Making a success of succession

Making a success of succession

Debjani Raffan, head of UBS Wealth Management Scotland, tells Bryce Wilcock how the company is helping wealthy families across the globe plan for the future.

Transferring wealth from one generation to the next can provide families with a real headache but it doesn’t have to be such an arduous task. In a new report titled “What’s it all for?”, UBS highlights some of the real challenges and dilemmas faced by families when it comes to succession planning.

Through eight case studies, the report delves into scenarios ranging from what happens when a husband and wife don’t agree to how to cope with complicated family structures and how to involve future generations in the planning process.

“The question of what wealth is fundamentally for has no single answer, and will be a deeply personal matter for most individuals,” the report points out. “Is wealth simply to be enjoyed by the people who have made it?

“Those with children and grandchildren will usually feel a sense of responsibility to their descendants. Setting them up in life though, without taking away their drive and incentives for success, is a complicated task.”

Debjani Raffan, head of UBS Wealth Management Scotland and a client advisor, said “A lot of families are very comfortable with their own family set up but at some point, their family unit expands to involve sons-in-law and daughters-in-law and that’s when things begin to get much more tricky.”

The first of the eight case studies features a husband and wife duo who had disagreed on the right thing to do with their wealth. Husbands and wives often share the same values and attitudes in discussions about family wealth; however, this isn’t always the case. From time-to-time, they can have different views on the big questions around succession, such as how to handle their wealth or what to do with the family business.

“My wife has a clear view that our children should make their own way in the world, but I feel that they face very different pressures now compared to when we were in our 20s,” the husband said. The pair then sat down with an adviser from UBS and were able to structure a plan that suited both of their needs and desires.

Another pressing concern for many families is choosing how to distribute wealth and assets to multiple children. It can be quite straight forward when a family only has one child but how do you remain fair and please everyone when there is more than one?

This can throw up an even bigger challenge when a business is involved. Two of the children may want to get involved in the business and another might have no interest. Then, which roles do they take up and how is the third compensated for missing out? If families misjudge the situation and get these decisions wrong, it can sow the seeds of lasting resentment, so it is understandable why it is a worry for many families.

The third case study featured in the report analyses a grandfather who had initially intended to divide his wealth 50-50 between his two children, however, as time went on, circumstances started to change, and three grandchildren came along.

He also decided one of his children wasn’t financially responsible enough to be given half of the family fortune and wanted to change his will. With this in mind, he changed his plan to a five-way split of the company shares between his two children and three grandchildren, who were already grown-up. Unfortunately, the grandfather died before his will was formally redrawn. Relationships in the family have since suffered badly, with lawyers now involved on all sides.

Debjani“With so much wealth now in the hands of baby boomers, situations can now be more complex and involve multiple generations,” the report highlights. “We often think of wealth being transferred to people when they reach the age of 18 or 21. Because people are living longer, and earning for longer, much wealth now transitions to people who are already in their 30s, 40s or even 50s.

“Sometimes, wealthy couples only start taking these conversations seriously in their 60s. By then, their children will be adults and have firm views of their own. It’s possible that there will also be grandchildren to consider and the temptation to skip a generation becomes much more real.”

Another factor to consider, which is high on the agenda of many people, is leaving money behind to charitable causes. Philanthropy plays a key role in wealth management and is also a topic close to the hearts of those at UBS. Whilst the majority of people are happy to use their wealth to help their children succeed in life and achieve their goals, many also want to use their wealth to achieve something else, for society or for those less fortunate.

UBS can help its clients identify and get involved in charitable causes through its dedicated philanthropy team, which ensures that the company’s clients individual philanthropic goals are achieved. Raffan adds: “We see a lot of clients involved in philanthropic projects and that is where the next generation is very frequently first involved in the family money.”

The fifth topic addressed in the report is one that is encountered by many and can be quite complicated for families when planning for the future. That is, when the next generation get married, what happens then?

The report says: “When it comes to wealth, family structures have always been complicated. With people living longer, having multiple careers and sometimes multiple marriages, the issues can now be more tangled. There is no set formula for ‘blended families’, with children from more than one relationship. Each situation will be unique and will require a unique solution.”

If one thing is for sure, nothing dissipates wealth as quickly as divorce and remarriage and this is something the team at UBS is all too familiar with, having advised thousands of people on the issue.

Property and education is another common factor that arises. “How do I ensure my children have a roof over their head?” and “How do I ensure they get the best education?” are just two of the questions often asked by those worried about their children if anything were to happen to them.

House prices have sky rocketed over recent years and so have private school fees. It is now widely accepted that it is almost impossible for young people to get onto the housing ladder without support and most wealthy people will do all they can to prevent their children from struggling.

“Whenever and however parents try to help, they will usually want to do so in ways that don’t take away their children’s desire and ability to find their own path to success,” the report says. “Here the adviser can provide an external sounding board, helping clients map out their goals with clarity and precision before suggesting the right financial solutions for each situation.”

One of the most commonly forgotten factors highlighted is disclosure and discretion. Many wealthy families may decide that complete transparency involving all the generations is the only sensible way to go about it. Talking about the extent of personal wealth is, however, quite often difficult. Friends and colleagues may treat you differently if they think that you are “rich”, and there is often the worry of potential stigma for children at school.

UBS’s advisers often help prevent its clients from being affected by this by working closely with them to provide financial training and educating the younger generations about the value of money and the responsibilities that come with wealth. As Raffan explains: “A client and their family wanting to talk about how to protect or enhance the lives of the next generation need to be armed with the information about what is possible and what is usual.

“UBS has a lot of experience helping the next generation and it can start as early as the family feels is suitable. We can have small individual savings accounts for children and young adults and give them the experience of investing.

“We also have a number of next generation plans where children can talk to other children in another situation, they can have group exercises and learn a little bit more about the world of investing, the world of banking and the world of wealth.”

The last of the topics covered in the report analyses death and taxes, which – as the common adage goes – are the two things in life that are certain for us all. Everyone wants to leave as much as they can to the people and causes they love, which is why the tax burden has always been a major talking point when dealing with estate planning, and for good reason.

The report by UBS certainly highlights some of the most pressing issues associated with succession planning and some of the best ways to address these concerns. However, as the report points out at the beginning, no two families are the same and every family will have different ideas on how best they would like their wealth dealt with.

To find out more download a copy of the report please visit

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UBS Wealth Management is a business division of UBS AG which is authorised and regulated by the Financial Conduct Authority.