Posts in Planning

Fiducia Partners Insights - How To Begin Succession Planning In A Family Business

How To Begin Succession Planning In A Family Business

January 31st, 2019 Posted by Family Wealth, Planning 0 thoughts on “How To Begin Succession Planning In A Family Business”

Every year 70% of family businesses fail to successfully transition from the first generation to the second. It’s not surprising considering that PwC recently found that just 18% of family businesses have a robust, formalised and communicated succession plan in place.

In my experience this is often due to a perceived lack of urgency where business leaders would rather push on with running and growing the business than face up to the fact that they can’t run it forever. There are other reasons too why business leaders would rather not begin succession planning. While each family is unique, these are some of the more common ones I see:

  • Time pressure – business leaders are invariably busy and other matters are often prioritised.

  • Interpersonal conflict – family unity can be stretched when it comes to handing down the family business. Complex family dynamics can make the subject of succession a difficult topic and can create factions among family groups or staff loyal to one member or another. Instead of taking steps to try and stop this happening many avoid the subject altogether.

  • Communication difficulties – if communication within the business and family is already difficult this presents a problem for communicating succession plans.

As with many things, getting started can be the hardest part so while I always recommend drawing up a formal succession plan and making sure to communicate with everyone affected, there are a few ways you can begin that are better than doing nothing at all. 

First, create a plan detailing the key operational elements of the business in the event that you aren’t able to run the business, either temporarily or permanently. In the event of succession being triggered ahead of plan, this acts like an emergency backstop that should prevent early succession from being a crisis event for the business.  

Second, communicate with your ideal successor and other family stakeholders. Writing a succession plan without involving other family members (as well as key non-family members of the business) is likely to invite upset and discord therefore communication is paramount and should ideally happen long before a planned departure. Communicating such plans gives likely successors and other stakeholders a chance to voice their opinions and become excited about the business before they bear its weight. It’s also possible that likely or willing successors don’t yet have the skills or knowledge to take over and so early communication gives them time to seek the right experience, nurture the necessary skills and build their knowledge.  

Third, nuture potential successors to ensure they are ready to take over. Spending a year or two working closely with your successor before you step down should help make for a smooth and successful transition.

These three steps are just the beginning but I think they are the absolute minimum any family business leader should undertake to ensure the continued success of their business and family. If you would like to discuss succession plans in more detail with me please do get in touch.

If you found this week’s article useful, please let me know by clicking the thumbs up icon above or writing a comment. I really do appreciate it. 

Fiducia Partners Insights - Four Reasons To Rebalance Your Investment Portfolio

Four Reasons To Rebalance Your Investment Portfolio Now

January 10th, 2019 Posted by Investment, Planning 0 thoughts on “Four Reasons To Rebalance Your Investment Portfolio Now”

Portfolio rebalancing is something people rarely do despite being essential for any investment strategy. As all investors know, considering goals, risk tolerance and timelines to determine the right portfolio allocations takes time. But by not monitoring your portfolio and rebalancing it every now and again it can easily stray from your intended allocations. This is because different parts of your portfolio almost always generate different returns and the risk profile of different assets continually changes. Therefore I think it is good practice to rebalance annually and often take stock when the new year rolls around. 

To begin you need to find out whether you need to rebalance your investment allocations and by how much so you need to know what they currently are. This means totalling up all your stocks, bonds, cash and other investments to calculate the percentages of each asset class and type. Once you know what your percentages are and by how much they differ from your strategy you have to decide how you will rebalance. There are two ways to main ways to rebalance a portfolio:

  1. By using new money. When adding new money to a portfolio, the money should be allocated to those assets in asset classes that have fallen. For example, if bonds have fallen from 40% of the portfolio to 30%, to rebalance you would buy enough bonds to return them to their original 40% allocation. 
  2. By selling “winning” assets to buy more underperforming ones. This forces you to buy low and sell high, which is difficult for some investors as they don’t want to part with winning assets although taking profits from your winners is often a wise strategy. As Sir John Templeton said: “The four most expensive words in the English language are, ‘This time it’s different’.”

There are several benefits to rebalancing your portfolio. Here I go through the key benefits in an effort to encourage you to do it regularly, something which is often far down on peoples’ priorities.

Maintain Risk Levels

One of the key benefits of rebalancing is to maintain roughly the same level of risk in your overall portfolio. Asset allocation is all about balancing risk and reward and depending on the direction of market fluctuations you could end up taking on risk that is either greater or smaller than you originally intended.

