Managing intergenerational wealth comes with unique challenges and opportunities. Sarette van den Heever, Wealth Director at Private Clients by Old Mutual Wealth, discusses with MARANA BRAND the importance of the family office approach in managing wealth across generations.
ORIGINATING from private banking practices in Switzerland, the concept of a ‘family office’ extends beyond just managing wealth. Sarette van den Heever, Wealth Director at Private Clients by Old Mutual Wealth, explains that it involves overseeing all associated structures, such as trusts and companies and any other entities that were created to manage a family’s wealth. And, she adds, it is there to assist every family member within these structures – from children to grandchildren – in navigating their financial landscape.
“The real benefit is having a single office look after all your affairs and truly understand how everything is interconnected and what the risks and opportunities are,” says Sarette.
This cohesive structure ensures that every aspect of wealth is aligned and managed effectively, preventing the fragmentation that can occur when multiple advisers deal with different structures.
COMPREHENSIVE SERVICES FOR DIVERSE NEEDS
The family office at Private Clients by Old Mutual Wealth offers a broad spectrum of services, including managing complex global tax structures, advising on the appropriate governance and ownership structures for the family, managing investments and handling practical administrative tasks when necessary.
“We work with multiple independent specialists that provide various services for our clients. For example, we consult tax experts in different jurisdictions as it is impossible to find one person who can advise on tax across all the different jurisdictions globally,” Sarette says. “Also, if a client has an entrenched relationship with an auditing firm, legal adviser, fund manager or tax consultant, we work seamlessly with these businesses,” she continues.
This collaborative approach ensures that clients receive tailored advice specific to their needs and locations.
PREPARING THE NEXT GENERATION
One of the most critical aspects of intergenerational wealth management is ensuring a smooth transition of wealth to the next generation. “Transferring wealth is a big responsibility. If your parents or grandparents built up wealth through a lifetime of hard work, it’s crucial for you and your siblings to become responsible custodians of that wealth.”
Understanding the history of accumulated wealth and the aspirations of the new generation is vital. “By understanding our clients’ histories as well as their future aspirations, we are exceptionally positioned to manage and grow their wealth across generations. That’s why we also enable younger generations to put their own stamp on the wealth while carefully preserving the legacy of earlier generations. Whether it’s taking over the family business, diversifying investments or setting up a foundation, we support and accommodate their goals and objectives. This is extremely valuable because we basically hold both sides of the coin.”
A practical tool that greatly assists in managing intergenerational wealth is the family constitution. “As more family members across generations start to benefit from the wealth, the family dynamics become a lot more complex. We work closely with the family to craft a family constitution. This document outlines the principles on which the family’s wealth is based, how wealth should be preserved, the roles of different family members and the ambitions for the growth of the family business and wealth,” Sarette explains.
This document should be updated regularly as family members’ circumstances, wants and needs change or when there are significant business developments.
THINKING GLOBALLY
It’s increasingly important to be able to seamlessly manage wealth beyond national borders. “While our parents and grandparents focused mainly on building wealth in South Africa, the concept of global citizenship has gained prominence,” Sarette says.
With globalisation, families are often spread across different countries, complicating intergenerational wealth management. This global perspective includes diversifying investments and taking money offshore.
“It’s not just about generating returns; it is about effective risk management and building a portfolio of assets in various currencies and jurisdictions for when you may need it. This is particularly relevant for the next generation, who may study or live overseas or for parents relocating after retirement to be closer to their children abroad. Further to this, many South African family businesses have started trading globally, and enabling them to build up a balance sheet outside of South Africa has become imperative to ensure long‐term sustainability.”
Managing offshore investments, trusts and tax on a global basis has its own distinct challenges. “We have the expertise to navigate these complexities to ensure compliance and to optimise the benefits for our clients,” Sarette explains.
“Managing intergenerational wealth demands a holistic and integrated approach. By providing a family office, we at Private Clients by Old Mutual Wealth ensure that every aspect of a family’s financial landscape is considered and managed effectively. This approach helps preserve legacies while empowering the future generations to build upon them,” she concludes.
More Information
Contact Private Clients by Old Mutual Wealth at privateclients@omwealth.co.za or
+27 (0)21 524 4678 or visit wealthprivateclients.co.za.