Family Businesses Must Plan Decades Ahead for Wealth Transfer
Family businesses often dedicate decades to building their enterprises but mistakenly view the transfer of wealth and control to the next generation as a single event, according to Sigal Shapira, CEO of Julius Baer in Israel. She emphasized at a Globes conference that while assets can change hands quickly, trust, authority, and family identity are built over years. Shapira advises initiating succession planning 10 to 15 years before the actual handover.
Family businesses account for over 70% of global GDP, yet nearly half of ultra-high-net-worth families lack a structured intergenerational transfer plan. By 2033, an estimated $30.9 trillion in assets will pass from the baby boomer generation to their heirs. Shapira highlighted that success in this transition is measured not only by asset transfer but also by preserving family identity, which is often overlooked in favor of business success.
Shapira proposed a gradual integration of the younger generation, starting with passive observation in board meetings and progressing to managing specific projects. This phased approach allows heirs to gain confidence, develop expertise, and establish their own identity within the family structure before formal involvement, such as board membership or voting rights. Entry into decision-making roles should be based on merit and experience, not age or birth order, aiming to equip heirs with tools to steer the family's resources in relevant new directions.
Selling the business is presented as a legitimate succession strategy that can preserve wealth and family relationships, citing Julius Baer's own history of partial sales while maintaining its core identity. However, Shapira cautioned about the potential emotional toll on founders whose identity is tied to their business. To mitigate this, she suggested diversifying personal identity like an investment portfolio and engaging in 'learning bets' like joining boards or pursuing philanthropic activities before a sale, framing it as a new chapter rather than an end.
Shapira identified two main goals for intergenerational transfer: wealth preservation and growth, alongside family cohesion. Three common pitfalls include emotional attachment to inefficient assets, ignoring family disputes and conflicting expectations, and a lack of proper documentation and infrastructure, which can hinder the process and create tax issues. She stressed the need for coordinated business, legal, financial, and tax decisions, likening wealth managers' role to that of an orchestra conductor.
For families not opting for a full family office, a hybrid model involving external support for wealth management and asset coordination is suggested, with family control retained. Shapira concluded by emphasizing that all agreements must be documented in writing, ideally through a family constitution, supported by open communication via regular family meetings and objective professional guidance. While demanding time, money, and effort, a successful transfer builds trust, shared identity, and a clear foundation, allowing the next generation freedom to explore new interests while maintaining security and belonging.
