The art of wealth planning with Evgenia Goti

Welcome to Beyond the Benchmark, the EFG podcast with Moz Afzal.

Moz Afzal:
Hi everyone. I'm very pleased to have today Evgenia Goti from EFG Wealth Planning. In fact, she's the global head of wealth planning at EFG Evgenia. Welcome.

Evgenia Goti:
Thank you very much Moz. My pleasure to be here with you today.

Moz Afzal:
So Evgenia, first time on the podcast. So please give us a little bit of an introduction to yourself, your upbringing. Obviously you've been in wealth planning for more than 15 years, so super interesting in terms of your background.

Evgenia Goti:
Yes, with pleasure. So I joined EFG roughly three years ago, and I took over the global function of wealth planning and before that I was working for eight years for a major financial Swiss financial institution. And before that actually I was working as a lawyer, so I'm a Greek national. I born and raised in Greece and I studied law in order to become a diplomat because I wanted to travel around the world. When I went to law school, I discovered that I actually really liked the legal topics and I decided I want to become a lawyer and more specifically a corporate and tax lawyer. So I followed that course and while working as a lawyer in one of the leading law firms in Athens, I became more familiar with private clients, private individuals, private wealth, and that's somehow how I transitioned into wealth planning. I had the luck to when I joined the first bank, the first Swiss bank that I started working with. I had the luck that there was the first wealth planner to cover the Greek market at the time. So there was a challenge and an opportunity to shape the wealth planning function and the offering according to what I had experienced or I had in mind. This is something that followed me throughout the process of being in that area of wealth planning and wealth structuring for private individuals.

Moz Afzal:
So for a lot of people who are not sure about what wealth planning actually means, maybe you can sort of set the scene for us in terms of exactly what does wealth planning mean, how do you create those structures, how do you get involved with sometimes personal relationships with many clients who probably don't even have the same relationship with their own children, right, in terms of the relationships that they might have with you.

Evgenia Goti:
Indeed, indeed. So wealth planning is actually a term used to describe a wide range of structuring and advice and needs that wealth planners and wealth advisors or financial advisors they provide to their clients when it comes to structuring or holding the wealth, depending on what the specific needs and priorities of an individual or a family might be. So structuring might be related to an individual that wants to do to perform very intense trading or investment activity. So what would be the best vehicle, the best means to formalise this investment activity and then structure the returns from the investments to himself or to the family or what's the best way to structure transfer of wealth and preservation of wealth across the nations relocations, but also from jurisdiction to the other, but also as you mentioned, family dynamics, family governance, how a family operates, communicates and evolves across generations. So it's a wide spectrum of topics and considerations that tax and legal considerations are key part of them, but not the only part of them, not the only thing in focus.

Moz Afzal:
Succession is probably the most difficult part of family decision making, particularly if you've got a patriarch that he or she has made the wealth and they want to bring other parts of their family into it is very sensitive and very critical. What typically goes wrong then in your experience?

Evgenia Goti:
Well, that's really an excellent question. So maybe to put some things in context before I answer your question, we are currently experiencing one of the largest and most intense transfer of wealth across generations of our times, so-called great wealth transfer. And we're expecting that within the next 20 years it is expected that something between 80 and 85 trillion will be transferred from baby boomers predominantly to millennials and generation X. So the magnitude and the impact of such intergenerational wealth transfer that by the way we are already experiencing in some shape and form across the globe, it's quite unprecedented and it's something that we also see being fairly discussed across financial related media. But not only, and indeed succession is a very sensitive and critical point when it comes to private wealth and when it comes to family because it is actually one of the most critical phases for wealth preservation is the point where if it's done properly and if it's done correctly, the wealth can be preserved and family cohesion can be insured.

But if it's not done properly and if the family or the patriarch fails to do it right, then we have various risks from family conflict that can be also very public and detrimental for the public image of certain families. We can have assets that are frozen for years or for decades until court decisions are issued. We can have blockage and challenges when it comes to running the family business businesses. So we can have a lot of value distraction when it comes to private wealth, but not just wealth, it's about family relations, it's about legacy, it's about a much wider impact that can actually happen if things go wrong.

Moz Afzal:
So obviously there's a very technical part to it, which is obviously your background, but there's also a human part to it, which is I guess also your background through experience. How do you balance the two items? Because obviously lots of pats I've met with aren't really bothered with the details. Right? Okay. You just sort it out and that also causes problems usually with the next gen. How do you balance the technical and the family part or the human part?

