Structures that do not prevent disputes

Michael Macfarlane frames the scale with estimates he cites at the start of the conversation. Over the next two decades, more than US$100 trillion of private wealth is expected to pass between generations worldwide, nearly half of it in Asia. Marshall Jen, a scholar-practitioner who works closely with Asian family offices, accepts the scale. His concern is with the tools families use to manage it.

Advice on wealth transfer, Jen argues, is still largely conventional. For a hundred years families have relied on trust structures and insurance. Those structures are widely in place, yet families still fight, divorces still happen, and during disputes assets can be frozen.

People are fighting over emotion rather than ownership.

— Marshall Jen, Wealth Office

The point matters because most succession advice addresses ownership. It allocates shares, establishes vehicles and plans for the future of the assets. Jen's experience is that the conflicts which damage family wealth often begin elsewhere, in differing assumptions about what succession means.

Different meanings of succession

Jen describes a pattern he sees repeatedly. When families talk about succession, he says, the father may be thinking about the succession of values and of the family's stories. The children may be thinking about leadership transition at the firm, or about how to steward the assets, perhaps for low-risk returns or perhaps by venturing into fields such as AI and the space economy. Each side may believe it is discussing the same thing.

This is why Jen treats family knowledge as a separate body of knowledge. It includes the rational decision-making and leadership found in conventional management. It also includes an emotional dimension that ordinary professional training does not address. He observes that Hong Kong is unusual in having two master's programmes devoted to family wealth.

Jen's interest in emotion has a positive side as well. When family influence works well, he argues, families look 30, 50 or even 100 years ahead and are willing to seed new ventures. He cites Lee Kum Kee, which is the subject of a Harvard case study on building a thousand-year family business. Long horizons of that kind depend on the family holding together.

Strategists and tacticians

Jen's central proposal is a division of roles. Families, he says, need to be strategists. Professionals need to be tacticians. Both, in his view, need to take their work up a notch.

For families, that means learning much of what professionals know and then adding family knowledge to turn it into a family strategy and build alignment. For professionals, it means understanding what other professionals are doing while still contributing their own expertise. Jen sees this partnership in Hong Kong's long-established family businesses, whose founders had a clear vision and were able to hire and train professionals who understood it.

So I think that's going to be the next model for family offices, that families understand a lot of things, they become strategists and they will outsource or in house hire out a lot of the professional to execute their vision.

— Marshall Jen, Wealth Office

The implication for advisers is significant. In Jen's model, technical excellence is necessary and insufficient on its own. A trust or insurance structure that the family does not understand, or that sits uneasily with expectations no one has voiced, can itself become the subject of a dispute.

Trust as governance

Jen's most memorable remark comes from a conversation with a friend who asked him about governance, which structures to put in place and which clauses to include.

And I told him the highest level of governance is that you actually trust each other.

— Marshall Jen, Wealth Office

He connects this to how Hong Kong itself was built. A business needed support, so its owner asked a friend to build a complementary business, and that friend in turn asked a family member to build another. Everybody knew everybody, he says. In that environment, trust carried much of the weight that formal governance carries elsewhere.

Jen does not dismiss structure. He describes a well-rounded family office as resting on three pillars. The first is investment, to preserve, safeguard and grow wealth. The second is spending to nurture social, intellectual, human and spiritual capital. The third is donation, since a family office, in his view, ultimately exists to contribute to the family's home. He also describes how single family offices use philanthropy to bring a family into alignment across generations.

Read together, his arguments suggest a sequence. Families first clarify what they mean by succession and what they want their wealth to do. Professionals then design the structures that serve that purpose. Where the order is reversed, Jen's experience indicates, a technically sound structure can still leave a family in conflict. In Jen's account, the emotional work has to come first.