First published in the Financial Times by Alasdair McLaren, Director, Family Office, Stonehage Fleming.
Earlier in 2025, STEP (The Society of Trust and Estate Practitioners) released its Global Survey on Attitudes to Wealth, revealing that 78 per cent of wealth creators prioritise ensuring financial security for future generations. However, 66 per cent of respondents identified political, economic and legislative changes as significant threats to preserving that wealth.
This raises a critical question: how can entrepreneurs achieve their goal of long-term wealth security while navigating an increasingly complex global landscape?
Identifying the Right Strategy and Support
For entrepreneurs, the journey begins with identifying the right structures and advisors to protect their wealth. This includes choosing jurisdictions that offer political stability, robust legal frameworks and a sophisticated financial infrastructure. But it doesn’t stop there. Once the strategy is in place, the next challenge is engaging the next generation in the stewardship of that wealth – balancing differing interests, personalities and family dynamics.
According to HSBC’s 2023 Global Entrepreneurial Wealth Report, a significant number of UK entrepreneurs operate internationally, with one-third planning to exit their businesses within five years. Alarmingly, 11 per cent have not yet considered succession planning. This oversight can jeopardise the very legacy they’ve worked so hard to build.
The Short, but Lucrative Career
Some clients, such as athletes, entertainers and social media influencers, experience a brief window of high earnings that must sustain them for life. One well-known sports personality had wisely set up investment holding companies to manage tournament winnings and royalties. However, trouble arose when “trusted friends” were appointed as advisors and directors. Their poor investment decisions led to significant losses.
The solution involved replacing these friends with independent, professional directors and shifting to a conservative, long-term investment strategy. The restructuring used Guernsey as a base, chosen for its tax neutrality and strong governance infrastructure. For high-profile clients, reputation management is also a key consideration.
Navigating Geopolitical Risk
Clients will often look to diversify jurisdictional risk to their wealth by establishing structures outside their home countries. These structures must comply with exchange controls and tax regulations while offering protection from domestic upheaval.
One client, concerned about political instability, wanted to ensure that overseas business interests were insulated from potential disruptions at home. A private trust company was established to hold these assets independently, while still allowing the family some influence over management decisions. Cultural or local inheritance norms may also play a role in succession planning. Some families integrate it into their structures, while others use trusts to provide the flexibility not available under local rules.
For this client, the key was finding a trustworthy team in a jurisdiction that was safe, stable and offered legal provisions to allow their heirs to inherit and manage the business as they would have wished.
Succession and the “Clogs to Clogs” Phenomenon
A major concern for many entrepreneurs is ensuring that the business they built from scratch continues to thrive after their departure. But do their children share the same passion and vision? What happens when family dynamics shift due to birth, death or divorce?
The proverb “clogs to clogs in three generations” captures the risk: wealth built by one generation is often squandered by the third. Experienced advisors frequently witness family harmony unravel after the death of a patriarch or matriarch, with sibling rivalries threatening both relationships and the business.
One effective solution is to appoint independent trustees – often through a family office – to hold the controlling interest in the business. Professional directors can then manage operations, while the economic benefits are distributed to family members. This structure helps maintain business continuity while reducing the risk of internal conflict.
Engaging the Next Generation
Another challenge is encouraging the next generation to take an active, responsible role in managing family wealth. Younger family members often prioritise socially responsible investing or have philanthropic goals they wish to pursue.
Some families address this by creating dedicated investment funds within their trust structures. These funds allow younger members to pitch investment ideas, fostering financial literacy and encouraging collaboration with trustees or the family office.
One other client, a Middle Eastern family, took this a step further by establishing a charitable foundation. Instead of making individual donations, they pooled their resources into a single vehicle. This not only streamlined their giving but also enabled them to attract additional funding and amplify their impact. The foundation aligned with Islamic principles of Zakat and Sadaqah, while also providing a platform for long-term philanthropic engagement.
The Common Threads
Across all these scenarios, several themes emerge. Entrepreneurs need structured solutions that protect and transfer wealth effectively; advisors and service providers who are professional, regulated and experienced; and jurisdictions that are politically stable, legally robust and offer the necessary infrastructure for long-term wealth management.
Ultimately, preserving wealth across generations is not just about financial planning – it’s about governance, education and trust. With the right structures and support, entrepreneurs can ensure that their legacy endures, empowering future generations to build on their success rather than start from scratch.