Evgenia Goti:
Well, as a matter of fact, and as does the controversial, as it might sound, the technical part usually is the easier part to manage. The human part is more challenging. So again, in succession planning discussions and succession topics first a good wealth planner and financial advisor first should start discussing the what is the need, what is the vision, what is the priority that the patriarch, the family, the founder, the key decision maker, call it as you like, and as easy or as kind of automatic this question or this assumption may be it's very hard to identify and to crystallise and for many people also to formulate and to communicate. So this is something that we place particular emphasis in our discussions and our initial discussions with the clients. It also has to do a lot about control. People want to feel in control and as long as they have ownership of the assets of the topics, they feel to be more in control.

And sometimes talking about succession is accepting that control must be let go or control is to let go earlier than one expected. So that's something that emotionally is hard for people to accept to, to formulate. But this is something that we try to guide and to navigate families and individuals and sharing stories, sharing best practices of what has happened and how people dealt with that in a successful manner, in a less successful manner tends to help in that direction. So once what is defined, the how or the technical details and the technical parts be the legal attacks, the regulatory, and again, I don't want to underestimate it, they can be very complex, they can be very technical, but once you have the foundation, once there is clarity on what the family or the individual wants to achieve, and usually the point is about control, how much control they want to maintain, how they want to exercise the control, how much sensitivity there is about ensuring continuity and consolidation of the assets across generations. One, these questions are answered in a quite articulate manner. Then as long as someone has good financial, legal tax advisors, the technical parts can be solved for the most of the part.

Moz Afzal:
So if I understood that right, giving up control, really important point. Second is I have two children, which children do I favour or do I give them both equal? That's a really hard question in terms of being able to answer.

Evgenia Goti:
So it's not about giving up control per se, it's about understanding how to structure it in a way that is retained across generations because, and that's something that I also personally place quite a lot of emphasis in the discussions with the clients to the extent that they wish to do nothing or to take no action or to not discuss about it. Now on your point about distribution of family assets and family members, how you allocate, how you distribute, how you decide who takes over the business, who takes over the private assets or who does not?

These are fairly complex family matters and dynamics and topics to which also the advisors, they should not interfere. These are, we are there to guide, to support, to demonstrate the path and the solutions, but these are fundamentally family decisions. However, when it comes to wealthy or ultra wealthy families, usually the discussion is not really about who takes this bank account or the art or how I split the real estate properties is about succession in the family business and continuity in the family business. And there are discussions and dilemmas even in a different format in the sense, do I involve my family or not, or do I create mechanisms according to which then professional management takes over. So it's about corporate governance and in the context of a family business, which is a different animal on its own. And again, when we're dealing with individuals of a certain wealth onwards, usually the concern is not about how I allocate and I split my assets because over the years this leads to erosion of wealth, but rather the contrary, how do I ensure how I create mechanism like a trust for example, or a foundation? How do I create umbrella structures under which wealth remains consolidated united? That gives also a certain power and leverage when it comes to investments, when it comes to returns, when it comes to getting financing. And at the same time I provide controlled access to family members when it comes to covering their lifestyle needs, their business venture, their education, and so on and so forth.

Moz Afzal:
So moving then on to the, I guess the other side of the coin, right? The next gen, how are they typically involved in the conversation and how do they shape the conversation as they move forward?

Evgenia Goti:
From my side, there are a couple of things that I would like to clarify when it comes to the next generation. First of all, it's very important to define which generation, which next generation we're talking about. Because if we're talking about the next generation from a purely succession planning, from a pure inheritance, then the next generation is usually people between their forties and late fifties. So we're talking about people between 40. The average age of succession, by the way is 59 years old. So this is a mature by definition a cohort of next gen that they will inherit in most of the cases they might be already involved in the family business if there is a family business involved. So that's one part that we need to have in mind. But if we perceive and we understand the next gen in a more sociological and a more traditional concept, automatically we're referring to people of younger generations, their twenties, mid twenties, maybe even early thirties.

But these are people that when it comes usually to private wealth, and unless they have done their own startups and their own ventures, they don't have so much control or decision-making power or ownership over the assets. And of course for that more, let's say traditional concept of next gen, the question and the concern very often raised by families is how do I involve them? How do I include them, how do I protect them? How do I ensure that they demonstrate the necessary prudence when it comes to financial matters, when it comes to protecting the legacy of the family and the wealth, there is no easy answer to these questions, to be fair and to be honest with you, something I always discuss with clients and I strongly advise is that they should create, and this is something that we also as a wealth planning team, we work closely with our clients is to create a roadmap to create an environment in which the next gen gradually and control acquires autonomy and some decision making.

