At a time when preserving family values and passing on wealth are key issues, FI&FO stands out for its rigorous, personalized wealth management. Since its inception, the company has offered tailor-made solutions for every family, combining financial expertise with respect for tradition. This commitment is reflected in innovative strategies that ensure the sustainability of future generations. Interview with Karen Ruphy, Director at FI&FO.
Can you tell us how FI&FO approaches the issue of passing on family values as part of family wealth management?
Based on trust, the core functions of our Family Office are to protect, preserve, develop over the long term and pass on our clients' family wealth. Thanks to our structuring expertise, we support our clients in choosing the legal structure best suited to their objectives. In addition to the wealth strategy and its structuring, we take charge of all the services that will be necessary for its deployment: from the creation of wealth holding companies to their administration, from their legal, accounting and tax monitoring to expertise in financial engineering, including M&A operations, the determination of management packages and financing.
As a Multi Family Office, one of our major roles is also to organize the enhancement and perpetuation of family assets. To this end, we offer our clients financial planning and strategic asset allocation services. We issue invitations to tender to banks and asset management companies, and then monitor financial flows and control the associated risks.
On the other hand, our mission is obviously to anticipate the transfer of these assets in a serene and sustainable way. Yet, in addition to identifying effective tax or legal tools for passing on wealth, our role will need to be accompanied by assistance in passing on family values, which are the keystone to the development and perpetuation of wealth for future generations.
What are the key strategies you recommend to ensure the successful intergenerational transmission of values and wealth?
In practice, as a professional Multi Family Office, we support the structuring and transmission of wealth thanks to a tailor-made approach based not only on the study of risk and return, but above all centered on determined family objectives.
This support takes the form of a number of key stages that can be classified into three broad categories:
- Getting to know the customer and identifying needs
This begins with the establishment of a 360° wealth assessment of the families we look after, in order to gain in-depth knowledge of their assets, family situation and plans. This assessment is necessarily accompanied by a "risk assessment" of the wealth, including the determination of wealth and family objectives, an understanding of risk aversion and the determination of a return objective based on this aversion. This requires interactive listening to their expectations and needs, as well as an understanding of the involvement of each family member.
- Framing the project
Our support continues with the determination of the action plan to achieve the family's wealth objectives through to the implementation of the determined strategy. As a Family Office, we act as the orchestra conductor for the operational implementation of the project, in harmony with all the parties involved - bankers, lawyers, tax specialists - but also ensuring that the strategy determined remains in line with the client's objectives and those of the next generation in its practical implementation. We need to ensure that the whole family is on board throughout the process, from determining the strategy to its deployment, in order to guarantee a successful intergenerational transfer. Our central role provides a bird's eye view of the process to ensure that the project stays within the framework agreed with all parties.
- Monitoring
The final key step in this strategy to ensure the continuity of this transmission: we need to regularly monitor the implementation of this plan, revise it and make it evolve across generations or according to the life stages and entrepreneurial projects of the families we accompany. Among other things, this approach helps to desensitize certain sensitive issues, preserve family harmony and anticipate the management and resolution of family conflicts. Marriage, birth, incapacity, death, transfer of a major family asset or gifts to children or grandchildren are all key, emotionally-charged moments during which, our role is to support our customers and their families so that these events fit into the overall wealth transfer plan and are aligned with their family values.
How does FI&FO integrate the cultural and personal aspects of families into its advisory services?
As a family office, we must constantly realign our service offering and practices (work processes, communication channels, dedicated case workers) to ensure that they meet our clients' values and objectives. Our organizational structure emphasizes a personal approach dedicated to families, which means that every member of our team is informed of all elements relating to the customer, family and cultural context, whatever their role or function within the company. We encourage our team to adopt an approach focused on excellence in customer service at all levels of the organization. This translates into a culture of active listening, responsiveness and a constant search for solutions to meet the ever-changing needs of our customers and the cultural or family peculiarities specific to each family. As a Luxembourg family office, handling cross-border/international cases is an essential part of our business, where cultural aspects are particularly important. FI&FO acts as a true orchestra conductor in order to fulfill these families' objectives. In fact, we establish a preliminary analysis to understand the specific needs and international aspects involved, we then oversee the coordination between international professionals and experts covering all legal, tax and regulatory aspects integrating them with the personal, family context specific to each relationship.
Could you give us some concrete examples where your services have helped reinforce family values while managing wealth?
FI&FO oversaw the transfer and restructuring of an intermediate-sized company (ETI) over a one-year period. A multidisciplinary team of legal, financial and management experts was involved in this project.
The main objective was to facilitate succession within the family business while ensuring a smooth transition and preserving harmony between members. We worked closely with the owner family members to understand their needs, values and long-term aspirations.
What made this achievement innovative was our holistic approach to transmission and restructuring. We implemented a separation of governance between the industrial and real estate activities by transforming the companies into sociétés en commandite par actions (SCA). Each company is made up of two managing general partners (the father and one of the children), while the child who is not a managing general partner becomes chairman of the supervisory board. This structure enables the new generation to progress and become more involved in the company.
.The impact of this achievement has been significant. Not only did we manage to ensure a smooth transition to the new generation of managers, but we also optimized the company's organization. The successful transition preserved the family heritage, corporate culture and values for which this company is renowned.
What are the biggest challenges you face when planning the transmission of family values, and how do you overcome them?
While the development of wealth over a lifetime can go smoothly, the transmission process is a pivotal stage for the whole family, which needs to be anticipated and secured. In fact, inheritance raises a variety of issues, such as the roles and ambitions of each family member, the wishes of the first generation, the place of third parties, cost, as well as technical matters. But above all, the psychological impact of this transmission can leave indelible after-effects within the family circle, whether top-down (parents, children, grandchildren) or transversal (siblings).
As a Family Office, we work to harmonize our customers' various advisors around an overall objective: to develop, perpetuate and transmit not only their wealth, but also their fundamental family values, which are the foundation of a successful transmission.
This topic is obviously not an exact science, and it is not possible to draw up "a guide to passing on family values". However, some methods have already proved their worth, and rely first and foremost on optimal communication management. For example, preserving intergenerational heritage requires family reunions to exchange, share and reinforce family values. The decision-making process and the allocation of roles and responsibilities within the family are the most difficult aspects to address, which is why many families have established family charters and family councils, with a system of representation and voting rights adapted to family issues, to guarantee a fair decision-making process adopted by all family members. Family charters also help to harmonize mindsets around shared values, to which each signatory commits to adhere.
In fact, managing a family estate can prove particularly complex in a multi-generational environment, where the wishes and constraints of each generation can give rise to different guidelines. So the real challenge in transmitting values today is to understand what they mean to each family. The term "value" is often perceived as a monetary value. But passing on wealth without accompanying family values would be like passing on a safe without a key: useless. This notion of value, inherently subjective, will necessarily differ from one family to another.
But one thing is certain: there can be no successful transmission of wealth without the transmission of values. This conviction is fundamental to our approach to the Multi Family Office business.
This post was translated from the original French.