Critical Wealth Leadership Role Transitions

In the wealth management field, there’s considerable focus on preparing the next generation for a transition of wealth, but spouses are likely to experience a transition first.

Discussion of the “great wealth transfer” estimates that $30 trillion will be inherited over the next 30 years, according to an estimate by Accenture. Of the top 1 percent of wealthy households, 95 percent are from the baby boomer generation-—76 percent made their own wealth, 87 percent of them are male, according to the Investment Management Consultants Association. Based on a 2014 U.S. Trust survey, 71 percent of those baby boomers are in their first marriage, and 76 percent of that group has children who will become next-generation stewards.

Wealthy female boomers who are 65 today can expect to live at least another 20 years, based on actuarial studies. In fact, it’s estimated that one out of three of them will celebrate their 95th birthday.

Given that husbands generally make the family wealth decisions, yet die before their wives, how do their spouses prepare to assume that role?

Many businesses dedicate significant time and resources toward succession planning. Similarly, large family wealth enterprises will benefit from planning for a smooth transition to subsequent decision makers.

The typical division of labor between married couples results in the spouses of wealth creators dedicating energies elsewhere for the family, such as raising children and managing the household. That can limit their involvement in the management of family wealth.

But the right process can support a smoother transition for a spouse assuming the key decision-making role. That process starts with the mapping, planning and management of the family wealth enterprise.

  • Mapping is critical to understanding every component of the family wealth enterprise, which will require leadership, governance and decision-making activities. It entails developing a comprehensive inventory of the family’s assets and liabilities, the ownership structures and associated decision makers, and the intended wealth-transfer plan. Analyzing the financial needs of the spouse and family and assessing cash sources and uses are important elements of the mapping process.
  • Planning happens after a comprehensive understanding of the components of the family wealth enterprise. This entails prioritizing what’s important: Will the wealth cover spending needs and enable a continued lifestyle? Are the proper providers in place to support the ongoing management of the enterprise? Are their fees and expenses appropriate? Do I have total control over decisions, or do others (such as trustees) participate?
  • Management determines how oversight and other ongoing decisions will occur. For spouses unaccustomed to making such decisions, this can be daunting without a comprehensive understanding of the mapping and planning components of this process. Experience shows that confident and prepared spouses are those who know what the family owns, what its financial needs are and how they’re sourced, and the plans for future transition of family wealth.

The transition from spouse to CEO of the family wealth enterprise should not be overlooked.

It should be noted that there are marriages in which partners share financial decision-making equally, as well as spouses who are financially successful in their own right, and spouses who are fully prepared to assume the responsibility of managing the family’s wealth.

Through a well-planned transition, spousal successors can collaborate with the next generation and thrive in their roles as caretakers of the family wealth and of the family itself. This component of succession planning is as critical for everyone-—today and tomorrow.

Julie Neitzel is a partner and adviser with WE Family Offices in Miami and a board member of the Miami Finance Forum. Contact her at or 305.825.2225.

No Comments

Post A Comment