83: Beyond the Balance Sheet: Jessica McGawley on Preparing the Rising Gen

 Key Takeaways

[:22] Steve Legler welcomes Jessica McGawley, founder and Principal Consultant at  Dallington, and asks her to explain what her work with rising generations primarily focuses on.

 

[1:54] Defining rising generations can mean a wide bracket of ages, and Jessica chooses to focus on late adolescence and early adulthood.

 

[2:39] Jessica shares the moment in her career that led to her interest in that specific subset of enterprising families.

 

[3:42] Including teens and young adults in conversations that will directly affect them in the near future is exposing them to learning and growth opportunities.

 

[4:38] Jessica touches on the intellectual malleability of those formative years and how important they are in terms of building skills and knowledge.

 

[5:40] How receptive are UHNW parents to including their kids?

 

[6:49] Collaboration and proximity are increasingly popular, but they come with pitfalls; Jessica details potential problems, especially for teens and young adults.

 

[9:47] Jessica touches on whose responsibility it is to maintain professional boundaries and how to measure the proper level of personal relationship that is appropriate as an advisor.

 

[11:16] While collaboration is important, Jessica underscores the critical importance of staying within one’s specialty when it comes to advising.

 

[13:05] Why neutrality can save relationships.

 

[14:41] Establishing parameters with the rising generation around confidentiality can save you from some complex situations in the future.

 

[15:42] Some cultures view confidentiality differently; Jessica shares an experience and the life moments where cultural clashes are more likely to arise.

 

[18:25] Jessica shares how she prepares the rising generation to face the demonizing. She also touches on a personal negative experience with the media.

 

[23:00] There is a fine line between letting knowledge of a family system inform your decision-making as an advisor and letting it lead your advisory work.

 

[24:28] Jessica shares moments when her advisory work surprised her clients.

 

[27:25] The inheriting of relationships is an important step to manage.

 

[29:01] Jessica shares her book recommendation as well as her advice for advisors.

 

[30:58] Steve thanks Jessica McGawley for sharing so much of her expertise and invites listeners to subscribe.

 

If you enjoyed today’s episode, you can subscribe to Let’s Talk Family Enterprise on Spotify, Apple Podcasts, and other podcast apps. Please remember to share this episode with family, friends, and colleagues.

Share your thoughts with us at fea@familyenterprise.ca.

 

You’re listening to the Let’s Talk Family Enterprise podcast for everyone in the family enterprise community, families, advisors, and thought leaders sharing ideas that help enterprising families thrive across generations. Brought to you by Family Enterprise Canada.

0:23

Hello and welcome to another episode of the Let’s Talk Family Enterprise podcast. My name is Steve Legler, and I’m delighted to be your host once again.

0:31

This month we’ve got a special guest joining us from the UK who’ll be sharing some thoughts on a couple of subjects relating to professionals who serve families, and we’ll all hopefully leave with some useful insights, whether we’re advisors to or members of the family. Our guest is Jessica McGawley, the founder of Dallington, a boutique-based firm based in London that supports families with the developmental and relational aspects of significant wealth.

0:59

I met Jessica last year during a breakout session sheeting at the Family Firm Institute conference in Boston and then came across an article she wrote for the Financial Times earlier this year.

1:10

We’ll try to cover the key points of both of those during this conversation today. We’ve got lots to talk about, so let me welcome our guest, Jessica McGawley. Welcome to the Let’s Talk Family Enterprise podcast.

1:21

Hi, Steve. Thanks so much for having me. It’s been great to finally be here with you.

1:27

Yes, I’ve been looking forward to this. And I was looking at your LinkedIn last week, and I see you call yourself a rising gen expert. And if I recall correctly, your presentation in Boston had to do with a particular subset of the rising gen, kind of on the younger side. Can you just fill us in on where you normally focus?

1:52

Absolutely. You know, I’m acutely aware that Jay Hughes, who coined the term rising gen, really attributes rising gen to no particular age group, and that you can be a rising gen at you know 60 or 70, but maybe it’s because it’s slightly less known in the UK. But I kept on going to meetings where people would repeatedly confuse next and rising, and we work predominantly with teenagers and 20 somethings who are very much rising? If we think about that sort of visual, in many capacities of their life, and so when I use the word rising, it is very much in the context of late adolescence and early adulthood. And how did you get specialized into that group? I’m curious the origin story of the focus on that subset. Absolutely, that’s all we have done exclusively for 10 years at Dallington. But to get to that point, I worked for a family office advisory in Mayfair in London for nearly 10 years prior. And the thing I kept on seeing and was frustrated by, which I’m sure is the same for many of your listeners, is a great reason to start a business if you see something you’re frustrated by, was that this younger generation, these teens and 20 somethings, were being left out of very important conversations that did affect them or would impact them in the near future. So, I had put it to that firm at the time: could we include them? And it just wasn’t the priority. So, I thought I’ll do it myself.

