We recently hosted the second in our seminar series for 2021 – a Q&A on Family Office governance in conjunction with Dentons Kensington Swan. A number of interesting themes are playing out in the family office space in New Zealand, which is why we thought this was an important conversation. Firstly, there is succession planning and transfer of wealth to the next generation, who not only bear the responsibility for future generations, but want to put their own stamp on how funds are invested. For example, they are increasingly more conscious of leaving a positive legacy. Secondly, with interest rates at an all-time low, there’s more focus and attention on strategic asset allocation, which is key to wealth preservation, but also having the ability to take advantage of opportunities. Last but not least, mergers and acquisition activity is buoyant and business owners/founders are exiting at significant multiples either in trade sales, to private equity or through listings. This can be a hugely stressful time for people as they transition from one stage in their lives to another.
We heard from Catherine Savage, who’s on our Advisory Board and Henry Brandts-Giesen, who shared personal stories, based on their own and/or professional experience working with family offices. They provided their thoughts on the evolving family office sector in New Zealand, insights into the design, implementation and governance of family offices and common mistakes.
Catherine is currently an independent director on the Infratil Board and an Advisory Board member for Pāua Wealth Management. She is a highly experienced investor and director with substantial governance experience in the investment management sector. She has also served as the Chair of the Guardians of New Zealand Superannuation and an independent director of the Todd Family Office, KiwiBank and Pathfinder Asset Management.
Henry heads Dentons Kensington Swan’s private wealth team in New Zealand. He is an expert in helping individuals and families structure their assets. Henry routinely advises high net worth individuals and families, family offices, athletes, entrepreneurs and captains of industry as well as ordinary New Zealanders and their businesses.
We asked Catherine and Henry to provide their top tips for people on this journey, which is available to view above. Additionally, we have summarised the key learnings below:
- When considering the need to set up a family office, you should first be clear on the rationale for doing so and what you aim to achieve. This could include managing risk, preserving and enhancing the family’s legacy, consolidating assets, or professionalising family governance.
- Have a clear idea of what you define as ‘family’ from the outset, as this becomes more important as the family continues to grow.
- Setting up a family office will take time and it’s important to surround yourself with trusted advisers. These are individuals who you are comfortable to speak with anytime and use as a sounding board. As well as providing their experience and expertise, they can also engage with family members to help develop the family office in line with family values and objectives.
- Ensuring that family members continue to get together and converse in a way that they feel their opinions are heard should be key.
- Open and honest communication and explaining rationale for key decisions is important (separate ‘family’ from ‘family office business’).
- Understand ‘best practice’ globally and see whether you can work this into your plan.
- There should be separation and independence between advice and governance to reduce conflicts of interest and achieve better outcomes.
- For those who have created wealth, don’t let this stop you from investing it – these are two separate decisions.
- Keep structures simple and aligned to purpose.
- It’s important that we continue to educate future generations of family members on money matters and managing the family assets well before trigger events that lead to receiving wealth.
Given the level of interest and questions we had from clients, it’s clearly an issue people are grappling with, which is why we were keen to share the learnings. If however you’d like to know more, please feel free to contact one of our team and they’d only be too happy to help.
The information above and in the corresponding video clip is for general information only. It does not take into account your investment needs or personal circumstances and should not be viewed as investment or financial advice. We recommend you seek independent financial advice before making any financial decisions. There are no warranties, expressed or implied, as to accuracy, completeness or results that may be obtained from any information provided herein. Any statements regarding market or other financial information are obtained from sources which we and our suppliers believe to be reliable, but we do not warrant or guarantee the timeliness or accuracy of this information. Neither our information providers nor we shall be liable for any errors or inaccuracies, regardless of cause.