According to Henry Hirzel in an interview, a good checklist for a smooth succession plan for families first involves trying to answer fundamental questions about, and defining the role of, the family and its various members in terms of the next generation.
It is only after this process that he said families should put a more formal structure in place.
However, Hirzel said clients tend to start putting in place a structure first without focusing on the fundamental questions about who they are as a family, where they want to go, and how they decide on this.
Issues for Asian families
When looking at particular issues for Asian families in the succession planning process, Hirzel said that while the value of the family overall is extremely important in Asia, there is also a common approach where people don’t question somebody who is in charge.
As a result, a challenge in Asia relates to business owners letting go of their control over the company and over managing the financial assets, he explained.
Identifying different roles for family members
Key to identifying roles for each family member is engaging the next generation in the discussion, said Hirzel.
Not everybody is born as a future chief executive officer of the family business, he explained. So there are increasingly situations where one family member will run the company in the future, with another in charge of managing the financial assets by running the family office, and a third pursuing philanthropic efforts, for example. If addressed properly, there can be a role for all family members.
The importance of gender
When it comes to the significance of gender within the family decision-making and succession processes, Hirzel said Asia is different from many other parts of the world.
For example, he explained, Asia has a very egalitarian society, so it might be a daughter or a son who leads the company. While in traditional families it is often the first son who will take over, more and more Hirzel said he sees such a role being allocated instead to the most suitable child.
Succession planning trends in Asia
Asian businesses are by definition very global, said Hirzel, which creates a lot of challenges for advisers as they need to be focused on multiple jurisdictions and work with local specialists.
It isn’t possible to have the same adviser for a real estate investment in China and also for their investments in the US or the UK because families need local expertise.
This also makes it more challenging for the families, said Hirzel, as they have to work with and manage more advisers.