It can take many shapes and forms as long as there is an overarching strategy and an overarching plan on how this is performed and why. And families that take this route, they usually, there are a number of interesting elements to that. First of all, the fact that the parents decide to trust the younger generation and to show trust in in acts usually works well. People tend to respond well when they're given trust and some ownership. Secondly, it's a very good test drive because then the parents can really see how they behave and how they react, not just on the investment decision, but also which is very important, but also how responsible, how accountable they are when it comes to the specific tasks and responsibilities. And it can also have some interesting outcomes in the sense that for younger generation that they decided to do their own venture when it comes to investments or to a startup, it can actually lead to some success sometimes with also a very positive outcome. So this is a way that we have seen and we are experiencing with families and with clients to work well when it comes to engaging in a structure manner, the next generation.

Moz Afzal:
So one of the big topics at the moment is also global mobility and relocation. Certainly we you are not, I am in the UK and every day we hear more and more people moving to Dubai or to the Middle East or to Italy or Switzerland and other places. And clearly its wealth, emotion is a topic. What are your thoughts around that?

Evgenia Goti:
Well, global mobility is a very important trend when it comes to individuals, wealthy individuals, but not only wealthy individuals. So first of all, from a economic reality and lifestyle perspective, relocation and global mobility is easier than ever. Secondly, and here things become a little bit different for more wealthy families and individuals, taxation is a key driver that has a key impact on the decision of individuals on where to live and for how long to live in a certain jurisdiction. In the sense that we have observed that families and wealthy families, they're much more aware when it comes to attractive tax regimes. So this is something that they're looking more and more. It has become more of a factor in the decision on where to live. At the same time, there are many countries that over the recent years they have introduced regimes to attract wealthy individuals there. So that creates a very interesting canvas of global mobility, especially for wealth individuals.

Moz Afzal:
The whole objective of moving in the first place may well disappear because they planned it very badly. In your experience, what are the mistakes that people make in that regard? Not necessarily just from mobility, but also in succession? What are the obvious mistakes people make and what advice could you give to people to say, just don't do that?

Evgenia Goti:
That's a very good question. So I would differentiate between succession and mobility and relocation because the factors are quite different. So if we start with relocation, I would say that sometimes people tend to be dazzled by a very attractive tax regime while underestimating the fact that they need to spend a significant amount of time in that specific jurisdiction or destination. So in my view, a relocation to be sustainable and to be successful in the short, but definitely in the long term, it needs to achieve a good balance between satisfying real life and lifestyle needs and tax environment. If this is not the case, and sometimes people tend to focus very much on the taxation, underestimating the other part, it will be inevitably a short-term solution. And I have clients that they came back after one or two years and they said, I cannot live there.

I cannot, I need to move out for a number of reasons. It's is it the climate, is it the lifestyle? It can be a number of reasons. And then they need to restructure again, which is not good because it ends up in additional cost and hassle or they relocate and then they forget to structure and to implement the relocation holistically, meaning what? There are some important elements with relocation that people sometimes tend to forget or to neglect that it's not per se, the tax regime or the immigration, but it relates to the impact of the new environment in which they will operate on their matrimonial status if they have prenups, for example, and what is the impact or inheritance tax considerations. So I would say these are the patterns of, let's say two risks or mistakes, things that people tend to forget When it comes to succession, I would say that predominantly the biggest risk and the biggest issue is inactivity and tendency of people to postpone and not take action early enough, which leads essentially to lack of succession.

There's a very interesting case currently in Asia with a billion founder of the empire Wahaha. He died in 2024. He had one legitimate daughter, and it came up that he had also three kids from another relationship. He was planning to set up some trusts for the succession planning and to ensure some equitable solution and distribution between all the kids. That was not done for a number of reasons. So the outcome is that 1.8 billion of liquid assets is currently frozen and blocked at HSBC because of the family conflict and the legal action taking in front of the courts between the years and many other examples. So this is quite prominent and well known, especially in Asia because of the size of the assets and how famous the person is. But there are many, many other cases similar to that of a smaller size of course.

Moz Afzal:
So we're coming to the end of the podcast. So always the last question. If you had to leave listeners with one message about why wealth planning matters, what would it be?

Evgenia Goti:
They should leverage their knowledge and their wealth planners and financial advisors to crystallise their objectives and needs when it comes to their family wealth, when it comes to their priorities, the technicalities, the tax, the legal part. It cannot be fixed and it cannot be organised with proper advice, but they should really take the time to engage, to listen what other families are doing, and use the process to formulate their own priorities when it comes to private wealth.

Moz Afzal:
That is very, very good advice. Good advice, indeed. So Evgenia, thank you very much for coming on the podcast. So with that, we'll wrap it up there. Thank you very much for listening and we'll be back soon.

 

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