Steven Nathan: What does success look like for your family's wealth in thirty years?
Every family fortune begins with someone: a wealth creator who started a business, made the investments, took the risks and, over decades, built substantial wealth for the family. Along the way they made the important decisions, usually with the help of a financial adviser, a stockbroker and an accountant. If that someone is you, a few questions are worth asking.
The difficulty is that much of what matters about the wealth lives in your head. Your spouse may know less about the family's financial affairs than you assume, and your children may see the results without understanding the thinking behind them: why a business was kept when it could have been sold, why money went offshore when it did, why certain investments were avoided altogether. You will also have made mistakes along the way, as every investor has, and unless those expensive lessons are shared, the next generation is likely to pay for them again.
There is a harder truth too. You have probably relied on the same advisers for many years, often with good reason. But your family's affairs may have become more complex, and it is fair to ask whether the advice has kept pace. Your family may now need broader investment expertise and advice that is clearly independent of product sales.
Before you step back, one question deserves more attention than it usually gets: what does success look like for your family in ten, twenty or thirty years' time? Is it a business still in family hands, or capital structured to give each child independence? How much should be preserved and grown, and how much should be used on education, opportunity and causes the family cares about? Is it a family that can still sit around the same table and make decisions together about how its wealth is stewarded? Without a clear answer, nobody can judge whether the current arrangements are fit for purpose.
The practical questions follow from there. Does the investment strategy match the family's goals, cash flow needs and time horizons? Are the trusts, offshore structures and wills still right for children who may now live abroad, and has estate duty been properly planned for? Who will be involved in decisions once responsibility passes on, how will those decisions be made, and is the next generation ready?
This is the work of a family office. It has two sides: managing the wealth well and preparing the family to steward it. The first calls for institutional-quality investment and financial expertise, applied to a strategy built around the family's goals and coordinated with its tax, legal and fiduciary advisers. It also calls for independence. A family office that earns nothing from the products it recommends has only one interest to serve, the family's, and that remains rare in South Africa. The second side is helping you pass on understanding as well as assets, and establishing clear ways for family members to be heard and decisions to be made as responsibility changes hands.
A good place to start is a confidential Family Wealth Review. We sit down with you, and where appropriate your wider family, to understand what success looks like, consolidate the family balance sheet and assess whether your current strategy, structures and succession arrangements will get you there. You come away with a clear view of what is working and what deserves attention, whether or not you go on to work with us.
You have spent a lifetime building something for your family. Deciding what it should become, and making sure they understand how to carry it forward, may be the most valuable thing you still have to give them. If these questions feel familiar, I would welcome a conversation.
Steven Nathan CA(SA), CFA Founder, Centric Family Office
Former Managing Director, Deutsche Bank, and founder of 10X Investments.
Centric Family Office is a jurisdit representative of Centric Wealth Advisory (Pty) Ltd - FSP 47766.