For ultra-high-net-worth (UHNW) individuals and families, reputation is a cornerstone of success and stability. In today's fast-moving digital world, where news spreads instantly and scrutiny is constant, reputational resilience is no longer a luxury, it's a necessity for UHNWs, as much as wealth preservation and financial planning strategies.
The unique challenges facing UHNW families and family offices
UHNW families and their family offices operate under a unique set of pressures. The stakes are high, and the environment is often unpredictable. In today's world, some of the key challenges include:
- Intense external scrutiny: Investigative journalists, campaign groups, and regulatory bodies are more active than ever. Their focus on wealth, influence, and governance means UHNW individuals and families are frequently in the spotlight, be it in the "traditional" media or online news and information sources.
- Digital risks: Online misinformation and disinformation can spread rapidly and quickly escalate into a full-blown crisis. AI-generated information, digitally falsified documents, and deepfakes are increasingly being used to spread false narratives and/or impersonate.
- Insider threats: Risks can come from within as well as outside. Employees and close associates often have access to highly sensitive information, such as trade secrets, payroll data, and security details, and may be prompted to expose it if dissatisfied with a business's actions or policies.
- Regulatory investigations: Increasingly complex regulations and legal requirements mean that even inadvertent missteps can attract unwanted attention and scrutiny.
- Risk of being de-banked: Financial institutions are under growing pressure to manage risk and comply with stringent regulations. UHNW individuals may find themselves unexpectedly "de-banked" if perceived as high-risk or because of adverse press, which can disrupt operations and damage reputation among existing or potential business associates.
- Complex family dynamics: As families grow and diversify, anticipating sensitive issues becomes more difficult. Multi-generational families often have differing priorities and perspectives, which can complicate decision-making.
Unlike corporates, which in our experience (to varying extents and degrees of sophistication) tend to have crisis plans, risk registers and media handling protocols in place, families and family offices often do not. This can leave them exposed in times of transition or crisis. These challenges can feel overwhelming, especially when the family's reputation, and by extension, its legacy, is at risk.
Why reputational resilience matters
Reputation is hard-earned and easily lost. For UHNW families, reputational damage can have far-reaching consequences, affecting not only business interests and investments but also personal relationships, philanthropic initiatives, and succession planning. The family's reputation is a key part of its legacy, and any damage can undermine the stability and future prospects of both the family and its enterprises. Investing in reputational resilience is, in effect, investing in the family's future prosperity, both in the financial and non-financial sense.
Building resilience: Planning, communication, governance
Reputational resilience is not achieved by chance or just by having "thick skin", it requires deliberate planning, clear communication, and robust governance.
Fail to prepare, or be prepared to fail
When a crisis hits, having a plan is essential, but so is having someone to coordinate its execution. Crisis plans must be flexible and be able to adapt to the emotional dynamics of the moment. Whether it's a family member, family office executive, or a trusted legal (or other) adviser, someone needs to "run the ship" and ensure decisions are made quickly and confidently.
Preparation is key. Established relationships with trusted advisers make all the difference when you're under pressure. Doing the groundwork ahead of time means you, and your advisers, are ready to act quickly, rather than scrambling to respond. While every family's needs are unique, effective preparation may include:
- Regular vulnerability assessments with independent experts to identify potential reputational risks;
- Forming a crisis team with clear leadership and defined roles ensuring the right mix of skills and experience is available when needed;
- Developing protocols for different types of disruptive events and preparing draft communication lines to take;
- Practising responses to different scenarios through simulations and drills to help everyone know their role and act confidently under pressure.
Just as you would have a plan for your business, it makes sense to have one for your family. Yet families and family offices often find it difficult to discuss and prepare for the most sensitive, personal challenges which might arise, such as family conflict or succession planning. This is why it is critical to have trusted, experienced advisers to help you spot and stress-test these potential weaknesses, with a more objective vantage point.
Singing from the same hymn sheet
Central to any resilience strategy is communication. In large or multi-generational families, every member is a potential "voice" of the family, and it's important that everyone understands and agrees on the messaging. Unified messaging ensures that all family members and key staff are aligned on what to say, and what not to say, during a crisis. Monitoring online platforms and social media for emerging risks, and having protocols in place for responding to misinformation or negative coverage, is increasingly important.
Protecting privacy is often a top priority, but it must be balanced with the need for transparency, especially when dealing with external stakeholders. Saying nothing carries risks – in the absence of a response, inferences may be drawn about omissions which can be more damaging than addressing something head-on.
Structure and execution
Governance underpins all of these efforts. Family offices exist to preserve wealth, manage risks, and guide future generations. The best offices have robust governance models, trusted advisers, and clear strategies. Strong decision-making structures and protocols help ensure that the family can respond quickly and effectively to reputational threats and crises. Ultimately, the goal is to protect the family and stay true to its core mission, even in times of crisis.
Our experience and how we can help
We have extensive experience advising high-profile UHNW individuals and families, before, during, and after reputational scrutiny and challenge. We understand the intricate dynamics involved. We have seen how crises can play out, and morph into larger reputational issues when preparation has been lacking. We help clients prepare, respond, and recover from planning and crisis management to communications and governance. We're here to help you focus on what truly matters. If you would like to discuss, please do get in touch.