Universities Aim to Educate Family Offices on Grooming Next-Gen Leaders
Professor Lauren Cohen, Lauren Cohen, L.E. Simmons Professor in the Finance & Entrepreneurial Management Units at Harvard Business School
Aug 28. 2019 Universities are increasingly targeting next-generation leaders at family offices and family businesses. A slew of professional courses offered by prestigious institutions aim to plug the widening succession gap in family enterprises.
In 2018, the St. Louis-based Koch family announced a $12 million endowment to Washington University to establish the Koch Center for Family Business and two professorships. As part of the announcement, Dean Mark Taylor outlined some surprising statistics. Family businesses are responsible for 80% of new job creation across the world and for contributing more than $68 trillion to global gross domestic product annually.
However, industry statistics suggest these businesses could face a succession crisis as families fail to train or convince next-gen leaders to take over. To address the issue, some of the world’s leading universities, including MIT Sloan and Institut Européen d’Administration des Affaires (INSEAD), have launched executive leadership programs tailored to the needs of family businesses.
Some, like the Harvard Business School, offer a range of more specific executive programs for families. Next year, Harvard will launch the Building a Legacy: Family Office Wealth Management program for the younger generations of high-net-worth families.
The program’s faculty chair, professor Lauren Cohen, says the increasing concentration of wealth with family businesses, the growing complexity of asset classes available to families and the drop in the cost of asset management due largely to technological innovations has convinced more wealthy families to launch family offices. That makes a tailored course for wealth management for next-gen leaders necessary.
Professor Cohen says creating a family office “can be an incredibly freeing and a wonderful expression of the family legacy.” However, early mistakes can linger in the structure for generations, which is why training younger leaders early and going the extra mile with the set up process is crucial.
“My biggest piece of advice for families considering starting their own family office is to learn from other families’ experiences,” says Cohen. “Your family is not the first to be in this situation, nor to solve the complexities of setting up an office.”