaining Family Fortunes, written by Russell Prior, an experienced consultant and adviser in Family Governance, Family Enterprise Succession and Philanthropy, de-mystifies the topic and shows advisers and families how governance can assist with the challenges of managing and transitioning surplus wealth.
It covers the characteristics and challenges of surplus wealth, why wealthy families need family governance and how family governance can help families with the successful transition of surplus wealth between the generations.
Key takeaways include:
Understand the need for a sense of shared purpose between the generations for surplus wealth and family enterprises, so it can succeed into future generations;
Determine ownership and leadership succession within the family enterprise;
Manage the balance of power and decision-making in and between the generations;
Prepare the younger generation for their role in a family with surplus wealth;
Prepare the older generation to let go of some responsibilities but show them how to take up new reins within the family;
Balance the interests of family members managing the family wealth or enterprise with those who do not, and with non-family members involved in the management of the wealth of business; and
Understand how major decisions can be taken within a complex family wealth structure or a family enterprise.
This title will be important reading and reference for all practitioners advising ultra-wealthy individuals and business families, including family business advisers, private bankers, lawyers, accountants, and financial advisers. It will also be of significant interest to ultra-wealthy family members and family office leaders.
Table of Contents
|Table of Contents||3|
|Part I: The challenges of surplus wealth||9|
|2. Surplus wealth||12|
|3. The human face of wealth||18|
|3.1 Fairness vs meritocracy||18|
|3.2 Encouragement of virtue vs punishment of waywardness||19|
|3.3 Control and conditionality (or ‘ruling from the grave’)||19|
|3.4 Secrecy driven by the fear of harm||20|
|3.5 Passing on nothing, giving it all away||20|
|4. Managing surplus wealth||21|
|Part II: The role of family governance in managing surplus wealth||23|
|1. Defining family governance||25|
|1.1 Open family communication||26|
|1.2 Valuing family overall||27|
|1.3 Competence in assigning responsibilities||28|
|1.4 An effective succession plan||29|
|1.5 Family conflict management processes||30|
|1.6 Maintenance of an effective family governance plan||31|
|2. Why do families with surplus wealth need family governance?||31|
|2.2 Family conflict||32|
|2.3 Communication issues||32|
|3. Family governance and transition||35|
|4. When and how family governance develops||37|
|4.1 Assessing a family’s natural governance||40|
|4.2 Development of family governance||46|
|Part III: Elements of family governance||65|
|2. Governance structures||68|
|3. Family vision statement||72|
|3.1 Wealth ownership and continuity philosophy||73|
|3.2 Purpose and objectives of the family’s wealth||75|
|3.3 The needs of the family||75|
|3.4 Benefits to society||76|
|3.5 The primary focus and vision of the family business||76|
|3.6 The next generation(s)||77|
|3.7 The family values||77|
|4. Elements of a family governance framework||79|
|4.2 Family council||79|
|4.3 Executive family council||90|
|4.4 Family assembly||93|
|4.5 Family branch assemblies||95|
|4.6 Family office||99|
|4.7 Family investment committee||119|
|4.8 Family education committee||125|
|4.9 Family philanthropy committee||136|
|4.10 Family arbitration committee||145|
|4.11 Family remuneration committee||152|
|4.12 Family employment committee||157|
|4.13 Audit and risk committee||166|
|4.14 Family code of conduct||171|
|5. Corporate governance elements||178|
|5.1 Management board of the holding company||178|
|5.2 Shareholders’ agreement||201|
|5.3 Valuation and discount||208|
|6. Trust governance elements||212|
|6.2 Purpose of the trust||216|
|6.3 Parties to a trust||220|
|6.4 Types of trustee||227|
|A final word||233|
|About the author||237|
|About Globe Law and Business||239|
It is a brilliant overview and a great contribution to how a family can address intergenerational issues related to wealth and wealth management.
This book is essential reading for anyone in the wealth industry looking after UHNW clients.
Charles Boulton, CEO
Great read, and very much a key read for UHNW clients and family office structures.
Consultant and adviser
Russell Prior is an experienced consultant and adviser in family governance, enterprise wealth succession, and family office advisory and philanthropy. He has worked with ultra-high net worth families from across the globe on governance and succession issues regarding surplus wealth.
The core of his work is helping his clients to understand the effects and consequences of the surplus wealth they have, for them and the generations that follow them. Critical to this is achieving harmony, balance and understanding between the purpose, the people and the management processes for their surplus wealth.
His career has spanned corporate banking, wealth management and international philanthropy and he currently leads the family governance, family office advisory and philanthropy practices at HSBC Private Banking, EMEA. He is chair of trustees of two charitable foundations in the UK - Bell Educational Trust Limited and the London Community Foundation. He previously served as a council member of the European Foundation Centre and chair of the UK Finance Hub, and has served as a trustee and non-executive director of a number of charitable organisations. Through this varied experience across different sectors and working with different types of organisation and entity he has seen first-hand the importance of functioning governance systems.
As well as working with families and individuals, he has written numerous articles and spoken at over 130 events on family governance and enterprise succession, as well as advising companies, banks and government agencies on philanthropy. In 2021 he was listed on the Spears 500 and Citywealth Top Recommended Philanthropic Advisors lists.