The Chinese have a saying that “wealth does not pass three generations.” While a handful of Filipino families have defied this through prudent management and maneuvering to thrive over the centuries, this seems to be the usual course for many families – with fortunes being lost or diminished by the third generation from the time the family business is established.
BPI Asset Management and Trust Corporation, the wealth management arm of the Bank of the Philippine Islands (BPI), holds various webinar series that cater to its broad client base, which includes individual and institutional investors. Its new webinar series, Reshaping our Future: Inspirations for the Post Pandemic World, features experts who can guide them on how to navigate practical problems.
“Business succession and intergenerational wealth management is a very real issue that many Filipino business owners face, and is one of their leading source of anxieties, especially during the Covid-19 pandemic” said Sheila Marie Tan, President and CEO of BPI Asset Management and Trust Corporation.
The first webisode in the series featured renowned psychologist, mathematics faculty at the Ateneo de Manila University, family business columnist and adviser, and award-winning author Dr. Queena Lee- Chua. She said that in the Philippines, where 80 per cent of businesses are family-owned corporations, it is usually family conflicts that make it difficult for a family business to transcend generations.
Here are some practical advice from her talk:
1. Do not spoil your kids.
“While they’re young, teach them respect, and let them face the consequences of their actions so they develop grit and tenacity,” said Dr. Lee-Chua.
2. Balance your role as a CEO while being a parent/grandparent.
Family business heads often struggle with their heirs’ lack of interest in the enterprise, with many of them wanting to follow their passion in the arts or other unrelated professions. Dr. Lee-Chua suggests that families can strike a compromise that allows heirs to indulge in their passions, while still preparing for their duties.
3. Be open to innovation and professionalizing the business.
Dr. Lee-Chua said founders must be willing to step outside their comfort zone to ensure the longevity and continued relevance of the business. They can do this by investing in technology if needed, streamlining operations, and being open to the entry of highly-qualified professionals who can help improve operations by bringing fresh perspectives.