Risk Assessment and Long-Term Strategic Planning: A recap of October's Global Family Council Meeting

In 2005, FOX established a Global Family Council (GFC) which meets semi-annually and brings together a group of sophisticated families from 13 countries around the world to discuss wealth management issues and key market trends. Our October 2-3 meeting in London focused largely on risk assessment and long-term strategic planning. That said, we began with a discussion of key market trends.

Dr. David Young, founder and chairman of Oxford Analytica joined the meeting to discuss some of the mega trends reshaping our world. Contrary to received wisdom, Dr. Young pointed out that of the top 10 most immediate global risks, eight are focused within emerging markets, and suggested that families include a full analysis of the drivers and restraints within the family enterprise in their risk assessment.

In a subsequent session on a ‘A Global Multi-Generational Investment Strategy Perspective’, Jim O’Neill, Chairman of Goldman Sachs Asset Management, offered up two key observations: 1) investors who have tried to diversify themselves away from the U.S. market have on the whole failed to do so; 2) investors who can understand the dislocation of value, and have the agility in their management to take advantage of that opportunity, will capitalize on the opportunities these markets present. Timing, entry price, country and asset class of the investment in question are therefore critical. Each family must define a long-term investment horizon in accord with its requirements and goals. Families should start by emphasizing the views of the family and the family enterprise as a whole over the investment view.

Family enterprise best practices

The meeting later turned to a number of family enterprise best practices closely related to the long-term sustainability of wealth. Families that thrive over the long-term consciously develop future family leaders, and promote rigorous systems of governance. The Council heard about one such model adopted by a member that encompasses five pillars: responsible ownership training, wealth management education, trust and leadership skills, leadership of special projects, and developing an understanding of the family enterprise’s functioning.

Finally, families clearly need to attract and retain highly qualified advisors across a range of disciplines, and an overall “chef d’orchestre” to coordinate. Attracting and retaining top talent means providing attractive, long-term oriented compensation and incentive structures; clear feedback channels; and maintaining the integrity and independence of the family office CEO and his team to provide the family with impartial advice.