Wealth Management

Paz Ambrosy. Professor at Instituto de Empresa

18 October 2004

A look at personal assets consultancy, which has been a high-growth sector in recent years.

Wealth management is defined as the efficient administration of assets belonging to a professional or a family group. It is estimated that the number of family groups with intergenerational wealth is growing at an annual rate of 12 percent. Europe, which represents the largest market, recorded a growth of 4.8 percent in 2003. In Spain, approximately 80 percent of the national wealth and creation of employment comes from family groups. Innovation and personalized consultancy services constitute the key to success here. Consultancy services required by this type of client call for consideration of aspects dealing with the all-round management and positioning of their own assets. This consultancy service covers areas such as capitalization for company growth; cash obtained from sale of a business; leadership, management and succession of the founder; or diversification of liquid assets and support for philanthropic initiatives. These situations can cause conflicts and should be handled by an independent consultant, one capable of offering alternative and objective solutions. It is a question of managing more than money. Consequently, it is necessary to design an efficient assets structure. This type of asset is usually distributed as follows: 49 percent are invested in the client’s own company, 14 percent go to private capital investments, another 14 percent to mixed investment funds, 13 percent are placed in property assets, 5 percent in hedge funds, and the remaining 5 percent is in cash. This distribution of assets is covered by entities such as Atlas Capital, UBS Warburg and Beta Capital Mees Pierson, among others, and today they are creating more specific units for dealing with this type of client. At the same time, many family companies are forming their own special divisions - the so-called Family Office - to channel their investments. Forming family entrepreneurs However, in the mid term, this type of consultancy service will require specific training to prepare for future challenges. Training contributes to creation of an entrepreneurial way of thinking that in the medium term will offer a vision of permanent continuity and innovation. This training must be personalized. Presence of family members and managers is recommended, whether the managers are members of the family or independent. Accordingly, Instituto de Empresa (IE) and Babson College offer their students an elective program called Family Venturing, where members of different family groups with various strategic needs receive the required training and advice with the help of IE students and professional consultants. Families want more than mere assessment. They lack the time for full-scale analysis, and consequently feel uncomfortable sharing information with strangers. Our course gives them tools, techniques and advice to help them implement and execute entrepreneurial programs leading to sustained behavior-driven innovation. It is our job to create a corporate and training culture capable of responding to the new business challenges that offer competitive advantages in a new market environment.

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