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The value of advice

Nobody understands individual family businesses like the families that manage them day-to-day, but planning for long-term success may require the support of a specialist. Here are three conversations family business owners should be having with their advisers.

24 July, 2023
Succession Planning for Families in Business, Family Business, Family Business Advisors, Partners, Article
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Three advice discussions family businesses need to have

Nobody understands individual family businesses like the families that manage them day-to-day, but planning for long-term success may require the support of a specialist. Here are three conversations family business owners should be having with their advisers.

How can I strategically diversify?

Many family business owners focus all their energy and capital solely into their enterprise. It’s their primary source of income and largest asset. Selling the business may also be the dominant plank in their retirement plan.

But this approach puts all their eggs in one basket, leaving them fully exposed to the ups and downs of their business’ particular sector. It also makes the family’s wealth difficult to access for non-business purposes.

A diversification strategy can reduce risk and unlock additional liquidity. Instead of the family business being a vault that holds most of the family's wealth, it’s a source of funds that can be used elsewhere. 

ANZ Private Director of Wealth Advice David Lipari notes a key aspiration can be to make the family independent of the business. This typically requires a focus on ensuring:

  • Withdrawing a component of profit from the business through adequate salaries being paid and appropriate dividends being allocated to shareholders
  • that superannuation contributions are maximised through the life of the business to provide a potentially tax effective retirement strategy
  • that complimentary investment portfolios are built to further diversify investments

Freeing up liquidity from the business can open new avenues for wealth planning.

“It gives business owners more flexibility with their wealth,” he said.

“You’ve got more options available to you and that means you can be more strategic in planning for your long-term goals.”

If the business needs money to expand, it may be able to raise debt from supportive banking partners.  

Diversification strategies can also help to protect against cyclical downturns but selecting how to undertake this can be more complicated.

A specialist adviser could help you identify diversification strategies that most suit your overarching goals for your family and business.

Key questions to ask your adviser:

  • How diversified is my business currently?
  • How can I use diversification to help protect against cyclical pressures?
  • What investment strategies would suit my current needs?

How can I ensure business continuity when I step away?

Many family businesses pass on ownership from one generation to the next as older leaders retire or step away to pursue other interests. That succession process can be critical to the success of the business and the continued prosperity of the family.

But what does succession planning look like? While the concept seems simple enough, ensuring a smooth succession requires more than simply handing over the keys.

Some important considerations include:

  • How to engage your client base through a leadership changeover
  • If necessary, what kind of succession funding to use
  • How to mitigate potential legal disputes
  • What happens with any philanthropic endeavours tied to the business.

These are conversations family business owners need to have with their advisers and their prospective heirs to provide the best prospects for a smooth hand-over.

Unfortunately, this sort of planning is often left too late, which can expose a family business to a heightened risk of losing customers, or disputes regarding control of the business. This may weaken the business’s capital structure or complicate succession funding.

Key questions to ask your adviser:

  • How do I prepare for a leadership transition?
  • What succession financing should I consider?

How can I protect my wealth?

While a good succession plan can help protect against tumultuous leadership handovers, family business owners still face day-to-day risks that can jeopardise their wealth.

Succession planning can also provide an appropriate time to consider business structures and whether assets are appropriately protected, or if strategies can now be implemented to help protect the family’s wealth against challenges that may arise periodically.

These strategies should be tailored to meet the needs and aspirations of your family. What works for one business could be wildly inadequate for another or, worse, create additional problems.

These plans need to be regularly reviewed and updated, too. Over time, the make-up of your family will change as the next generation begin marrying and having children, or others seek divorce or pass away.

Key questions to ask your adviser:

  • What risks to my wealth should I be most aware of?
  • What strategies can I implement to minimise these risks?
  • How can you work with my accountant and existing advice team to optimise these strategies?

How ANZ Private can help

ANZ Private work with high-net-worth Australian families to help navigate the challenges facing their businesses. Its team has extensive experience designing and executing succession plans and providing ongoing financial support to business owners across generations.

ANZ Private can work with other financial services experts and assist its client’s existing advisors to tailor solutions to individual businesses.

It has extensive in-house expertise – from a chief investment office to a range of specialist banking and advisory services – which means ANZ Private can provide diverse range of core financial services.

To find out how ANZ Private can assist your family business with succession planning and financial services, get in touch.


The views expressed in this content are those of the author, who is also responsible for any errors and omissions. Family Business Association provides this article for your information only. The content of the article should not be taken as advice. If you wish to explore this topic, please consult an advisor who you consider to have the expertise to provide specific advice in relation to your family business.