Family businesses and strategic wealth management

Italian family businesses are going through a period of upheaval compared with the past, caused primarily by geopolitical instability. This is a period that calls for action and change from all businesses, and in particular from those that have been less innovative in recent years, resting on their laurels after having achieved a position of strength over time through extraordinary resilience. Macroeconomic pressures are eroding revenues and profitability, whilst leadership is changing as generational handover becomes more frequent. The annual average has doubled compared with the previous decade. Of the nearly two thousand (1,944) generational handover events between 2010 and 2024, those occurring between 2020 and 2024 averaged 192 per year, compared with 98 between 2010 and 2019. It is forecast that one in two (48.8 per cent) family businesses will undergo a generational handover over the next ten years (2025–2034). We are therefore in the midst of one of the largest transfers of wealth from one generation to the next. It is not merely a generational handover. Wealth and succession planning has matured and now addresses legal issues alongside emotional, psychological and reputational aspects. Wealth is at the centre, no longer just the business itself. Longevity and education have led to multiple generations living together and managing the family’s wealth – both tangible and intangible – with an eye to the future, with vision and by investing in family talent: it is the legacy that guides and sets the direction. Planning through the lens of legacy helps to put the wealth planning process into the right perspective. Using the so-called ‘wealth planning cube’ (SDA Bocconi, 2016) and its three dimensions, I have sought to highlight how entrepreneurial families manage uncertainty through planning. In addition to corporate instruments, non-corporate instruments such as trusts, insurance policies, family agreements, wills and contracts are becoming increasingly important in the field of wealth planning. These are all useful tools for wealth and succession planning. Furthermore, people’s mobility and the ability to invest across multiple jurisdictions determine the importance of domestic and international compliance. Through the instruments mentioned above, the organisation must be flexible, capable of adapting to the personalities and career paths of the members of the entrepreneurial family and to their choices, including that of ‘leaving’ the family business – whether to facilitate its growth and development or, rather, to hand over the long-established company.But it is the third dimension of the cube – that of the vectors – which enables the whole system to be harmonised and energised. How do I manage and hold the assets? What is the system of power (governance) – whether horizontal amongst members of the same generation and/or vertical amongst members of different generations – and what is the strategic objective of the circulation of assets: succession and/or philanthropy? It is the legacy that acts as the binding force, shaping the long-term strategy and laying the foundations of the wealth architecture that is central to the progress of the entrepreneurial family. This is the natural evolution of traditional wealth planning: the legacy as the driving force, rather than a consequence of planning. Future generations need a clear purpose and underlying philosophy, a shared vision and a technical framework that prevents the dispersal of wealth and enables strategic decisions to be made in the interests of those who will follow, avoiding the creation of a ‘golden cage’, but rather by fostering mechanisms that combine freedom, innovation and the full development of personal paths. In this context, certain best practices clearly emerge within our legal framework, available to all entrepreneurial families, not just the largest ones. It is the responsibility of those in family leadership to pay due attention to this aspect. Every family member must feel encouraged to develop their talents to the full, not just in financial or economic terms. A family’s ‘soft power’ – its sphere of influence – is linked to its legacy. Thus, instruments such as holding companies, trusts, insurance policies, family constitutions and family offices, serve as building blocks for constructing an architecture that combines soft power with operational decisions, within a framework of optimisation and efficiency typical of a business – such as the entrepreneurial family that chooses to plan. In this scenario, wealth planning becomes a dialogue between values and tools, leading to a necessary convergence between worlds that, until recently, ran parallel: that of lawyers and tax specialists, and that of business professionals. The former have always focused on the structure; the latter, on the business. But the real challenge today is the estate as a whole. By combining the opportunities offered by the legislator with advanced tools, and seizing the opportunity for investment in the real economy through club deals and structured financial products that help to raise equity – precious fuel for young entrepreneurs and SMEs. Perhaps planning, today, means precisely imagining the future with the wisdom of our forebears, allowing our great-grandchildren to adapt the wealth architecture they have inherited to the realities of the present, whilst equally ‘compelling’ them to think like their forebears in the interests of those who will come after them. Grateful, yet also responsible and custodians of that true wealth which endures through time and is passed down through the generations. For the benefit of the economy and, therefore, of the whole community.

Founding Partner, Belluzzo International Partners