This lack of reputation underlies almost every problem faced by newcomers. It creates a credibility block that means they find it difficult to operate effectively in both their business and private lives.
To avoid an uphill struggle, and the risk of failure, all families must take the reputational challenge seriously and put a strategy in place, preferably before they arrive.
Going from known to unknown overnight
When international families relocate full-time or part-time to the UK, the majority of foreign-born wealth creators suddenly go from being known and respected in their home territory to being unknown, overnight.
When we say ‘known’, we do not mean that they have significant media profiles in their country of origin but, instead, that they are respected in private circles and have an established network of advisers and business partners around them that they are used to doing business with.
When these families arrive in the UK, they often end up leaving that social capital behind in their home territories.
The difficulty of doing business
This lack of social capital can severely affect a family’s ability to do business with UK banks, government regulators, investors, lawyers and advisers, and impact on personal issues such as securing top school places. It can also affect the family’s ability to socialise, make new friends and integrate themselves successfully.
Banks are increasingly risk averse, and they are guided in the first instance by a person’s reputation, and that is based on publically available data – they are looking for evidence. If there is little or no factual information online about how the family acquired their wealth, the banks will assume they have a poor reputation and will not do business with them.
This lack of reputation comes with costs. If a family with no reputation wants to do a business deal, partner with an investor, find a UK home or place their child in a new school, they will be expected to pay for the costs of due diligence on themselves. This can amount to many hundreds of thousands of pounds.
Putting in place a reputational strategy first
Many advisors understand the impact of a lack of reputation for newcomers, but do not recognise that these challenges can be overcome with intelligent and sensible solutions.
A family should give visibility to their source of wealth online; they should demystify their business activity and provide an accurate and transparent record of how they secured their wealth. The family may, for example, want to create a controlled website for their holding company that provides this information, ensuring that it is all translated into English accurately.
This may not always be possible, of course. At the very least, the family should undertake the following as soon they arrive:
- Translate existing online assets, such as biographies, into English and make them fully accessible
- Ensure any online biographies are both up to date and accurate
- Make sure any family office or foundation website holds a full history page and biographies
- Ensure full biography pages on their corporate websites
- Make sure all this information is quickly and easily findable via search engines, such as Google
This does not mean exposing the family
Many families and advisers instinctively cringe at discussion of putting this information online. They understandably feel that they are private families with private interests who do not have to make this information public. This is, of course, right.
However, there is a risk of misunderstanding here: we do not propose that the family goes on a publicity drive – instead, this is about putting controlled, accurate and up-to-date information (in English) in the public domain that is likely already well known and understood in private circles. The family will also need to work together to articulate this information in a way that respects that privacy and any personal subtleties.
Additionally, as an aside, more families are starting to recognise that while they may prefer not to put this information online, it will be online at some stage sooner or later in any case. It is much better that external audiences read this information in a way that has been presented by the family than by an alternative source.
Reputation can be built quickly and effectively
Reputation is like a magnet: a good reputation attracts; a bad reputation repels. If an individual or family has a bad reputation, people will avoid being seen with them, are put off investments with them involved, and go out of their way not to work with them. They put people off, find it difficult to access business deals, and find it difficult to get business done.
This can be especially so if a family comes from a country such as Russia, parts of Africa or the Middle East. Rightly or wrongly, assumptions will be made that their wealth is somehow tainted, unless there is a range of publically available information to the contrary.
But it is not only those people from countries with perception problems that struggle. Reputation affects all newcomers. Even if a family is from Europe, or the US, if they have a non-existent or neutral reputation, they will lose out to people with better reputations than them. But with the right reputational strategy families can build a strong and highly effective reputation quickly and effectively.