Morgan Stanley Takes On UHNW Challenges Beyond Tax Planning

Morgan Stanley was a 2022 ThinkAdvisor LUMINARIES finalist in the “Thought Leadership — Firms” category for its Family Legacy and Governance (FLAG) Institute program, designed to help solve the specific challenges of ultra-high-net-worth clients.

Elizabeth Chand, head of Morgan Stanley’s Family Office Resources Generalists, came up with the idea for the program while attending an event put on by a traditional estate planning institute. She realized, “There really is a gap here,” according to Glenn Kurlander, managing director at Morgan Stanley Wealth Management.

“There really was a void and an opportunity for us to step into the void and fill it,” he said during a recent interview. “And that’s what we did with the Family Legacy and Governance Institute.”

During the interview, Kurlander and Chand discussed what the program has achieved so far and what is planned for this year and beyond.

THINKADVISOR: What is the FLAG Institute, and what needs does it specifically address in the UHNW sector?

GLENN KURLANDER: There are many programs that focus on what we think of as traditional estate planning: programs that are focused on the advisor community, on estate planning professionals and address the challenges that ultra-high-net-worth clients face from the perspective of traditional estate planning, which is typically about tax-driven matters: managing estate tax, gift tax, generation-skipping transfer tax, income tax and the like.

Obviously those are very important, very significant challenges, but there are very few, if any, programs that focus on the more qualitative challenges that ultra-high-net-worth families face, and those challenges come under the umbrella of family governance: a term admittedly that is somewhat amorphous but is meant to encompass challenges that are more qualitative in nature that relate to the impact that financial capital has on the family.

And so we saw a need for helping wealth-planning professionals deal with those challenges, develop greater understanding and expertise in that area so that they can help their clients, not just with the tax-driven challenges, the more traditional estate planning challenges that all of these other institutes address, but instead focus on these more qualitative challenges as well. And that was the impetus behind the Family Legacy and Governance Institute.

How does the institute benefit financial professionals with UHNW clients?

By providing education in this space. We think it’s something that is desperately needed because there aren’t really other vehicles for getting this form of education.

We think it’s very much needed in the space, and also we think that this is an area that has tremendous impact in the lives of ultra-high-net-worth clients, as important as managing these quantitative challenges are, as important as it is to our clients to manage estate tax and gift tax exposure.

Clearly, those are important undertakings. Nevertheless, when one thinks about the long-term success of families, we think it’s undeniable that managing these qualitative challenges has the far greater impact.

When you think about the long-term success of families over two, three, four generations or more, the things that have the greatest impact are not the extent to which they manage estate and gift tax. It’s the extent to which they manage the human capital challenges, the challenges that affect whether wealth will destroy initiative and ambition. Whether the family will be destroyed over devastating family conflict. Those are the areas that we address in the Family Legacy and Governance Institute.

Those are the things that make the difference over two, three, four generations or more.