FWR recently talked to Jill Shipley, head of governance and education at the international family office, about the challenges family-owned businesses have in getting succession right and avoiding costly mistakes.

This industry endlessly crackles with conversations about “intergenerational wealth transfer,” and Family Wealth Report has reported and written about it a great deal. But it is clear that there are still problems to fix.

For example, the PwC 2023 Family Business Survey showed that almost three-quarters (72 per cent) of family businesses want to ensure that the business stays in the family. However, unless a robust succession plan is in place, businesses are going to scramble to figure out a viable successor, and sell up. LVMH Moet Hennessy Louis Vuitton, the French business conglomerate, faces such a position, but so do many others, albeit not always in bright media lights. 

The issue of “succession” has become so important that a lurid – and eagerly watched – TV drama of that name was made. Leaving aside the biases of television scriptwriters, there is no doubt that succession of family businesses and wealth has caught the public mood. People, particularly those in the high net worth brackets, want solutions and guidance. 

With that in mind, Family Wealth Report recently interviewed Jill Shipley (pictured), who is head of governance and education at AlTI Tiedemann Global, a multi-family office. (See a related story about that firm’s recent M&A deal.)

FWR: In very general terms, how much of the work that AlTi Tiedemann Global does is focused on transition/succession advisory and guidance work?
Shipley: We take a holistic approach to wealth management. It involves not only preserving and growing capital for one’s financial benefit but also focuses on enhancing our client’s human, intellectual, social, and spiritual capital. We help families define and achieve the impact they want their wealth to have on themselves, their family, and society – aligning their actions with their values and ideally leaving the world a better place for generations to follow. Within this mandate, transition and succession planning is a crucial component of the integrated advice we provide for multi-generational families.

Legacy and transition planning is one of the six focus areas of our Governance & Education practice. We work with our clients to design and implement a proactive multi-generational roadmap grounded in shared values that is flexible so it can change as the family or the enterprise grows or evolves. Further, we are seeing a growing number of rising generation family members wanting to engage in decisions about their family’s wealth.  

They are eager to gain the skills and experience for being good stewards. This leads to the need for formal and informal education on technical topics such as financial literacy and estate planning as well as the social and emotional topics of managing a life with significant wealth. Learning and development are often overlooked but we believe they are vital aspects of legacy and transition planning, so we focus a considerable amount of time on this area as well.

FWR: It is interesting that according to the PwC 2023 Family Business Survey, 72 per cent of family businesses want to ensure that the business stays in the family. Yet given the points about NextGen attitudes, that does not seem very likely. Is there a big gap between what people want and what’s going to happen?
Shipley: From my vantage point, both the senior generation and the next generation can achieve their dreams. The next generation does not need to be the CEO or successor to keep the business in the family. The rising generation can pursue their professional goals outside the family business and still be responsible owners in the business. In fact, as the business and family grow, it is a best practice to create greater formality and structure in the business. In some cases, the most successful scenario includes a professional management team running the business day to day with an oversight board made up of family owners and independent board members.

The key to success is fostering open communication between generations. In some cases, it is our recommendation to discuss as a family the option of proactively selling the business. Selling does not mean a family’s legacy is ruined. Often the liquidity event can create exponential opportunities for additional entrepreneurship, collaboration on the management of the wealth, creation of a family office, and/or changing the world through a charitable vehicle such as a donor advised fund or family foundation.  

For some families, the best decision for the individuals and the family is not to be tied together in any way. I have seen families become closer when they are no longer forced to be together in business or philanthropy. Financial resources can be used independently as a tool to fuel individual wellbeing, and even family fun.

FWR: Do you think the changed economic conditions we are in (inflation, rising rates, post-pandemic adjustments, politics, taxes) have a specific influence on the sort of conversations you have with clients?
Shipley: Absolutely. Challenging dynamics in the economy and geopolitical arena impact our clients’ mental health, personal wellbeing and, in some cases, their family relationships. Before the internet and social media, you could go to family a dinner with no knowledge of a relative’s extreme or opposing opinions but today these polarizing views are in our face non stop.   

FWR: In broad terms, do you see younger adults of clients you deal with being interested in business overall, either in starting up firms from scratch, or running existing ones? Is the younger generation a very “businesslike” one?
Shipley: While there will always be stereotypes of uninterested youth in families of wealth, for the most part this has not been my experience. The clients we work with are intentional with their efforts around preparing family members for a life with significant wealth and for many an entrepreneurial spirit is part of the family’s DNA. Overall, the younger generation is more purpose-driven than profit-driven. Many of the rising generation family members I work with prioritize family relationships, meaningful work, and being a responsible steward of financial wealth, family legacy and/or the family business.

Leaders, especially founders, are challenged with thinking about, planning for, or implementing a strategy to let go of the reins and face their mortality. These conversations can be scary and uncomfortable, although vital to the long-term sustainability of both the business and the family relationships.  

On the other side, younger generations stereotypically have different values from their parents and grandparents, striving for more work-life balance and/or meaning and purpose in their work. A key driver for Generations Y and Z of talent when seeking employment is identifying a business whose values and mission align with their personal beliefs.

FWR: Business transfer is not just from an older generation to a younger one, but also “horizontal” – between brothers, cousins, spouses, etc. Do you think this gets overlooked? For example, when a woman is widowed and wants to step into a role, are their challenges fully appreciated? Or when it happens the other way around?
Shipley: I agree there is an opportunity to focus more intentionally on the opportunities and challenges that arise across a generation in succession and transition planning. In some cases, a founder chooses to put siblings in equal leadership roles to avoid having to select one successor and deal with the interpersonal implications. In my experience it is difficult not to have one key decision-maker. 

For large, complex businesses with different business lines I have seen siblings or cousins take on divisional leadership roles, but this requires a broader leadership group to make overarching business decisions. In some cases, spouses may make the most qualified successor, but families are worried about the implications of potential separation or divorce on the enterprise. We recommend that families think deeply about the options and implications of transition decisions and ensure that stakeholders are involved and informed.