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H.S.H. Prince Philipp von und zu Liechtenstein and H.S.H. Prince Max von und zu Liechtenstein talk about protecting family wealth and the advantages of a family-managed bank and its future prospects.

Interview with H.S.H. Prince Philipp von und zu Liechtenstein and H.S.H. Prince Max von und zu Liechtenstein

For large families it is often a problem to find a consen-sus. Are there any solid rules here?H.S.H. Prince Max: Experience shows that it is always the

same issues and challenges that confront families. These inclu-

de succession, decision-making, conflict resolution mechanisms

or the question of who takes over what responsibility within the

family. It is important that these issues are addressed and re-

solved at an early stage. Because very individual family circum-

stances are involved here, there are no easy answers. Neverthe-

less, it could be a good idea to find out what functions for other

families and what one could

take over for one’s own family.

H.S.H. Prince Philipp: Since

the end of the 16th century, our

family has had a set of family

statutes, which clearly regula-

te these issues. These statutes

and the structure of our family

wealth are extremely helpful es-

pecially when the time comes to transfer wealth to the next

generation. Of course, by themselves statutes are not sufficient.

A strong sense of family and common values within the family

are required in order to preserve wealth over generations.

What attributes distinguish a family-managed bank?H.S.H. Prince Philipp: We have the great advantage that we

can think in terms of generations and we do not have to consider

optimizing short-term profits. This provides us with the neces-

sary latitude to develop strategic projects over long periods of

time and to let them grow. A second aspect is the high degree of

alignment between the investment interests of our clients and

our interests as a family: our clients can invest like the Princely

Family, their assets benefit from the same expertise, the same

structures and processes, as well as from the same relationships

as our family assets. Last but not least, our clients deal with a

family member or a representative of the family and not a man-

ager, who is subject to performance pressure each quarter and

who may even have left the company six months later. Thanks

to our long-term-oriented corporate culture, we have a great

many long-serving employees. This continuity simply enables a

The Euro and debt crises as well as fears of a collapse of the economy and the financial markets worry entre-preneurs and investors. As an entrepreneurial family and large private investors, how do you protect yourselves?H.S.H. Prince Philipp: In my view, the key factor is a healthy

diversification of assets. Our family has always been involved

in various business sectors: in agriculture and forestry manage-

ment, in real estate and other investments and participations.

Our largest holding is the LGT Group in the financial services

sector. A substantial part of our total capital is invested in the

Princely Portfolio, which is

managed by LGT Bank. In ef-

fect, our family is therefore

the bank’s largest client. Sec-

ondly, it is also advantageous

if one can adopt a long-term

approach, at least with a part

of the total assets. If one thinks

in terms of really long time per-

iods, short-term fluctuations are still important, but one gains a

different perspective and can avoid hasty decisions which could

have a negative impact.

Finally, for entrepreneurs these kind of crises always have two

sides. On the one hand there are risks, but on the other there

are opportunities. The current consolidation in the banking in-

dustry could certainly lead to interesting opportunities.

Preserving wealth over generations is surely a very de-manding task. What must families watch out for here?H.S.H. Prince Max: Many entrepreneurs have built up their

wealth using great skill and dedication and by taking high risks.

Once this kind of wealth has reached a certain magnitude, one

should plan to preserve it for future generations in a systema-

tic and disciplined manner. At this stage, it often makes sense

to reduce risks and diversify assets. That’s precisely what our

family did about 15 years ago when we sold a part of the LGT

Group and invested the proceeds in the Princely Portfolio. If

an entrepreneur or his successors simply continue to take high

risks because by doing so they were successful in the past, this

could have disastrous consequences.

“A strong sense of family is required”

“Especially in this unsettled environment, we see that our

stability as a family-owned company is highly attractive for our clients

and our employees.”

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different kind of climate at discussions and meetings, which our

clients confirm for us time and again.

H.S.H. Prince Max: Generally, I would say that family-mana-

ged companies probably have a lower risk profile and they pur-

sue a longer-term perspective. Especially private banking and

asset management clients have a long-term perspective and a

strong interest in the stability and security of their bank part-

ner. Indeed, we build up very personal and in some cases deep

relationships with our clients. They don’t like to experience too

much fluctuation and change.

“We have a major advantage in that we can think in terms of generations.”

At present private banking institutions are going through a consolidation phase. In your opinion does the model of a family-managed private bank have a future?H.S.H. Prince Max: The acquisition of Dresdner Bank Swit-

zerland is an excellent example of how because of the problems

experienced by a large bank we were able to participate in the

consolidation process in the banking industry and strongly ex-

pand our business in Switzerland. Especially in this unsettled

environment, we see that our stability as a family-owned com-

pany is highly attractive for our clients and our employees.

H.S.H. Prince Philipp von und zu Liechtenstein, born in 1947, has

been Chairman of the Board of Trustees of LGT Group since 2001.

H.S.H. Prince Max von und zu Liechtenstein, born in 1969, has been

CEO of LGT Group since October 2006.

Managing the LGT Group with a long-term perspective: H.S.H. Prince Philipp von und zu Liechtenstein (left) and H.S.H. Prince Max von und zu Liechtenstein (right).