In our previous article, Co-Founder Nataliia Luzina argued that it is time for female caregivers to take a more active role in wealth planning.

In this piece, she explains how they can make this happen.

 

How can female caregivers take the lead in wealth planning?

We often observe that in many entrepreneurial families, wealth planning is not approached strategically or proactively – especially for families who have achieved first-generation wealth.

Instead, planning is divided across selected family assets – business, investments, lifestyle – and driven mostly by technical considerations (e.g. choice of a favourable tax or regulatory regime). The reasons are understandable: the primary focus of entrepreneurs is usually on growing the business and accumulating wealth, leaving little time and appetite for strategic planning. What’s more, wealth planning can be seen as “complex” – and finding the right holistic advisors a challenge.

Such an approach brings risks – not only to the spouse, but the entire family. Without a proper plan, a family may be unprepared for the challenges of “sudden” wealth or the premature transition of wealth to the next generation.

By proactively engaging in the planning process, female caregivers not only better protect their own interests, but the family’s wealth and relationships as a whole.

I believe there are three practical steps for a female caregiver to strengthen her position in the family – and to gain confidence and financial independence.

The first is to promote dialogue about the family wealth plan.

Not only does this build a more open culture within the family, but it also enables women (and ultimately all family members) to gain a clearer picture of the family’s financial situation – now and in case of various contingencies. It also allows them to build alignment between core family values and strategic goals, across generations, ensuring solid fundamentals for a wealth plan and coordinated actions of family members.

An open dialogue gives everyone the chance to voice concerns and ask questions on the plan, ensuring comprehensive assessment of risks from various perspectives (entrepreneur, caregiver, next generation etc.) In turn, this manages the expectations of family members, primarily regarding terms of access to the wealth, and avoid misunderstandings. Knowing what to expect helps family members to properly prepare individuals for future roles (e.g. leader of the family business, investment advisor, protector of family trust, mediator of family conflicts).

Finally, a culture of transparent conversation addresses potential conflicts and tensions in advance, before things become too complicated, and avoids last-minute (and emotionally difficult) discussions.

Open communication and embracing different perspectives are vital for successful planning, be it concerning family wealth, relationships, or the overall legacy.

 

What is the second practical step?

Whereas the first step was more analytical, the second one is very practical: devising an action plan. This is particularly important for the female caregivers, who often lack financial independence on the one hand – but on the other bear a significant responsibility for the well-being and future of their dependents.

From divorce to sickness, disability to death, a female caregiver should rehearse for “what if” scenarios.

Let’s explore a typical scenario. Imagine a happily married couple in their mid-40s.

The husband is a successful entrepreneur who owns a thriving tech company. He is focused on growing the business and spending most of the time on trips around the globe.

The wife is an active partner in their family life, raising three small children, taking care of elderly parents and managing household affairs. She is aware of the business operations but is neither actively involved in the day-to-day decisions, nor does she dedicate proper time to discuss existing structuring and planning arrangements.

Now imagine her spouse unexpectedly to pass away in a car accident. Besides dealing with the emotional turmoil, she faces dozens of questions she needs to find answers herself:

• What assets did my spouse hold, and where? Who are the people he trusted?
• Who will take the lead in managing family business assets? Are these parties aware and well prepared?
• What happens to other family assets, like investment portfolios and holiday homes? Who will have access to them and under what terms?
• How has the financial position of the family changed, and are family members able to support previous lifestyle?
• Who can be contacted in emergencies, and what can be disclosed?
• Is there a “rainy day” fund, and who has access to it?

That’s why we advise our clients to continuously reflect on these questions, in advance of the unexpected. In doing so, a female caregiver will have a clear and up to date action plan.

 

Is there anything else a female caregiver can do?

Women are often called “stewards of family wealth” due to their significant role in managing and preserving the family’s assets and well-being.

Therefore, I believe that continuous improvement of wealth planning literacy is an important condition female caregivers to take the lead in the wealth planning process.

Financial literacy is an essential starting point to enhance knowledge around wealth and succession planning.

Financial literacy is important for any wealth owner, regardless of gender. It helps to understand and manage financial risks effectively, ensuring better protection from fraudulent schemes and mala fide financial advisors. For women, it can foster confidence, empowering them to actively participate in managing family finances, to make sound financial decisions and secure their family’s future and legacy.

But, wealth planning literacy goes beyond pure financial aspects. It implies deep understanding of the entire planning process and its value: Why it is needed? What is the goal to be achieved? Who should be the stakeholders of the process? How should it be organized? How to choose right sparring partners on the way? What are the pitfalls and “white spots”?

Enhancing wealth planning literacy helps female caregivers to better understand implications of various contingencies (like divorce, loss of a spouse, or career changes) and navigate these transitions with greater ease and competence. Furthermore, it raises general awareness of the benefits that a carefully crafted wealth plan offers for the sustainability of family wealth and the harmony of family relationships.

At Conduct, we help our clients develop and enhance their wealth planning literacy by sharing our experience, insights, and practical observations. We assist families in integrating various educational initiatives, inter alia, for female members (in the form of seminars, workshops, retreats, and coaching sessions), into building a governance platform for the family.

For more insights on the art of wealth planning, subscribe to Notes On Wealth Planning.