Top of main content
gGrl and man playing the piano

Wealth preservation – why communication is key

Family Governance

Wealth preservation
UK News
Family governance

Wealth preservation – why communication is key

Family conversations about finances can feel awkward, and as such are often delayed or avoided. But transparent and timely communication between generations is vital for preserving wealth and family businesses, explains Russell Prior, Head of Family Governance & Family Enterprise Succession and Philanthropy.


Whilst not all families need to discuss wealth and succession, for some, a failure to do so could create major problems. Our research shows parents routinely over-estimate the amount they communicate with their children about family wealth – and the clarity of this communication.

This absence of communication around the purpose of the family's wealth and values may create a vacuum into which would-be successors could build their own expectations and financial management practices.

The cost of silence


When wealth-related decisions are made with little explanation of the rationale, unspoken confusion and frustration are likely to mount. Trying not to hurt feelings could hurt your wealth.

A lack of communication around plans for wealth succession can lead to children or grandchildren perceiving that the family has not fulfilled their obligations to them. Imaginations often go into overdrive and sensitivities can run high, giving rise to a perception of unfairness – whether true or not.

This kind of emotional tension can severely impact wealth preservation, as plans for the family's finances can quickly become fractured. Knowing this, however, does not necessarily make the subject any easier to broach.

Does your family communicate well? For 80% of the parents the answer is yes, 5% no and 15% sort of.  For 40% of the next generation the answer is yes,  15% no and 45% sort off.
Sometimes, the grown-up conversations can’t wait until they’re grown up.

Overcoming fears


Planning for the future is a tough topic for most people – not only because it causes us to reflect on our own mortality and our own wealth journey, but because it can also require technical, legal and fiscal knowledge. Add to that a cocktail of emotions, including a natural concern for the well-being of future generations, and suddenly transparent wealth planning can seem extremely daunting.

It's also challenging to find a time during which the family's future wealth can be discussed, so it is put off or avoided altogether. Sometimes, the grown-up conversations can't wait until they're grown up. Consider using a significant life event, like major birthdays or a child leaving for university, to make the discussions easier.

Before such conversations can adequately take place though, it's important to have a game plan in mind. A good question to ask yourself – although often a very tricky one to answer – is: "What's the point of our wealth?" Deciding what purpose your wealth should serve will help guide you through this tough conversation.

Do you have a clear purpose for your family's wealth? For 38% of the parents the answer is yes, 5% no and 57% sort of.  For 35% of the next generation the answer is yes,  35% no and 30% sort off.

Sharing plans for preservation


It's also important to consider your family's opinions towards wealth and the preservation of it. A good starting point is to consider whether the family has a shared interest in continuing the management of its wealth together.

Knowing whose vision is driving the plans for the family's wealth is equally important. Is the whole family behind this? Or are they being swept up in someone else's dream?

Often, these insights can be gleaned through informal, seemingly inconsequential, conversations with your loved ones. Being armed with this knowledge can then make it easier to get the ball rolling when the time comes to have a more formal "sit down" about succession planning.

Vision into action


Once the family's attitudes towards wealth preservation are known and any shared goals have been identified, it is then important to put in place a plan to actively work towards whatever that future vision entails.

This plan should not only outline future wealth preservation goals, but also ways to maintain the family's current wealth until it is passed on. Once again, communication of this plan to the family – whether formally or informally – will only aid successful wealth preservation.

Through clear communication and planning based on future goals, your family should be able to get over the initial awkwardness of conversations surrounding your wealth, and move towards a shared understanding of your family wealth's preservation.

To discover more about the importance of transparent communication in wealth preservation, please contact your Relationship Manager.

Graphs source: HSBC Private Banking Family Forum, September 2016

This material is issued by HSBC UK Bank plc which is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority in the UK. It has been issued for your information purposes only.

Please note that HSBC does not provide tax or legal advice and clients should seek professional advice from their tax advisor. Any reference to tax is based on our knowledge of the current and proposed tax regime and is subject to change.

In the United Kingdom, this document has been approved for distribution by HSBC UK Bank plc whose Private Banking office is located at 8 Cork Street, London, W1S 3LJ.

No part of this publication may be reproduced, stored in a retrieval system, or transmitted, on any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior written permission of HSBC UK Bank plc. Copyright© HSBC Private Banking 2022. 

Listening to what you have to say about services matters to us. It's easy to share your ideas, stay informed and join the conversation.