Stephanie Hughes
Stephanie Hughes
THE LONG VIEW
Clear governance means there should be clearly defined roles for family members— and a structure that prevents ambiguity and helps avoid future conflicts.
saving and traditional investing, often prioritize stability and preservation. Their heirs, however, may have different views, favoring strategies that align with their personal values, favoring more alternative kinds of investments, or financial tools that are driven by technology.
These differing priorities, if unaddressed, can easily lead to friction and misunderstanding, causing family conflicts and inefficient decision-making.
The transfer of a family business to the next generation comes with its own set of complexities, not just financial and legal challenges but the interpersonal dynamics of family members. The next generation may have different ideas about running the business, and that can lead to disagreements. The family members might struggle to separate business decisions from personal relationships, and deciding how to split shares among heirs can be legally and emotionally complex. The transfer of business assets can, meanwhile, create significant tax burdens if not structured properly.
Again, advisors who want to help must be able to do more than manage assets. They’ ll need to embrace a role that integrates mediation, counseling and comprehensive strategic planning. To effectively support clients in wealth transfer, advisors should do the following things:
1. Create clear governance structures. Advisors should help families create frameworks for making decisions, facilitating regular family meetings or creating formal family advisory boards. Clear governance means there should be clearly defined roles for family members— and a structure that prevents ambiguity and helps avoid future conflicts.
2. Align generational investment philosophies. Advisors should prompt conversations between older and younger generations to help them reach common ground on investment goals and risk tolerance. For example, an advisor might guide a family through a blended strategy— one that allows an older generation to maintain their conservative approach to investing while earmarking a portion of the portfolio for impact investing or emerging asset classes that younger family members support. By aligning these philosophies early, families can minimize friction and maximize financial harmony.
3. Develop holistic wealth management plans. Truly effective wealth transfers require the integration of estate planning, tax planning, investment management and overall financial strategy. Advisors who comprehensively integrate these components— not merely claim to— can significantly improve their clients’ outcomes.
4. Explain gifting and trust strategies. Advisors must clearly explain various wealth transfer strategies— such as irrevocable trusts, grantor-retained annuity trusts( GRATs), intrafamily loans and strategic gifting— to ensure families understand their choices, trade-offs and tax implications.
5. Balance immediate needs with longterm goals. Advisors should assist clients in modeling different gifting scenarios, helping them determine how much wealth to transfer and how much to retain so they can meet their lifestyle needs, tax objectives and legacy goals.
How Families Benefit From Getting It Right
When families approach wealth transfer strategically, proactively and with clear governance structures in place, the outcomes can be transformative. Effective planning offers substantial benefits, including:
• Stronger family cohesion, since there are fewer misunderstandings and there are clearer expectations;
• Optimized financial outcomes, which are achieved when the family minimizes estate taxes, strategically gifts assets and protects family wealth; and
• Smoother operational transitions that reduce the risk of costly financial or legal errors during the wealth transfer process.
Advisors who embrace the roles of mediator, educator and strategist become invaluable extensions of the families they serve. By understanding and proactively addressing both emotional and operational dynamics, advisors not only facilitate effective wealth transfers— they also help strengthen family bonds, ensuring the legacy created by one generation truly benefits the next.
Ultimately, successful wealth transfers depend on personalization, transparency and proactive planning. Advisors must remain sensitive to each family’ s unique circumstances, needs and aspirations. No universal formula guarantees success, but families who openly communicate and strategically plan, supported by advisors who genuinely understand their dynamics, are far more likely to thrive across generations.
STEPHANIE HUGHES is the CEO of Wiss Family Office, leading the firm’ s wealth management strategy and providing holistic, comprehensive financial planning for business owners, entrepreneurs and corporate executives.
24 | FINANCIAL ADVISOR MAGAZINE | APRIL 2025 WWW. FA-MAG. COM