! NOVEMBER 15, 2014! ! !
WWW.INTERNATIONALWEALTHPLANNERS.COM ! PAGE � 1
New IWP Members !!Athena P. Constantinou
MBA, CPA, CGMA APC Constantinou Ltd. !
Nicosia, Cyprus!!Gerard Aquilina
Family Office Advisor !London, England !!
Rupert Pleasant LLB MBA MCSI
Director, Praxis Trust (Switzerland) SA, Geneva, Geneva!!
Recent Event “Foro Planificacion Legal
Patrimonial” IWP successfully held the
inaugural “Foro Planificacion Legal Patrimonial” for lawyers
and
professionals from November 6 - 7, 2014 in Bogota, Colombia with
the support of five attorneys including
Juan Pablo McEwan!(Conference Programme Attached)#
IWP NEWSLETTER !Veritas Vincit#
“Putting our Heads Together: Developing the Next-Gen Leaders”
(from presentation at FFI Global Conference, Washington DC, October
14th, 2014)! To put this title into context, the underlying idea is
the theme of succession which typically involves a person handing
over power and control over something with value, such as a
business or capital, most often to a younger family member. We are
not considering political
power or royals. The transfer of authority, power and control
may be triggered by death, incapacity or resignation. !At a
technical level, there must therefore be an existing power holder
and a recipient of that power,(continued on pg. 2.)
FORO PLANIFICACION LEGAL PATRIMONIAL, BOGOTAIWP organized the
Foro Planificacion Legal
Patrimonial with around thirty attendees from countries
including Argentina, Brazil, Chile, Colombia, Ecuador, Mexico,
Panama, Peru, Spain, Switzerland, Uruguay and the USA. With Juan
McEwan and four other leading attorneys sending out personal
invitations, IWP created a memorable, highly engaging and exciting
event. A very enjoyable
group dinner was held at Andres D.C. Thank you to the various
sponsors from UBS, Mora Banc, Lombard International Assurance S.A.,
GaMFOs and JTC Group for supporting the event. !
The conference was held entirely in Spanish. Such was the strong
interest that plans are underway for another Foro in Lima in May,
2015. Stay tuned!
Foro Planificacion Legal Patrimonial , Bogota - Juan McEwan -
McEwan & Asociados, Argentina; Jonathan Mossi- GaMFOs ,
Switzerland (from left to right)
http://www.internationalwealthplanners.com
IWP NEWSLETTER! NOVEMBER 15, 2014
! PAGE � 2
Calendar!November 19 - 20, 2014 8th annual Private Banking
Latin America, Miami conference IWP Full Members, Edgar
Fernandez, Fiduciary Solutions Specialist with RBC and Felipe Ruiz
will hold a roundtable discussion on the subject of Protectors.
Come join the discussion on this interesting topic giving
employment to a few among us! !PRESENTERS WELCOME…!
February 4th, 2015 IWP Bermuda Event !Focus on Trusts and
Insurance!Rosemount Tucker’s Point !!May, 2015 (2nd or 3rd week)
“Foro Planificacion Legal Patrimonial”!Lima, Peru!!July 21st -
22nd, 2015 IWP Dublin Conference!Fitzwilliam Hotel!Ireland !
NEXT-GEN LEADERS!position of authority and / or ownership. These
three items may provide certain benefits and comforts but
fundamentally are transient. As the philosopher Voltaire commented
on life and death, “One arrives at death as well as by lacking
everything as by enjoying what can make life pleasant”. !!In the
case of empires, Voltaire also said “For empires to fall, all they
have to do is exist. Everything has to fall”. By analogy,
businesses which can be small empires, also have to fall. What is
the most profitable enterprise today may be non-existent tomorrow.
Businesses, just like people cease to exist and both go through
these natural cycles. Capital can be created just as easily as it
can be squandered.! !Perhaps a useful recommendation on family
business is the book from the turn of the last century by the
German author, Thomas Mann, called “Buddenbrooks” on the decline of
a family. A family business is at one point at its peak of
financial prosperity and stability is great. Successive generations
experience a gradual decline of their wealth and family ideals,
finding happiness increasingly elusive as values change and rapid
industrialization presents its own set of challenges. Business
interests are sacrificed at the expense of happiness. Yet with the
weakening of business acumen
and the deterioration of ethics, this results in the collapse of
the firm and the family. By contrast, the family’s original
ascendancy was driven by business expertise and strong ethics.
