Family Business Wealth Management Mechanism

The major beneficiary of the family business is the family itself. Generally, the family is heavily invested in the family business. But as the business grows larger, they will have to start thinking about creating personal wealth and creating a suitable mechanism to build a moat to protect their wealth. Effective wealth management strategies include succession planning, managing and administrating wills, estate planning, and creating various mechanisms to manage personal wealth through trust and family office.


For the elder family members to retire and maintain their lifestyle, the business should create a mechanism, which will help them create personal wealth that will be insulated from the business cycles and business risks. All such wealth instruments should be in the personal name of the family member and should give them security and confidence in maintaining the same level of lifestyle irrespective of the business cycles. This needs planning well in advance for moving excess assets leveraged by business into the personal name to create wealth. To sustain this the Family business should have a stable profitable business model, which can continue to help the owners generate the desired income for them for years to swell their investments. If the family business can meet these expectations, then the family will be prosperous. Both are interlinked objectives; hence the success and continued profitability of the Family Business is a matter of importance for the wellbeing of the Family and the Family Business.


One of the important functions of the family business is to continue generating profits and build sufficient cash reserves for the business as well as for the family. Creating personal family wealth is an important dimension of a family business. Over the period, the family business should have the capacity to remunerate the family members for their management inputs and reward them for their capital investment in the business.


With wealth comes the need to responsibly manage and protect it. If the family wants to continue to live well, they should protect the asset that is giving them those returns, otherwise, the income stream will dry down over some time. Such behaviour is very common, that is why the saying ” shirtsleeves to shirtsleeves in 3 generations” meaning that the Family wealth is short-lived and does not last beyond 3 generations.


The Right Approach to Wealth Management

Every family wants to build and protect its wealth. However, Family Business Wealth Management can be complex with different dimensions in place. It calls for deciding on the business succession, ownership succession, estate planning, delinking personal assets from the business, and creating a suitable mechanism for managing the personal assets. This requires the external assistance of experts in the field.


What is Your Family Business Wealth Management Plan?

Almost all Family businesses aim at building and preserving wealth that will last for generations, many fail to create a suitable mechanism for the same. Despite a common goal, many family businesses run into challenges along the way, as most of the time the business exigencies get priority over personal wealth creation. The family business never accounts for the family members’ efforts as cost, it is always treated as a free resource. To top it up, the business takes time in developing financial prudence; hence profitability and cashflow get sacrificed and Sale Revenue becomes the prime business number to chase.


Factors to Consider in Devising Wealth Management Strategies

·        Investment Choices

·        Tax Planning

·        Succession Planning

·        Creating multiple financial streams

·        Managing Risk

·        Establishing Family Trusts


Being Smart with Money

Every family member of a family member has a responsibility for wealth creation and preservation. They are responsible for each generation to preserve and maintain the wealth created and decide on the value-based principles that the family has. Family members must understand their responsibility to guard and protect the family’s wealth. They need to understand the risks involved and take judicious decisions concerning family wealth. They should be good money managers and should know the risks associated with various investment instruments and the returns they can give. They should effectively manage the people who manage family money and not put it at excessive risk.


Does Your Family Business Need Help?

With extensive hands-on experience in assisting family businesses, we understand the challenges families face as they work together to build a thriving family business generation after generation. Through orientation programs, one to one and group meetings, workshops, public talks, mentoring, coaching, family retreats, and private family business consulting services, we help family business owners chart their way through family business issues of all shapes and sizes





To know how our services can help your family business reach its potential –

+9198 2001 4999

+9122 7961 4770
+9122 2541 1214

Get In Touch

Sandesh Vasant Mestry
Family Business Consultant and Mentor
101, New Chandralok CHS, Ground Floor, Near, Veer Savarkar Marg, Tembhi Naka,
Thane West, Maharashtra 400601