2 minute read
Wealth Management
COMMENT
Creating a consistent approach to sustainable family wealth
Family businesses are considered an essential driving force of the Middle East’s economy. These businesses have played an integral role in transforming several industries in the region ranging from retail and property to energy and financial services. In fact, recognising their contribution to the economy, the UAE has recently launched a programme that aims to double familyowned businesses’ contribution to the nation’s gross domestic product to $320bn by 2032.
Wealthy families are increasingly exploring how they might contribute in a meaningful and lasting way to society, not just through philanthropy, but also in the way they run their businesses and manage their investment portfolios. The pandemic and global social equality movements have shed a light on inequality and made people reassess what it means to be wealthy. People are also becoming more aware of pressing environmental issues such as climate change.
With wealth in the spotlight, the reputational risks for the wealthy have increased if they are not seen to be acting ethically. We’re approaching a new era of transparency and accountability, with more individuals curious about how others spend their money. We’ve also seen a generational shift in the opinions around the purpose of wealth. Younger generations have grown up with a greater awareness of global social concerns and are questioning what their families are doing with their wealth and whether they can utilise it to drive positive change.
These transitions present a great opportunity for families to examine the vision, values, and purpose for their wealth and to integrate their approach across their businesses, financial portfolios, and philanthropy. Defining a core set of values, that everyone in the family agrees with, provides a way to engage younger family members by encouraging them to take on new roles and foster greater awareness. This can also aid in succession planning by preparing the next generation for the responsibilities that come with wealth.
WHAT CAN THEY DO? It used to be that families that made money through their operating business or investments would deploy those assets with one set of values and strategies, and subsequently spend their private wealth on philanthropy and other family initiatives with a different set of values and strategies.
Family businesses can develop a model for sustainable family wealth by integrating their beliefs and purpose into all elements of their capital.
GIVE WISELY Many philanthropists are motivated by a strong desire to solve social problems and help others. Having spent years accumulating and growing their wealth, they want to give back and make the world a better place.
Many people’s charity aspirations will be guided by their values, ethics and what inspires them. They are often driven to give as a result of life events and choose to support issues that have personally affected them.
