Historically, family businesses were owned by men, as wives and daughters were often explicitly prohibited from ownership and management of the business due to social norms. Decisions on which child would succeed the founder often defaulted to primogeniture, whereby the firstborn son would inherit management and ownership. As the M&A market matured, families increasingly sought to sell their businesses and would often use the proceeds of the sale to start a family office. Unfortunately, these gender biases continued with this evolution from family business to family office, and women were continued to be excluded from wealth transfer and management discussions.
Today there is a changing tide and a fading of patriarchal systems, such that we are seeing upward mobility of females in family offices. Despite the fact that many families are now allowing for females to inherit wealth, many of these women stay “silent”. Barclays Private Bank research highlights that a gender gap still persists today, as 70% of women are not involved in family wealth decisions and are four times more likely than men not to be involved in family business decisions.
We are on the precipice of the largest intergenerational wealth transfer in history, where approximately $30trillion will be inherited by the rising generation. Many of these future wealth owners will be women. However, many of them are yet to discover their voices. This is a great disservice to not only families but also to our future world. The inclusion of female voices is critical as women are more likely than men to take communities into consideration when making business and/or wealth decisions. This hour calls for such decision-making as family offices find themselves in a world that is laden with social challenges: The effective collaboration of male and female voices will maximize the impact of family offices and speed up the transition to more conscious capitalism. Increasingly investors are expected to use their wealth to affect social change and maximize both financial and social returns. This can only happen when women discover and project their voices. There are three key ways that families can invite women into the decision-making process and empower them to use their voices.
1. Creating structured learning
Research has suggested that there is a gender-confidence gap, where women tend to be less confident than their male counterparts, even when they are equally as competent. As a result, women tend to underestimate their abilities. Only 2 out of 5 women state that they are confident making financial decisions, according to a report by UBS.
In addition, they tend to wrongly interpret their male counterparts’ display of confidence as evidence of greater competence than themselves. Consequently, they are less likely to want to try new things and take risks. Female family members who may not have been exposed to conversations on wealth and business may therefore be intimidated and reluctant to venture into new territory due to lack of confidence. As a result, they may defer financial decision-making to their brothers, fathers, and husbands, who appear to be more confident, whilst the women grow more and more silent. It’s no surprise then that Credit Suisse has reported that women are more risk-averse than men, demonstrate less investment knowledge, and feel less confident when making investment decisions.
Key to solving this problem is by firstly acknowledging the conditions which have created this scenario. The next is to improve inclusivity, through structured learning for all family members, to even out the playing field for both genders. This structured learning should address finance, investing, leadership, and behavioral skills and will help to build confidence.
The mode of learning is also critical. Creating an environment that has psychological safety at its core is essential. Women often desire learning guides that are empathetic, patient, and good listeners. As such highly customized learning that is 1:1, and is a blend of coaching and training is often successful in helping women in building their confidence
How wonderful is the human voice! It is indeed the organ of the soul. The soul reveals itself in the voice only.
Henry Wadsworth Longfellow, American poet
Business families can be likened to nations. Nations that lack political leadership, governance structures, law enforcement, and a system of accountability are likely to be in a state of anarchy. Similarly, families that lack governance structures can become chaotic and disorderly, especially as they grow beyond the second generation. Just as an orderly political infrastructure is a necessary enabler to ensure that citizens have a political voice and participate, an orderly family governance structure is also an enabler to ensure that all family members have a voice in the family wealth.
Governance structures create a systematic platform through which family members can project their voices and participate in the decision-making of the family wealth. They create order and reduce conflict in the family.
Even though the changing tide has led to more women being owners of wealth, there still remains a significant gap in terms of involvement in wealth management. Barclay’s research further highlights that four in ten women say that they are not involved in the management of the family wealth compared to only one in ten men. As female voices are systematically less present within wealth, creating good governance gives females the opportunity to voice these opinions.
The thought of governance may be intimidating to families as the thought of councils, charters and committees can seem bureaucratic, burdensome, and boring. But if we reframe governance as the ability to have“considered conversations” the picture becomes quite different. A great starting point for a family would be to have periodic conversations on the collective purpose, vision, values, and strategy of the family wealth, inviting all members’ views. One may consider inviting a third party to facilitate such conversations, and seek to create formal structures thereafter.
Incidentally, the more citizens that are informed and participate in political processes, the stronger the quality of democratic governance and civic relations. The same holds true for family governance structures: the better-informed members are on wealth management, and the more involved they become, the better the quality of decisions are made. These decisions are also more representative of the family.
People must be able to use their voice, tell their stories, have their experiences recognized and their voices heard. Patricia Leavy, American sociologist
3. Finding allies
During the Black Lives Matter movement in June 2020, it became apparent how critical non-Black allyship was in the movement towards racial equality. Across the globe, people began to realise that we are a collective humanity and should stand together in uprooting injustices of any kind, whether in our households, local communities, or global communities.
A common African social philosophy is Ubuntu, which means “a person is a person because of others”. The idea is that we seek to honor the dignity of each person and are concerned with the development of mutually affirming relationships. Family members should seek to imbibe an Ubuntu-like philosophy, one where members have deep empathy for one another and seek to uplift one another. With such a philosophy, allyship becomes natural.
Ubuntu is the capacity in African culture to express compassion, reciprocity, dignity, harmony, and humanity in the interests of building and maintaining community with justice and mutual caring. Ubuntu acknowledges, among other things, that: Your pain is My pain, My wealth is Your wealth, Your salvation is My salvation.
In business families, it is of fundamental importance that men become allies, and are change catalysts who support in ensuring the upward mobility of their female relatives. Gender equality in family firms can only become a reality when men and women work together towards their goals.
Male relatives can take a number of practical steps to do this. By listening to female relatives to understand the challenges they face and to inspire trust. By exposing females to the business and the wealth from an early age.
By acting as mentors or coaches to encourage women to take more interest in the family wealth. And by actively inviting their female relatives’ views in a 1:1 environment where they can “practice” finding and using their voices.
A person with ubuntu is open and available to others, affirming of others, does not feel threatened that others are able and good.
Desmond Tutu, Human rights activist
The wind of change is blowing through the family office sector as we see more women becoming wealth owners. However, more work can be done to invite their active engagement in decision-making when it comes to wealth. Families can actively invite their female family members to find and project their voices through introducing structured learning programs, governance structures, and male allyship. This inclusion of women does not go unnoticed, as an effective collaboration of males and females often leads to both wealth-maximization and social change.