Family offices now release wealth to children in stages, such as at ages 18, 27, 35.

[02:04]

"Lots of family offices today are including a discretion clause within wealth transfer, so that some of the money is released at age 18, some at age 27, some age 35, some at age 50 to the kids in the family."

[01:31]

"And basically to multi-generational wealth. It basically means what it sounds like when a patriarch or matriarch sells a business, takes a business public or has a lot of wealth. They often have a few kids."

[03:24]

"So you have to really get to know who you're working with before you have somebody actually provide multi-generational wealth management services for you. It should be obvious. But just be very careful."

Full transcript

That's richard wilson, coming to you from the swiss alps and the family offices group. I'm here at about 10,000 feet up in the mountains between zurich and liechtenstein. I'm here for a family office conference. What I wanted to talk to you about today is multi-generational wealth transfer and knowing how to manage multi-generational wealth management. Really, and this is such a critical thing within family offices but at general wealth management firms and if you're just a financial advisor or cpa, you might not deal a lot with multi-generational issues.

You might, but you might not deal with it a lot. It's really central to what family offices do for families and the bigger the family office, the bigger the family, or the more wealth being managed by the family office, the more important this is. I was speaking with somebody last week at a job interview meeting, actually someone might hire to work on our team to help grow the family offices group further, and they were actually asking about getting into the industry and gaining expertise and multi-generational wealth management. And really there's a few ways to do so.

One: you could go to work directly for a family office. Another way, which is probably a little bit more likely, is go work for a private bank or a trust company. Many times those companies will hire people with little or no experience to help them run their large operations, where a family office can be very picky on the amount experience you have, and they already want you to have the experience before they hire you most of the time. Um, so that's really how people get into the industry and you know.

I just wanted to define what it means. And basically to multi-generational wealth. It basically means what it sounds like when a patriarch or matriarch sells a business, takes a business public or has a lot of wealth. They often have a few kids. They have a few kids underneath them and you want to plan out how that money is transferred from one generation down to the next and then down to the next.

If you don't do that carefully, you'll pay a lot more taxes than you need to, you'll lose a lot more wealth along the way and you might lose control of who gets the money. If everything is split up automatically and evenly when you die. It might not be the best thing to do. Lots of family offices today are including a discretion clause within wealth transfer, so that some of the money is released at age 18, some at age 27, some age 35, some at age 50 to the kids in the family.

But at each stage, or at a few of the younger stages, it can be done at different levels or at full discretion of the older people in the family who are still alive. What that means is that if you have two kids who are responsible, they go to school, they take their life somewhat seriously, they're not spending all their money on a fleet of ferraris or, uh, you know, getting into things like drugs and alcohol abuse as like they're doing things that are responsible, then yes, they can get the money which is scheduled, but you can retain the power to not get to the money if you know they're just going to blow it on something irresponsible. So that's one of the trends that's kind of affecting multi-generational wealth management. Another uh tricky part of this area is knowing who to trust.

I was at a recent conference. I spoke at a family office summit in sao paulo and there's actually somebody from switzerland speaking there with me and they were talking about setting up trusts and trust vehicles in new zealand and singapore or cayman islands or bermuda and different places like that. But it's really tricky. You're not an expert in that space.

You might not know who to trust. You probably don't want to do something legal. That's too grey. So you have to really get to know who you're working with before you have somebody actually provide multi-generational wealth management services for you. It should be obvious. But just be very careful.

It's easy to get wined and dined or go to a fancy office and hire the first people that you meet with. You really should meet with people three or four times at least, once or twice outside their offices. Get to know them. Make sure you really trust them before we have them handle anything related to multi-generational wealth management.

That really is a long-term partnership and expert, hopefully, that you're going to start working with. So I hope there's a good summary and kind of 10,000 foot overview of how wealth can be transferred to different generations and some of the different trends and things which can affect this area of family office management. This is richard wilson, coming from switzerland, and the family offices group. Thank you for joining me and I'll see you again soon.