Next Generation Transition - Reframing the approach

Matthew Millard-Beer
Matthew Millard-Beer

Managing Partner

Transition in a family office is much more than the simple passing of wealth from one generation to another. A new approach is required to meet an ever-changing world.

It is estimated that between now and 2045, $84 trillion of wealth will be transferred to the Next Generation, with $72 trillion passing to direct heirs. There is an increased moral hazard surrounding the positive impact of the world’s most wealthy, and so never before has effective transition between principals and the next generation within a family office been more important. But what are the key considerations in this rapidly changing world?

Itriom was lucky to be part of the UHNW Institute’s most recent webinar, “The Family Business in Transition: Rethink, Rebalance, Reinvent”. The lively debate around the topic of transition went to the very core of rethinking the existing models.  What’s clear is that traditional thinking about transition needs to change.

Succession

It may appear to be semantics, but transition isn’t the end of one era and the beginning of the next.  It is much more about the evolution of the family office through succession and continuity. As such it is a process, not an event, and a process which should be both planned and executed over a number of years. The planning and focus for transition should therefore not be too binary but more focused on consistency and the evolution of the family model.

More complex transitions

It is increasingly clear that principals or elders are working for many more years than previous generations, some well into their 80s before ill health or some other catalyst forces a transition. This means that often not just the next generation are already adults, but the generation beyond that, so the transition process may be across multiple generations at the same time. The simple labelling of principal and next generation is therefore too simplistic, and transition plans need to account for different paths and complexity spanning many stakeholders and geographies.

New roles for everyone

Often there is a single focus on those inheriting the wealth in transition, but the list of those impacted is far greater. Not least the retiring principal who may adopt a changed role, or a new area of focus, such as philanthropy. In some families, the retiring principal becomes a mentor to grandchildren, or becomes part of a Council of Elders able to step back from the day to day and take a much more deliberate strategic view of the family over multiple generations. Equally, there may be changed roles for other family members who can play a key part in supporting the transition, and building bridges to improve understanding between other family members. The principal may be a hands-on doer, and the process of transition can be traumatic emotionally, so the principal needs a clear strategy and choices supported by advisors. Self-reflection will be important if transition is to be approached succesfully. For the outgoing principal, the reframing of transition towards creating a legacy can be helpful in that it addresses the imbalance of power and takes a view beyond the immediate shift of responsibilities.

Peer-to-peer support

Feedback from those who have most recently been through transition suggests that peers in the family office space can be hugely valuable in providing both practical advice and support to a new principal. Peer-to-Peer groups should be secure and discrete, where new principals can be confident to seek advice. As with our own families, relatives can often have a fixed mindset when considering other generations, but the family needs to approach transition as a learning opportunity both individually and collectively. 

Often the focus can be on preventing wealth from spoiling children, but a transition is a deliberate period, for which planning needs to be deliberate and fire-drills prepared. Ranging from leadership development of the new principal to the future plan for the outgoing principal. Building a glide path towards transition creates a greater likelihood that both evolution and continuity will be achieved.

About the author:

Matthew Millard-Beer is CEO & Founder, based in Itriom’s London Office.

About Itriom

Itriom is the global impact platform helping leading families shape a better world. Itriom’s platform enables families to refresh and redesign their values, aligns them with the right UN Sustainable Development Goals, combining them in an agreed purpose and a Family Impact Charter. Itriom’s platform supports the development of impact initiatives and whilst providing discrete and secure spaces for peer-to-peer messaging and collaboration. Itriom’s core practices in leadership, geostrategy, and sustainability benefit clients by developing strategies to engage and support the next generation in building a lasting legacy of which families can be proud. 

About Itriom's Leadership Practice

Itriom’s leadership and resilience practice instils all-encompassing leadership in support of principals of leading families and the next generation preparing for family succession, transition and evolution. 

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Tim Boughton

Senior Partner
Practice Leader – Leadership & Resilience

Renowned family office thought leader, Tim works with UHNW families to ensure they are fully equipped to deliver their legacies inter-generationally and effectively.

Dr. Herb Castillo

Associate Partner
Practice Leader – Sustainability

Dr. Herb creates methodologies and frameworks for managing, measuring and assessing sustainability performance. His work identifies where maximum impact can be made.

Simon Hulland-Lucas

Senior Partner
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Simon harnesses research, liaison and networks globally to identify opportunities for Itriom, building the knowledge needed to deliver intergeneration legacies for UHNW families.

Matthew Millard-Beer

Managing Partner
Practice Leader – Strategy

Matthew is Founder & CEO of Itriom, providing solutions and a global platform for Ultra High Net Worth Principals and their families to engage in unifying purpose, enduring legacy, and sustainable impact.