How family businesses can preserve wealth, create legacies

The wealth management industry in the GCC countries has been steadily growing, particularly due to the rising flows of UHNWI and HNWI from all over the world.

By 2040, the number of centimillionaires is expected to rise by 150%, with Dubai, Abu Dhabi, and Riyadh emerging as the main attractors due to favorable factors such as infrastructure development, low taxes, supportive government policies, and a growing financial services sector. These cities are becoming financial hubs with well-established financial centers like the Abu Dhabi Global Market (ADGM) and the Dubai International Financial Centre (DIFC).

Wealth Transfer and Succession Planning
Wealth transfer and succession planning have become critical due to the increasing number of family businesses in the second or third generation. Many family businesses are in the process of creating clear leadership transition plans to ensure long-term sustainability.

According to the 2024 Family Barometer, succession planning is essential, particularly for family businesses that play a significant role in regional economies. Families are focusing on transferring leadership and wealth while addressing cross-border complexities, as many family members reside and operate businesses globally.

Key Trends Defining Wealth Transfer:
Intergenerational Wealth Transfer: Families are highly concerned with passing leadership and wealth to the next generation. This requires proactive management, especially given the large amounts of wealth and the cross-border nature of today’s families.

Political Stability: Political changes can impact economic conditions, asset values, and investment returns. Families aim to establish financial plans in stable jurisdictions with strong legal protections.

Taxes and Regulations: Tax and regulatory environments remain dynamic, requiring expert local advisors to navigate complex legal frameworks effectively.

Family Office Management: Family offices are essential due to multigenerational family structures. Islamic inheritance laws in the GCC often complicate the process, leading to delayed wealth transfer and potential internal disputes.

Family Business Growth & Personal Development: Families are increasingly focusing on the development of family members' careers and wealth education programs for younger generations. These initiatives help secure the future sustainability of family businesses.

Building the Future:
The GCC family businesses, established in the 1950s and 1960s, are now managed by second- or third-generation family members. The challenge lies in balancing legacy preservation with embracing new business opportunities. Businesses must address succession, intergenerational collaboration, and evolving economic conditions.

Julius Baer supports families through financial education programs like the “Young Partners” initiative and tailored wealth management boot camps. This structured approach enhances personal and business growth while ensuring the continuity of family legacies.

As the global wealth management industry evolves, the GCC region remains a key player in defining the future of family businesses and wealth transfer. By embracing strategic planning, professional advice, and intergenerational education, families can secure both their financial and personal legacies for generations to come.