A new research conducted by Morgan Stanley Private Wealth Management and Campden Wealth Research shows that financial decision-making among ultra-high net worth families tends to have a marginally positive impact on relationships within families.
The report ‘Family Decision-Making’ shows that advisors play a significant role for ultra-high net worth (UNHWs) families. In fact, the families give more importance on what their advisors say than their own family members. 41% said that they prefer wealth managers or financial planners to make investment decisions over family members.
When family decision-makers were asked, ‘to what degree does decision-making about family wealth impact their relationship with other family members’, 44% said it had a positive impact and 30% said it had little or no impact. Only 3% said it had a strong negative impact and 16% said it had some negative impact.
The study shows that involvement in decision-making helps build better family relationships. “But importantly the analysis identifies a vital element underlying this harmony in decision-making: having proper governance and decision-making structures in place to minimize conflict,” states the report.
This is clearly evident when looking at the perceived outcomes of investment decision-making, where there are more governance structures and non-investment decision-making. The survey shows that investment decisions are clearer, more efficient, more effective, more responsive and better understood among all relevant family members.
Agreement with outcomes of decision-making around investments and non-investments
Source: Morgan Stanley/Campden Wealth, Family Decision-Making
The report maps what structures are currently in place, what is planned and where the gaps might be. In the case of mission statements, for example, the majority of families polled either have a plan in place (51%) or they are developing one now (7%) or planning to in the future (7%). However, 34% have no mission statement and have no plans to address this. A family mission statement is a document put together to help families articulate their goals and values and assist members in achieving alignment.
The findings were based on the survey of 59 individuals from North America of net worth in excess of $25 million who are actively involved in financial decision-making, as well as 15 in-depth qualitative interviews.
