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Rethinking it all: life-changing decisions deserve major planning

Wealth planning

Rethinking it all: life-changing decisions deserve major planning

Jun 7, 2022

They’ve been called ‘pandemic epiphanies’: individuals and families re-evaluating their role in their businesses, their communities and society.

Since Covid-19 engulfed the world, nothing has been the same. This shattering of business as usual has spurred a rethink of values and purpose, and raised questions about how wealth is being used, and the way businesses engage with their communities and employees.

It’s a time of change, and the events of the last two years indeed triggered an existential reckoning for many. But before you turn over a new leaf, it’s important to understand the dynamics at play: why you’re doing it, and what you should be thinking about to preserve your legacy and your wealth.

Step back or double down?

Russell Prior, Regional Head of Family Governance, Family Enterprise Succession and Philanthropy, EMEA, at HSBC Global Private Banking and Wealth, has seen first-hand how entrepreneurs are shifting or accelerating their business plans as a result of the pandemic. While some saw an opportunity for growth and doubled down, others in hard-hit sectors had to take drastic action to protect their business and their employees. 

One entrepreneur’s experience over the last two years has led him to rethink his priorities altogether. This individual was running a very successful business in the hospitality sector pre-Covid. When the pandemic hit, the impact on turnover was huge – and he had some difficult decisions to make. 

“He had a very staff-orientated approach to the way he ran the business, so he resisted making lay-offs during the pandemic,” Prior explains. “The UK government’s stimulus measures helped, but over two years the business has had to take on significant debt – he had to borrow to keep it alive. This combination of circumstances and his life stage has made him question whether he really wants to continue with the business, or whether now is the time to step back.”

Exiting your business isn’t a decision to be taken lightly. It’s important to prepare for what’s next, think about how you’ll manage your newfound wealth and understand how the exit will impact your future – and that of your family and employees.

“We’ve seen so many people go through that transition, and we understand the thought process and the emotions they will experience. We bring that understanding to bear in the conversations we have with people,” says Prior.  

While some entrepreneurs may be reconsidering their choices and stepping back, for others the pandemic has been a catalyst to seize the day and do things differently within their organisation.

“Entrepreneurs and business owners tend to be extremely passionate about what they’re doing,” says Carly Doshi, Head of Wealth Planning and Advisory, Americas, at HSBC Global Private Banking and Wealth. “Many see their businesses as great disruptors that are agents of change in their own right. Given everything we have experienced recently, they are digging deeper to bring about change, and that’s very exciting.”

Life is short: Health and longevity in focus

With health and mortality being brought into much sharper focus post-pandemic, some wealthy families are redirecting their wealth and investments, and individuals may be rethinking their roles in their family business. Some have realised that life is short, and they want to pursue their own passions and go a different way, Doshi explains. 

One family, for example, runs a business in hospitality and real estate, and a younger family member discovered a passion for sustainability and reducing their carbon footprint via more environmentally friendly food production. 

“That’s their particular area of interest and, with the support of their family, they have been able to take some of the liquid capital generated by the successful business and invest it in plant-based meat companies. This diversification is good for business, and it is also now helping to bring the family’s portfolio more closely into alignment with the next generation’s values.”

A number of families are also thinking hard about things like succession, estate planning, governance and other family matters in reaction to the pandemic. Talking about death and planning for what comes after is not a conversation most people want to have, but it’s the only way to ensure wealth continuity and secure family legacies, says Doshi.

Decisions made about things like business succession affect not just the immediate people involved, but extended family, and other stakeholders such as company employees and even entire communities. 

During the pandemic, some wealthy families were trying to deal with things in panic mode. “No one is making their best decisions in a state of heightened stress. So, we would advocate for a preferable course of action, namely to plan for those critical decisions in advance, at a time when emotions are calm and people are thinking clearly.” 

They key is to communicate – as early as possible – about crucial issues like long-term planning and structuring ownership. “These are meaty topics that are often the toughest for families to discuss, so they often aren’t discussed at all,” says Doshi. “We believe in leaning in to these conversations.” 

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