Dual Principles of Investment Banking for UHNWIs!

 For every business associated with Ultra High Net Worth Investors (UHNWIs), the culture is generally created through a natural hierarchy of power that favors the incumbent era, and endeavors by the younger generation to promote cultural disturbance can result in a variety of conflicts. This idea may be applied to UHNW families, organizations, businesses, and even governments. Good family governance contributes to the development of well-managed investment banking companies in India, a trustworthy family office, and fosters responsible and ethical behavior among all stakeholders. These principles are related to the concepts of stewardship over ownership and healthy communication.

 

Let us understand them in depth!

1.    Ownership vs Stewardship:

 

When someone generates wealth, most often through business, they frequently believe they 'own' that worth. They have yielded it, it is theirs, and they have complete control over how it is spent or reinvested. This works only when there is only one person in the circumstance. However, when we look at family wealth as it passes down through generations, the concept of 'ownership' can cause tension. 

What happens when money is passed along to the next generation?

 A 'stewardship' approach is necessary if wealth is 'owned' by more than one individual. Someone else curated the whole business, and you as a part of investment banking companies in India should care for it before passing control to the next generation. But it is not, has never been, and will never be 'yours.' That is what stewardship entails. To be sure, you may get the benefits while also responsibly sharing those benefits with other family members. This transition from ownership to stewardship is tough.

 

Since the organization is not 'yours,' the responsibility of care is stronger than in a private corporation that you control.

 

2. Healthy communication and transparency:

 

The second principle addresses communication, and transparency follows naturally from the first. When there is more than one shareholder, communication becomes critical for a variety of reasons. For example, when numerous family members are stewards of the family fortune, they may occasionally need to make collaborative choices with the best financial advisory services. In the insufficient information, we fill in the voids with assumptions and guesses, which is a general component of communication.

 

While this may seem clear, it simply isn't the case in many homes. Being productive co-owners becomes extremely difficult if members of the family cannot communicate. This fosters a vicious cycle of distrust throughout the family. Being transparent with information demonstrates that you have nothing to hide and that members of the family can be trusted with sensitive information.

As a result, families that grasp the nature of stewardship concerning family assets, as well as those that communicate freely and honestly, create virtuous cycles of trustworthiness among family and other stakeholders. The application of these principles with the help of top firms for financial advisory services in India is an excellent choice for seamless family governance resulting in a well-run system that serves everyone.