Review Performance

Rebalancing your investment portfolio also gives you an opportunity to review fund performance and make changes. For example, for funds that are underperforming you can sell them off and look for others.

Make Strategy Adjustments

Our tolerance for risk changes are we grow older and as we go through other big life changes. In general investors start off willing to take more risks but they become more conservative as they grow older. When reviewing your portfolio with a view to rebalancing it, you can also take the time to alter your investment strategy according to changing tolerance, financial goals and time frames. 

Prevent ‘Analysis Paralysis’

One of the other key benefits I see to rebalancing is that it helps to prevent ‘analysis paralysis’ where you can spend so much time trying to work out the best way of doing something that you end up doing nothing at all. Rebalancing as a periodic activity takes some of the emotion out of investing and ensures you draw up a plan and review it periodically in a way that you can stick to knowing you have done a formal review based on rational considerations. In theory this will help you avoid panic selling at the bottom of a market and buying at the top. In essence, it maintains a disciplined approach to your investment portfolio strategy.

Please let me know if you enjoyed reading this article by clicking on the thumbs up icon above or leaving a comment. I really appreciate it. 

Fiducia Partners Insights - The Future For Family Offices

The Future for Family Offices

October 18th, 2018 Posted by Family Wealth, Planning 0 thoughts on “The Future for Family Offices”

The number ultra-high-net-worth (UHNW) families is rising and with them, more single and multi-family offices created to serve them. Knight Frank’s The Wealth Report 2016 tallied 187,500 UHNW families (controlling at least $30 million in assets), forecast to rise to 263,500 by 2025. Family offices need to adapt to reflect the tech savvy, socially conscious millennials about to inherit the family wealth as well as the changing investment market. Here I detail four trends I think family offices will increasingly embrace in the coming years.


  1. A preference for socially responsible / impact investing

Socially responsible and impact investing may soon dominate family office investments. A study released this year by Spectrum Group found that “more than half of millennial investors (52%) see the social responsibility of their investments as an important selection criteria, compared with less than 30% of WWII-era investors and 42% of Generation X investors”. Over the next decade the largest transfer of wealth since pre-WWII is about to benefit millennials so any family office not engaging with socially responsible or impact investing may struggle to keep up with the family’s expectations.


  1. A move towards direct investments…

…aligns with the long-term outlook of family offices

Something I have noticed more and more of over the last few years is family offices’ growing appetite for direct investing. Many have been moving money from underperforming hedge funds into direct investments, often in real estate and startups, in the hope of more sustainable returns but also to retain control. This is only set to rise with Family Office Exchange reporting that nearly 60% of family offices expect to increase their direct investments in the next two years.

Direct investing makes sense for family offices where the goal is to grow and preserve the wealth of their family for generations. Whereas family offices take a long-term view and can stay in investments for as long as they want, private equity funds tend to stay in investments for five-to-seven years and are judged by quarterly performance. Family offices don’t need to move with short-term markets or put time limits on their investments so cutting out the middle man means they can make long-term investments and ride out market fluctuations. Direct investing also means they avoid hedge funds fees, which can often make the difference between a return, or not.


…allows family member to hand-pick investments

Direct investing also makes sense when thinking about the move towards socially responsible investing as it allows family offices to hand-pick each investment according to their family’s own criteria for what it deems as a socially responsible or impact investment.

Also, because we are all living longer millennials are inheriting the family wealth later in life and therefore many have forged their own careers before becoming involved in managing the family fortune. Direct investing allows them to choose investments where their own expertise can deliver value.


  1. An increase in collaboration

I also think we will see more and more collaboration on deals between family offices. I think this because families often develop their expertise in a particular market and so when looking to diversify their portfolio, may approach a family with expertise in the market they know little about and vice versa. This can significantly lower the risk element and encourages knowledge sharing.


  1. More casual forms of communications

Finally, the Spectrum Group report I referred to earlier has found that 68% of millennial investors favour texting or instant messaging as a way of communicating with their financial advisors vs. email or phone calls. It looks like family offices will have to get comfortable with this fast-paced, all-hours mode of communication.


I hope you enjoyed this article, if so please leave a comment to let us know.

Fiducia Partners Insights - Family Business Feuds

Family Business Feuds and How Stop Them Being Fatal

September 20th, 2018 Posted by Family Wealth, Planning 0 thoughts on “Family Business Feuds and How Stop Them Being Fatal”



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