This research conducted by Withers Worldwide looks at changing dynamics of family wealth between generations and between continents from US, to Europe to Asia. For many family businesses looking to pass the baton to the next generation, some of the considerations include:
1. Whether to carry on the business or cash out and become a “financial family”
2. Whether to establish a new family owned enterprise
3. And/or to whether to leverage wealth for social good through philanthropy.
Across Asia longer lifespans and globalisation are seeing a clash between the generations on the question of ‘what next for the family business?’
Much of Asia’s economic success is intimately bound up with the strength of its business-owning families. Outsiders have generally not been invited to the decision-making table. Globalisation, longer life expectancies and education of the current generation who are learning the best of business practice at the world’s top universities, is leading to different points of view, challenging traditional cultural and inter-generational practices.
According to one research participant: “In Asia, we have three generations living side by side. Generation one is all about legacy. Generation two is filial and Confucian, and generation three, my generation, is saying that we have been away from Asia for 15 years and while we have a sense of obligation, we also want flexibility. We have got two generation shifts happening at once, so the hard business stuff has become the easy stuff, and the soft family stuff has become the hard stuff”.
It is not uncommon for first generation wealth creators at the pinnacle of their success to have the sudden realisation that their own succession is in doubt. To cope with this complexity, family business leaders in Asia are seeking to learn from the experience and best practices of families that have gone through.
The most common piece of advice these individuals sought to pass on was the importance of bringing in professional support early on. Whether that means bringing professional managers into the business or seeking professional advice to support family transition, outside opinion is vital to helping family businesses make decisions that are both good for the family and good for the business.
There are many strategies being used in this process: from formal education to family councils; from leading by example to leading from behind; from creating opportunities for entrepreneurship to philanthropic activity; and from giving a head start to giving just the bare essentials.
Regardless of the strategy, the lesson that came through most clearly was that each individual, regardless of age, generation or geography, has to be free to find their own way ahead in life.
You can download the full research report here: Withers – The Meaning of Wealth in the 21st Century.