Family Governance Advice

For nearly every wealthy family, at one stage there is a reflection point whether the family setup is in proper shape i.e., the roles of each family member, the decision-making process, the estate planning and so much more. Our team advises on family governance in order to help sustain wealth and values through successive generations.

There are four main dimensions which need to be addressed when reviewing and improving an existing family setup:

1. Family governance

This is all about having a clear mission and family vision for the future, so that all family members can rally behind that. Certain family governance instruments can be used to set shared values to balance passions and ideals with goals and objectives.

aa) Family charter

The family charter defines the relationship between family members, shareholders, and managers (be it for the business that is owned by the family or other engaged managers). It also defines structures to align on important decisions, which includes pre-defined rules in case of family members’ conflicts.

bb) Family Council

In this forum, discussions on investments, strategy, philanthropy, infrastructure, and similar topics are addressed. This is particularly helpful to avoid family members acting in isolation or becoming receptive to bad advice. Furthermore, this forum allows to address sudden events in a structured manner.

cc) Estate planning

Estate planning is typically a longer process that ensures corporate control and the appropriate ownership structure in the event of either a private or a business succession. The outcome will give clarity on the wealth transition. Actively involving the next generation into the thought process and commitments is sometimes delicate, but often creates better outcomes.

By addressing the above topics comprehensively, the family value system can be enormously strengthened.

b. Legal governance

Many times, the legal-side of things seem to be “a necessary evil” and going through that process can feel cumbersome. Nonetheless, having a water-proof legal framework governing the ownership structure of the family and its businesses is of paramount importance. This includes the review of investment vehicles and structures, ensuring these are up to date and fit for purpose. Also, compliance processes are getting more and more relevant and need constant reassessment.

c. Investment governance

Among the family members there should be an aligned philosophy on how to deal with investments, be it traditional investments like real estate, venture investments like new start-ups, or the financial investments within a bank’s financial assets portfolio. It’s often advised to set up an Investment Committee, consisting of own select family members and external experts, which can ensure that a professional investment process is adhered to. Most importantly, this also includes managing risks and defining the acceptable risk appetite for the family.

d. Operational governance

Lastly, administrative and organizational processes supporting a well-functioning family setup need to be in place. This aspect is often underrated, but can be extremely helpful to have everyone in the family on the same page – without stress and troubles. Comprehensive and sophisticated reporting tools can create transparency along the entire journey. Finally, staffing and employment topics as well as decisions whether to insource or outsource certain tasks affect the smooth operational governance of the entire family affairs.

Whether you are a family looking to transfer wealth to the next generation, or there is a major liquidity event which requires proper transition, having the family governance in optimal shape will help you to smoothly achieve your goals.

We at Kaleido offer a comprehensive “health check” across all governance topics above, ensuring that everything is ready for the future of your family. Guiding families as a trusted partner and mediator for all opportunities and challenges of the family to preserve wealth over generations is one of our core principles at Kaleido.

If you want to find out more about our expertise for strategic investment activities with focus on big themes that will shape and influence the next generation as well as getting full access to the entire collective intelligence and capabilities via our open architecture (best-in-class) approach, please contact us anytime here on our website www.kaleidoprivatbank.ch or send us an email at info@kaleidoprivatbank.ch.