External advisers can play an important role when it comes to complex issues such as investments, ownership and inheritance
Succession is a complex process. It requires looking ahead to the rising generation of a family enterprise, engaging the family in charting the path and encouraging, training and then selecting the rising generation of leadership.
The founding generation may find this unexpectedly challenging. It is no longer a question of simply deciding who will succeed them. Family business owners must change the culture of the family to balance the values of tradition with innovation and change. To do this, they need the active participation of all generations.
For many Asian family enterprises, it is not uncommon for the senior generation to view the rising generation as unqualified or not ready to govern. Similarly, the rising generation may believe the senior generation will never relinquish their leadership positions.
To manage governance issues, resolve conflicts and plan for the future, many families seek out an external adviser with expertise in these areas, or rely on a long-time trusted adviser. The adviser can act as a buffer, mentor and neutral party, helping to navigate discussions on such potentially contentious topics as investments, ownership and inheritance.
Even with external advisers in place, the senior generation needs to continue to engage upcoming generations in strategic planning and discussions. By providing guidelines and procedures, external advisers help families develop and sustain effective strategic plans while keeping responsibility and controls within the family enterprise.
Cynthia Lee is the Head of Wealth Advisory, Asia for JP Morgan Private Bank.