Therefore a family’s values and principles are seemingly a key
ingredient in their success and the business. !!Conceptually the
ascent or descent of a family is linked to its values, intelligence
and foresight, all these combined factors are intangible and the
continuity thereof is perhaps the greatest challenge.!The
assumption is that the goal is for an operating business to succeed
and provide the benefits to a family from security, employment,
involvement in a community. In the wealth management sphere a
family’s capital may have a liquid state and comprise financial
assets whether cash, bonds or equities which can also afford
similar benefits. !!In the former case, most families where perhaps
an older generation owns an enterprise and some members have the
expectation and legal right to take ownership, preparation for
leadership roles is paramount. Education and practical experience
are fundamental to the planning process. Yet can an external
consultant teach values to a family? With Latin American ones, the
older generation is the one who will teach values at home. The
external advisor can indirectly influence the importance of
parents’ teaching values, setting good examples and recognizing the
perils of wealth. For this to occur, there must be strong
IWP NEWSLETTER!!Please feel free to send
any articles you wish to have included in the next IWP
Newsletter or topics you would like to see covered. !
! NOVEMBER 15, 2014
! PAGE � 3
NEXT-GEN LEADERS!communication in the family. Preparation of the
next generation therefore must begin when individuals are receptive
and can be molded. !!In the case of mining families in Peru, some
family members manage active businesses and their children continue
the family endeavour. Some will study relevant degrees abroad,
others will go on to work for other unrelated mining companies
before returning to the family business. Other siblings of the
younger generation may convert their ownership into cash and then
embark on the risky world of financial investments. The economic
boom in Peru created many liquidity events with families sending
their money to the United States just in time to experience the
financial crisis. This event had three results: irrecoverable loss
of capital, a realization of just how limited their understanding
was of financial instruments; and most importantly, that in the
wealth management business, interests are not aligned. !!A family
who owned one of the largest retailing operation across Central
America converted their 100 year old operating business into cash
which created a new set of issues for the cash rich generation in
that they were highly experienced in retailing but inexperienced in
money management and the risks involved. Wealth may be liquid or
illiquid, each carries its own set of risks. This particular family
decided to separate the management of their liquid wealth from the
active involvement of the family, they have evolved into passive
investors in other operating business, essentially managers of
managers, hiring external non-family professionals to administer
their wealth, while designing a governance structure that would not
allow the next generation of family members to manage operating
businesses. This unique approach is akin to the Peugeot founder
wishing all shares in the enterprise to only pass to the male
heirs. An equally ineffective approach would be to ban a generation
from having any children. It is my view that the retailing family
will probably go full circle and return to retailing once the lock
up period is completed. !
A patriarch of a Costa Rican family established a rule that no
grandchild would inherit anything and the liquid wealth would serve
to advance the interests of charitable foundations, the second
generation would receive a usufruct for the duration of their
respective lifetime. The patriarch’s view was that the
grandchildren were not his responsibility and he did not want to
create a generation of “inutiles”, spanish for useless people. !!A
family member in Kenya commented to me once that he had the Midas
Touch. Money was in abundance, life was very stable, health was
excellent. Within a span of ten years the family business collapsed
and the family homes were sold. On reflection the triggers were
various, failure to recognize financial risks, excessive debt
levels, deaths, separations, a lack of business expertise in new
investments and a loss of trust. The cash cow that was the family
business was milked not just dry but till it died. Which is not
necessarily a bad thing, as life carries on, the family divided and
each set off on a new path finding opportunities in different parts
of the world. As Voltaire said, “God gave us the gift of life; it
is up to us to give ourselves the gift of living well”.
!!!!Authored by Felipe Ruiz for FFI Global Conference 2014,
Washington D.C. !!© 2014 International Wealth Planners, LLC!