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How to Future-Proof Your Family Dynasty: Part 5.

Effective Strategic Planning & Succession Planning Strategies

Future-Proofing Your Family Dynasty - Strategic PlanningIntroduction

Desirable Succession Planning outcomes are dependent upon well-executed Strategic Planning.

Once your family office is operating under the initial plan (i.e., family charter), its strategies may require an annual evaluation. Family offices that have existed for generations likely also create five or ten-year strategic plans.

As family offices must often respond to a wide variety of demands from many family members, it is easy to take a more passive stance on planning. For that reason, your executives may need to take the initiative to ensure continuous planning of the family office strategies.

Ten-year strategic plan

Family offices that have existed for a long time and support multiple generations tend to formulate a five or ten-year strategic plan. These plans are designed to develop the foundations that will be needed to realise the vision, as defined in your family charter (sometimes considered as a 100-year plan). By taking the time to articulate the goals of the next ten years, your family office may think differently than it would in annual planning, when the focus is on the short-term horizon. Moreover, your family may find it beneficial to engage an outside advisor to lead and facilitate the planning efforts and bring in new perspective.

There are three major elements often considered in such a plan:

Succession planning

Preparing family members for leadership takes many years, whether that involves leading the business, governance committees, or the family office itself. Families may establish a development program for an entire generation, including training, mentorship, and business internship programs to give the next generation leadership experience.

Business or investment growth

Families may consider starting a new business or a large real estate development plan. They may also shift into private equity investing, which could require years to mature as both an investment and a foundation for the new business.

ESG (Environmental, Social and Corporate Governance), sustainability, and impact investing and philanthropy

Some families set ESG goals that centre on the avoidance of controversial sectors. Others aim for more direct societal impact through, for example, the support of a particular community by providing higher education or solving health issues. These tend to be long-term goals that may be better served through a ten-year plan.

How to Future-Proof Your Family Dynasty: Part 5.

Strategic Planning – The Right Way

Annual Strategic Planning

In contrast to the other kinds of planning, annual planning involves the evaluation of the previous year’s activities. It also covers the setting of goals for the coming year and an action plan to achieve them. The planning process can be extensive and present an opportunity to address different topics.


An honest look at the past year will involve asking certain questions. How have the family and the office performed against the current annual plan? What are the strengths and weaknesses of the family office? What major changes have occurred since the last plan was devised? Is the family successfully moving toward the long-term vision detailed in the family charter and in line with the ten-year plan, or are there major gaps between the stated goals and actual activities?

Feedback for improvement

It is valuable to find out what family members think about the office, staff, and the support provided. The older generation might be satisfied with the office, for example, while the younger generation would prefer to make changes.


This is an opportunity to reflect on succession planning, risks related to staff or operations, and potential economic, ESG, legal, or tax matters.
How might these business risks impact the family, and how might family risks impact the business? This discussion can help to identify the major risks facing both the family and the family office and determine how they could be mitigated.

Family office operations

The annual evaluation is a good time to assess the family office and its current operations. This is because priorities often change over time. In addition, as some services may be better delivered by an outside provider, the process allows for a discussion of potential choices. Family offices may also have a need for additional staff or wish to plan for upcoming retirements and other changes.


Family offices can use the annual evaluation to compare current offerings against the rapidly changing marketplace. Assessing how the various technologies work together to meet their needs may well result in the need to explore various aspects of digital transformation strategies. In addition, it is crucial to consider cybersecurity given its potential impact on family finances as well as on the family’s privacy and physical safety. The social media behavior of family members can also be monitored to evaluate the digital presence of the family.

Family initiatives

New initiatives and the potential role of the family office could also be considered. Initiatives might range from business ventures and real estate development to new philanthropic initiatives, an upcoming family meeting, or even the planning of a major family anniversary.


The evaluation of the above will help determine the budget for the coming year and the plan for funding it. If the family agrees with the plan and
future initiatives, they will be much more likely to agree on the required funding.

Future-Proofing Your Family Dynasty - Succession PlanningSuccession Planning at its Best

Devote an appropriate amount of time and resources to both financial and non-financial goals of the family.

The Family Office is often the right place to centrally manage and execute important, non-financial activities on behalf of the family and Family Council.

Below are several examples of these non-financial activities:

  • Support family governance by executing the activities of the Family Council such as:
    • Organise family gatherings and next generation events that help build family unity
    • Organise family projects that strengthen the family’s connection to the business
    • Maintain the Family Protocol **
    • Administer the family newsletter, family website, and family surveys
    • Help the Family Council think strategically about how to achieve the family’s mission and goals, and recommend initiatives
  • Structure talent development programs for the family such as: 
  • Build the family’s soft skills
  • Educate the family about their assets and the role of owners
  • Prepare next generation members to serve on the boards of the family’s operating companies
  • Prepare family members to serve on the Family Council
  • Educate the young children about a healthy wealth identity
  • Organise philanthropic activities in the absence of a family philanthropic foundation


Recognise that in most systems, the unity-building and talent-building activities, such as those listed above, are the domain of the Family Council. That’s because it’s the Family Council that is responsible for strategising for the family. The Family Office needs to coordinate closely with the Family Council to clarify each group’s role. Two typical scenarios are:

  1. The Family Council leads the family’s unity-building and talent-building initiatives and asks the Family Office to administer and help execute, or
  2. The Family Council invites the Family Office to have a hand in recommending the Family Council’s long-term plans for the family, as well as administer and execute them.

In either instance, it is vital to have continual communication between the two groups to delineate roles and responsibilities and know who makes which decisions.

