Beyond Wealth Transition: Role Transition

  • May 16, 2019

From WE Family Offices, by Maria Elena Lagomasino and Michael Zeuner

In our experience working with wealthy families, it is not uncommon to find a situation in which there is division of labor between spouses, each taking on decision-making roles in different aspects of the couple’s life.

Particularly circumstances in which the husband has been financially successful, it is also not uncommon for him to take on the primary decision-making role around oversight and management of the family’s wealth enterprise. Of course, not all relationships are this way. There are women who are financially successful in their own right, and relationships where partners share financial decision-making equally, or where the wife takes on the full responsibility. Yet globally, according to a recent study by UBS1, 58% of affluent women defer to their spouses when it comes to long-term management of the family’s wealth.

In many cases, this division of labor often works for a long period of time, and the family has a strong sense of financial security and high standard of living. But what happens if and when he is unable to manage the financial affairs of the family?

This paper addresses and identifies this important but not often discussed subset of women: wives in ultra-affluent families and the challenges they encounter when, by choice or circumstance, they find themselves transitioning into a leadership role in the family wealth enterprise. Typically, these are women who have historically:

  • Knowingly delegated decision-making of the family’s financial affairs to their spouse;
  • Passively agreed to most financial decisions made their spouse, and signed financial agreements with service providers upon his recommendation;
  • Not explored the details of their financial circumstances;
  • Made spending and budget decisions, without fully understanding the family’s finances;
  • Been comfortable with the fact that financial matters have been the husband’s domain.

In such families where the husband assumes the CEO role of the family wealth enterprise, the wife may have chosen to take a passive role in the family’s finances for a number of reasons. In the UBS study, which surveyed 3,652 wealthy women across nine countries, the most common reasons include assuming the spouse knows more about finances; focusing on other responsibilities; lack of personal interest in finances; and deferring to the spouse because he is the primary breadwinner. Yet, whatever her initial reason may have been, at some point a wife may start feeling anxious. Maybe her husband is getting older and forgetting things, maybe there’s a divorce, maybe a health crisis. Something triggers her anxiety.

“What happens to me if I can’t count on my husband to manage our wealth enterprise?” becomes one of several questions:
  • How do I prepare myself to become the CEO of our wealth enterprise?
  • Can I do it as well as he does?
  • Where do I start?

The media is flooded with recommendations about how to teach and prepare heirs before a transfer of assets occurs, particularly in reference to the imminent “Great Wealth Transition,” during which an estimated $30 trillion will be handed from one generation to the next, according to Bloomberg. But often the definition of “heirs” is the next generation…

About The Authors:
Maria Elena (Mel) Lagomasino and Michael Zeuner are both Managing Partners at WE Family Offices. Mel is the CEO of the firm and Michael leads the business in the United States. With offices in New York and Miami, WE Family Offices is an award-winning independent, family-focused wealth management firm, serving ultra-high net worth clients. The rm addresses the real-life challenges that deeply impact wealth so that clients are able to make the critical decisions necessary to manage, preserve and grow their wealth. WE Family Offices was most recently named Best MFO $3-5B by Family Wealth Report; ranked as #14 out of 150 in Financial Planning magazine’s 2016 RIA ranking; a Top Wealth Manager by Forbes and a Top 300 Registered Independent Advisor by the Financial Times. Mel can be reached at mel.lagomasino@wefamilyoffices.com and Michael at michael.zeuner@wefamilyoffices.com.