Why Family Wealth Should Be Run Like an Enterprise

FOR IMMEDIATE RELEASE

Families who are able to successfully manage their wealth often use the same best practices that are used to run a business enterprise, says Maria Elena Lagomasino, Chief Executive Officer and Founding Partner, WE Family Offices. They think of their wealth as they would any other business – managing it with a distinct purpose, focusing on best practices, succession planning, governance and decision making – they create a wealth enterprise. The result is that all the family members become engaged, constantly learning, and the likelihood of success is much greater, she elaborates.

A speaker at the marcus evans Latin Private Wealth Management Summit 2013, in Panama City, Panama, September 26-27, Lagomasino shares her observations on well run private wealth portfolios.

How can wealthy families make their wealth last for many generations?

When I consider the families who are the most successful and how they have managed their wealth, whatever their definition of success, they have typically managed their family wealth using the same best practices and resources that were used to create the wealth in the first place.

The good news is that most wealth is created through a business enterprise. Someone invests capital, builds a business, creates value, jobs and wealth. Managing, protecting and nurturing private wealth requires a very similar skill set.

Statistics show that most wealth does not make it past two generations. What often happens is the family sells the business, makes the wealth liquid and gives it to someone else to take care of it because they feel they cannot. As a result, the learning stops.

What happens next? What goes wrong?

Some wealth managers throw big words and concepts at families, and it can seem daunting, but it is not overly difficult. It is actually more business common sense than it is touted to be.

For example, when running a company, there is a mission and a strategic plan. The same should apply for private wealth. That means understanding how much you are spending, putting the right professionals on the right activities and managing them, communicating with stakeholders and putting the right processes in place to achieve the company’s objectives. It should be exactly the same when managing private wealth.

How should they train the next generation of family leaders?

A family of wealth needs to educate the next generation of wealth owners as early as possible. There has to be a plan around what they can expect, what role they will play, and what they need to know to manage the family wealth. Some of that may be technical skills, on investing or budgeting, while others may be values-driven. If part of the wealth is to be used philanthropically, the best way to help the next generation is for the wealth creators of the family to start role modeling the desired behavior, perhaps by starting a foundation and putting aside money for that purpose.

To teach the technical skills, education is necessary around accounting, legal, tax or investing, to make sure the next generation of enterprise owners make the right decisions. The earlier they start honing these skills, the easier it will be for them when they get older. It is like learning a new language.

In a company, the top of the house coaches and mentors the next generation of managers - it should be the same in a family.

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About the Latin Private Wealth Management Summit 2013

This unique forum will take place at the Trump Ocean Club, Panama City, Panama, September 26-27, 2013. Offering much more than any conference, exhibition or trade show, this exclusive meeting will bring together esteemed industry thought leaders and solution providers to a highly focused and interactive networking event. The Summit includes presentations on jurisdiction management, family governance, portfolio construction and risk management, and preparing the next generation.

For more information please send an email to info@marcusevanscy.com or visit the event website

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