** The Family Protocol

A family protocol is a document or contract where a set of agreements between family members are set out. Families that own a family business often need to establish the rules that regulate: their relations with the Company, the way to solve conflicts, hiring, how to achieve the continuity of the company over time…

The protocols seek to order, foresee and globally solve all the problems that can arise within the “family” business.

The Characteristics of a Family Protocol

The features that generally characterise a family protocol are:

  • atypical legal business (insofar as it lacks specific and systematic regulation in our legal system),
  • concerning a family business,
  • onerous (each party expects to obtain some advantages or attributions from the others),
  • diversified and complex contract.

The family protocol is intended to be the backbone, a framework agreement that is not exhausted in itself.

It can be accompanied by other documents that make it effective. For example, marriage contracts, wills or the corporate bylaws.

The Family Protocol is subject to the general principle of freedom of format. Therefore, it may be formalised in a public or private document.

For its validity to be assured, it only requires the concurrence of the essential requirements of any contract:

  • Consent,
  • Objective, and
  • Cause.

It is advisable that the protocol is adequately prepared and that:

  • it is adjusted to the needs of the family business.
  • is in accordance with current legislation.
  • seeks its own usefulness, convenience and family support.

Suffice to say, an ambiguous, generic protocol or one that does not adjust to the family needs will result in a useless and dangerous protocol. It will not help the family business to last, which is exactly what it is trying to achieve.

It is recommended (but not obligatory) that its signing by the relevant signatories takes place in the presence of a Notary. Reason being is that this will accredit the identity and capacity of the grantors, the reliability of the date and the content of the document.

A Family Protocol’s content varies from one family to another but in general, they usually regulate the following matters:

  • the business philosophy of the family or family group,
  • the delimitation of the material and temporal scope of application of the protocol itself,
  • the performance of the positions by the members of the family (access and exit),
  • the governance and management of same,
  • the ownership structure of the company and the succession in the company,
  • the economic-financial management of the company and in particular, the economic relations between the company and the family members involved,
  • conflict resolution.

Effectiveness of the Family Protocol

It will depend on the type of protocol, but most of the doctrine distinguishes in two categories:

  • gentlemen’s agreements,
  • contractual covenants (that is, binding and generating rights and obligations).

Succession planning with a purpose

Family offices can help prepare and execute succession plans.

Succession planning as an imperative

In the next two decades, it is estimated that an astounding AUD 3.5 trillion of family wealth will be transferred from one generation to another!

However, recent surveys point to some of the challenges surrounding the transition of family wealth and businesses, that is: 

⚫ 70% of families report not being on the best terms and failure in intergenerational wealth transfers

⚫ Two thirds cite succession planning and inheritance issues as their biggest concerns.

Whilst it’s true that more families and family offices are already thinking about succession planning, the topic deserves considerably more attention. 

Planning for generational change 

Because succession planning is not a one-off event but rather, a process, families often underestimate the potential problems and need for plans and procedures. In fact, it’s estimated that nearly three-quarters of failed wealth transfers are attributed to a breakdown in family communication and the failure to establish a family mission. 

Whether families are handing over a business, investments, or both, family offices can play a role in managing the technical and emotional dimensions of succession planning. As with any important process, it is helpful to begin early, even years in advance.

Building on shared values

There are three specific areas where family to ensure a smooth transition of wealth and maintain a sense of family unity.

Establishing a governance model

A clear and professional governance structure is the  cornerstone of successful cross-generational families. A solid model will reinforce the transfers strengths of the family business and help the family develop strategies together, based on a common set of values.

Fostering dialogue between family

Effective communication about wealth, relationships, and family business ownership is essential to building and sustaining high-performing family businesses. Families often look for external support to improve their framework for communicating and put these ideas into practice.

Drafting a family investment philosophy

The purpose of a family’s wealth should be discussed early, often, and across generations. This step entails establishing and regularly revisiting the overall goals for the family’s wealth. The philosophy should reflect a balance between the best practices of institutional investment and the unique needs, values, and vision of the family and its business(es).

A holistic governance structure is necessary in order to have an effective Family Office

As has been discussed in earlier articles, a Family Office tends to oversee a broad range of activities and services. Such complexity necessitates the family to be clear about its direction and goals. Similarly, the Family Office needs to be clear about its responsibilities and authority relative to the successful operations of the entity. A key ingredient to achieving this level of direction and clarity is a well-functioning governance system that guides and stabilises the Family Office. Building trust among its stakeholders is also a “must-do” function.

In the beginning, the governance system may be informally structured. Nonetheless, as the family and the Family Office grow more complex over time, a more formal governance system is likely to be needed. Often this comes in the form of an oversight board or council with committees composed of family owners and independent advisers. The principle we embrace is to design a governance system that is right-sized for the Family Office to achieve its strategic goals, and not in excess of what is truly needed.

Consider these elements as you design your Family Office’s governance:

It is important to reassess the suitability of the Family Office’s governance over time, based on its ability to satisfy the family’s shared purpose and vision. This is key to ensuring that the Family Office remains relevant for the next generation.  Work closely with the rising generation to adapt the governance model to their cultural style and to develop Family Office services and activities that serve their needs and strategic goals.

How FBA Can Help You With Your Family Office

At Family Business Advisory (FBA), our purpose is to help family businesses succeed on a sustainable basis. As such, we provide you with access to specialist family, business and technical services with a goal being to generate opportunities for families in business.

In order to complement our own particular specialised skills, over the past several decades, we have developed a network of trusted, professional advisers in such areas as:

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Moreover, we work at all times to give you peace of mind and proactive support to help navigate any changes in the market brought about by legislative changes, geopolitical events and general market conditions – all to maximise your personal wealth and security.

These services are provided by FBA, in association with the Wealth IQ Group.

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