The majority of high net worth individuals (HNWIs) don’t have a wealth succession plan in place for their family businesses, according to a Lombard Odier exclusive survey.
The Swiss private bank found that 90 percent think that their family business is set up for an efficient wealth transfer to the next generation. However, only 24 percent have a full estate plan in place.
Its interviews with 300 Middle East-based HNWIs found that having a succession plan that complies with Sharia principles is important to more than two-thirds, and of particular importance to older and wealthier ones.
While nine-in-ten HNWIs hold their wealth in the Middle East and expect to do so over the next few years, almost a quarter are rethinking the geographical set-up of their family business.
The bank found that HNWIs are aware of the importance of effective succession planning, but less certainty lies in whether wealthy families have implemented the succession plans required to meet the varied needs of their complex family structures.
“In a region where family is the dominant social institution, the wealth of HNW individuals is often intertwined with their family business, its governance and Islamic values,” said Lombard Odier.
66 percent of older business owners said they had a formal and rigid system of governance in place, compared to 50 percent of younger respondents. Younger HNWIs also show a greater degree of openness to change.
When it comes to the geographical placement of family wealth, the overwhelming majority (90 percent) intend to keep their wealth in the region for the foreseeable future.
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