Managing Family Wealth

The Henley Family Office Program

© 2021 | Walid S. Chiniara
Managing Family Wealth – Preamble

The first thing that comes to mind when we hear the term “family wealth” is assets, real estate or otherwise, investment
portfolios, diversification, maximizing profits, etc. …

In reality, however, and within a family business context, family Wealth transcends financial capital, and includes, inter alia,
human, cultural, intellectual, societal, etc. …

This Module, will discuss family offices, the umbrella under which all the components of a given family’s Wealth are
clubbed and managed.

Experience has shown that successful family offices, are those who:
• Adhere to a common purpose and abide by a strong code of ethics;
• Invest in professional and like-minded people;
• Embrace technology;
• Nurture trust and respect; and
• Instill a culture of communication [radical transparency]

Topics covered

• Understanding the Family and the Relationship among Family Members

• Values, Mission and Goals that Drive a Relationship
• Governance Framework / Family Charters
• Time Horizon, how Material?
• Ethical considerations and the Root Cause of Success 2
Walid S. Chiniara, in numbers

≈40 Years 100s

1 practicing law
across 5 continents
6 of conferences
lectures, and books

≈25 Years > B$500

2 exclusively serving
business families
7 under management

3 + 10,000
interviews 8 75
countries

4 160
families 9 +1,500
NextGen

www.walidchiniara.com
5 + 250
family leaders

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The Family and its Wealth

The challenges ahead

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The ecosystem defining Family Wealth is
comprised of a complex web of
elements and sub-elements that
cohabitate under the same roof.

Family

Family
finances

Family
business

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As the term is commonly used in the literature, a (single) family
office is nothing other than a body (legal or virtual) that is
entrusted with managing the Family Finances, i.e. all the wealth of
the Family, other than the wealth related to the Family Business.

Like any other entity, a family office has its own stakeholders,
decision-making body, source of funding, reporting mechanisms,
and rules of engagement.

Like a family business, a family office is a partnership.

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A Partnership

1. Between two or more 2. who believe that the 3. and who intend to build
individuals who (happen to whole is greater than the something extra-ordinary.
be family members) agree sum of its parts …
to pool their resources
together …

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This being said ….

Not all partnerships are meant to be

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Research into different types of partnerships shows that:

1 The rate of failure of mergers and acquisitions and of joint ventures ranges from 50 to 90%.

2 The rate of failure of marriages ranges from 50 to 90%.

3 The rate of failure of family business transfers ranges from 50 to 90%.

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How to beat the odds

Partnerships … root cause of success

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 The Parties to
a partnership

The interaction between three factors

The Dynamics The quality of

among the Parties communication

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1. The parties in a relationship

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 YOU ME
Striking the right balance between
what “I” want and what “YOU” want,
in order for “WE” to triumph.

WE

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2. The dynamics among the parties in a relationship

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 LOVE
Nurturing and sustaining
a genuine sense of communion
among the parties.

RESPECT TRUST

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3. The quality of the communication the parties entertain
Communication, the glue that solidifies the relationship among the parties

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 The art of maintaining the
channels of communication open
at ALL levels and at ANY cost.

Internal
Horizontal
Vertical
External

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The Sustainability of a Family Office

Its survival in the hands of the NextGen and after them, their own NextGen … and so on

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Sustainability is not achieved in a linear manner

It is achieved through an evolutionary looping process,

comprised of repeated cycles of successes and failures.

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Governance

The ultimate scalable solution

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Governance is about

1 Building Institutions; and

2 Protecting said institutions with Rules;

3 Devised BY the Partners, FOR the Partners.

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The primary objective of introducing good governance

1 Give a voice to ALL the family members.

2 Move from autocracy to democracy;

i.e. from WE the Sun King, to WE the Family.

3 Institute a culture of communication, and

Introduce peace and harmony at home.

4 Protect the minority from the majority, also

Protect the majority from the minority.

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It also helps achieve the following:

1 Establish a real separation of powers, and a real

separation of business matters from personal matters.

2 Professionalize relationships at the three levels:

Family, Business and Private Wealth.

3 Introduce a system of checks and balances, based on

empowerment, accountability, and responsibility.

4 Instill discipline and rigor.

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To ACE it … you need to FACE it
Simplicity overlooked

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How to get from A to Z

F A C E I T

The 7-Step Methodology™

Family Charter
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The 7-Step Methodology™
The power of conversation

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The 7-Step Methodology™

Know to Know your

1 give and take
2 family 3 Know your
assets

Know your Know

4 values
5 yourself 6 Know your
options

Know to
7 conclude

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Resulting in …

1 Keeping emotions in check, and

Separating Family Affairs from Business Affairs.

2 Introducing a Culture of Checks and Balances.

3 Securing Communication Channels to Preempt Potential Conflicts.

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The whole Encapsulated in a Family Charter

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A Family Charter is …

1 A charter of trust.

2 Also, a partnership agreement.

3 Enforceable and binding among its signatories.

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 1. No need to look for the holy grail
• It need not be perfect
• It is aspirational and evolves as the needs of a family evolve
• It is tailor-made, and remains a perpetual work-in-progress

A family charter is not an end in 2. Embark on a conversation instead

itself, it is a means to an end. • Going through the journey breaks barriers and builds trust
It documents the agreement • Introduce a culture of communication
reached among the family members • Give and take … at the pace of the slowest family member
at a given time in their life cycle.
3. The most effective family charter is the one written by the family itself.
They, alone, are responsible for its success and for its implementation
• A family may secure the help of third-party experts
• Often, they are invited to hold the pen on behalf of the family
• However, at the end of the day, the Family needs to embrace the final result

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