Experts state that the most successful people are well-connected people. The same goes for family businesses and family offices. Too often, family offices are caught up in their own small circle of relationships and tend to mainly trust themselves. Instead, they should think about “big family” and how connections with other businesses can be even more valuable than those inside their own company. Timely investments in relationships — professional and personal — pay back in dividends throughout the generations. However, forging trustful relationships takes decades and requires considerable time to test their strength and reliability. But if strong bonds of friendship and partnership with other family offices have been formed and passed on to the next generation, the quality of these connections becomes reinforced many times. Such alliances allow families to mutually benefit from each other’s vast networks and resources. This gives them incredible longevity, serves as a safety net for business development and provides unbeatable advantages over other market players.
Evidence for the importance of investments in relationships can be seen in the richest families in the world; they all have built alliances and strong relationships with many other prominent families. A good example of this is a recent deal between the world’s two greatest dynasties: 96-year-old David Rockefeller and Jacob Rothschild, 76 – the patriarchs of the two families – cemented a five-decade relationship with RIT Capital investment trust buying a 37 per cent stake in the American’s business. Commenting on the deal, Mr Rockefeller said: “Lord Rothschild and I have known each other for five decades. The connection between our two families remains very strong. I am delighted to welcome Jacob and RIT as shareholders.” In addition to bringing together the two seniors, the deal will considerably expand the vast networks of both families.
As it can be observed, it takes decades to build such powerful coalitions and a young family office does not have a decade to work its way towards it. Can this process be accelerated? Absolutely! With a good atmosphere aimed to create a feeling of familiarity and trust among all family members both near and far, regular family office networking gatherings, dedicated involvement of heirs in investment decisions and the presence of reputable peers, powerful coalitions can be built in a much shorter period of time.
As the head of a global single-family office and investment leader from Hong Hong said: “In our world, successful succession requires very good planning and a very good team. I mean not only accountants, lawyers, investment and financial advisers, but also third parties that help to engage heirs into a family business and build their own network of peers and SFOs. Unfortunately, the majority of family office leaders, who I personally know and who are going to retire in the next 5 years, struggle with preparing heirs for the transition. SFO gatherings organised by trusted professionals are a great solution to this problem. It tremendously helped our transition.”
One of the few places in the world with a specialty in building relationships for single-family offices is the Global Investment Leaders Club. Large investors and heads of single-family offices, who deeply care about mankind and making the world a better place, gathered in the lavish 7-star Burj Al Arab hotel in Dubai in 2016. They conversed and exchanged ideas for 3 days, and, as a result of their thoughtful resolution, several of the most active and respected investors decided on the need to create an exclusive place for direct communication between the heads of single-family offices and investment leaders. Therefore, by the initiative of a group of large international investors, the Global Investment Leaders Club became an established place for conducting regular face-to-face meetings for investment leaders and family-offices. During global meetings in Dubai and Switzerland, the formats and rules for investors’ participation in the Club meetings were formed and agreed upon. The Club has become a safe and neutral business place, not lobbying any interests of investing or financial groups. The main goal of the Club is to cultivate global trustful connections between family offices through generations from all around the world. The Club’s thorough standards and mature approach provide family offices with all the right instruments and ingredients for establishing strong global bonds and leading partnerships with like-minded families in a very short period of time. Through socialising with each other at the regular Club meetings or during special activities at the closed-door Family Table gatherings, wealthy families can easily tap into each other’s many skills and resources and form powerful ties that are beneficial to long-term business success.
Liza Markina, a leader of the Global Investment Leaders Club, says, “We understand the importance of involving the next-gen into the family business by awakening in them true passion and willingness to take responsibilities in the family office. We pay a lot of attention to providing younger heirs of family offices with an opportunity to establish connections with their peers from other family offices globally. Our main goal is to ensure that family businesses stay afloat and prosper for many decades to come. We see that is possible through establishing trustful connections and helping each other to build, preserve, and enjoy their wealth in a harmonious and supportive family office environment across future generations.”
The Global Investment Leaders Club has conducted more than 120 summits and dedicated gatherings in Europe and the Middle East, which resulted in many family offices having built powerful communities of families who trust and support them.
A head of SFO based in London shared his view: “I always look for opportunities to establish relationships with other single-family offices because it opens a cornucopia of possibilities and together, we can make more meaningful changes in the world. It is hard to meet like-minded peers though, and I do not always have enough time or the proper atmosphere to develop trustful and deep connections with those who I met.”
It is obvious that the successful survival of a family office highly depends on them having beneficial investment relationships globally with other family offices. But the problem is that families do not have sufficient resources and time to find and build these connections by themselves. Experience shows us that leaving this problem unattended or expecting the desired relationships to form naturally may take up to 50 years or won’t happen at all, which, in this case, is basically the same. That’s why it is crucial to actively look for like-minded communities and reach out to third-party professionals as a catalyst for involving heirs in a family business and forming relationships with other family offices. The bottom line is – to take an active stance against this problem!