3:22

Well, that’s interesting because I think as an advisor to families, I often hear the question like, “At what age should we start including our kids in these conversations? And my answer is usually, “Sooner is usually better than later. So, I guess this is the same thing that you saw and managed to find a way to actually serve those people, absolutely. And I think you know, there’s so much fear surrounding Wells and Family Enterprise. I’m sure you have, and many philosophers have, the same experience that many of these meetings are surrounded with our fears about what the money, or what the business, or what the legacy is going to do, instead of actually thinking how exciting and aspirational and joyful this could be, and hopefully many of your listeners will remember their teenage years being a series of up and downs, lots to be excited by, lots to be you know nervous by, but you know taking it in its stride, and I just kept on seeing time and time again, that they weren’t being included in things that actually they might gain a lot from and learn a lot from. And at a young age like that, they are sponges and they want to learn, but most families aren’t giving them the space or the seat at the table. Is that what you’re finding?

4:37

It’s not just that as well. Most of them are in some form of education, be that school, high school, university, maybe a master’s. So, they’re already in environments where they’re used to having to receive information, you know, debate it, question it. Don’t we want that for this rising generation? Don’t we want them at that stage in their life where they can? Maybe not as the answer for some people, but we found that that was I would much rather learn a new language or to ski or to drive as a teenager than in my 40s. Partly because we’re a little bit more amenable and we’re a little bit less afraid and we’re a little bit less embarrassed, and so that’s the analogy I quite like to use.

5:23

So, I’m guessing that you get a good reception from the young people you want to serve, but getting to them through their parents is probably the bigger challenge. Is that true that the parents they’re more hesitant to start to share about the family’s wealth when they’re still young?

5:41

You know what, Steve? It’s a really good question, but I’ve actually found the people who find us or are already having conversations with the types of advisors, be that legal, financial, who refer us, are already quite open to it and want it. If a rule of mine, certainly in more recent years, has been if I’m ever in a meeting having to convince a parent why this is important, they’re not my client.

6:08

Right. Okay. So, what I said about parents being reluctant does exist, but those are not the people that you ever get to talk to. You’re already getting the pre-qualified ones who know about. And you mentioned also now and so let me segue to the article that you wrote about the different professionals that serve the families, and some of them are referring you to the families to help the families have these important conversations involving everybody. I think people are becoming more multidisciplinary. Collaboration is going on a lot more, and that’s generally a good thing, but sometimes can become a bad thing.

6:50

So, I absolutely agree that collaboration is essential. I mean, even you know FFI where we met, we you know you’ve got all those different disciplines in a room, and in the breakouts, people aren’t just doing chit chat networking. They are talking about the work, about what they’re seeing in their offices on a day to day, and that’s fabulous. The problem is that we can all collaborate whilst maintaining professional boundaries of what is in our lane versus another’s. So I think you know the article that I wrote that you’re referring to was again slightly born out of a bit of frustration of seeing multiple rising gen clients of ours who are in that sort of 16 to let’s say 25 or thereabouts bracket saying you know I’ve really opened up to our family’s wealth manager, or my trustee, and now I’m embarrassed, and I don’t think I can go to the next meeting. Or we went on a racetrack day, or for drinks. To me, that is, you know, not really.

7:53

That goes above and beyond.

7:55

Right. So well-meaning advisors who want to do well and serve their clients are inadvertently sometimes crossing a boundary. Yes, because also in your teens and 20s, how do you discern between who is a professional advisor and one that you’ve maybe heard of that your family have spoken about, and whether a friend? Because as we know, the financial and legal world move relatively quickly. People don’t stay with firms, and some do, but on the whole, they may not stay with firms for their whole career. And I’ve had it twice last year, where my client, my mentee, had thought they’d built up a really strong relationship with their wealth manager, only to turn up the next week, and they’ve moved firm, and that was it. That was the end of the relationship. Now, from the advisor, the financial advisor’s perspective, sure, they’re not. You know, that’s how this works. But if you’re 17, how do you make sense of that?

8:54

Right. I just want to read a little bit from that article because I was, I highlighted some stuff this morning. The advisory role has grown closer, warmer, more expansive, and on the whole, that is a good thing. There is, however, a problem that needs to be addressed. It involves professional boundaries. Turns out, they’re pretty important. These are people who’ve been around for the big moments: the business sale, the divorce, the death of the patriarch. So, it’s natural, and the people who have taken the FEA program here in Canada, and there are several 100 of us now, we take that program and learn that it’s important to develop these relationships on the human side with our clients.

9:37

But then there’s a slippery slope of a lack of clarity, is it that is that part of the problem? The lack of clarity of the role we’re supposed to play. Definitely, I think. Well, I think the onus is on the advisor to explain from the get go what is in their remit. This doesn’t mean they shouldn’t be warm and want to genuinely understand about the client and what they’re interested in, what you know, what passions they have in comparison to their parents. There’s nothing more frustrating and you know belittling than going into a let’s say technical meeting where you’re talked down to as the son or daughter of X. No one wants that, so it’s important you find out about them as individuals. At the same time, the parents have done their due diligence, probably gone through the houses and ran the houses over the years to say, “I choose this individual because they will be able to meet my needs at this point in my life. The next gen, the rising gem we’re talking about, haven’t had that. They haven’t gone on that exploration. They are inheriting this relationship to some degree, and therefore it’s up to the advisor to start afresh and say, as if we were meeting for the first time, this is what we do as a firm. This is what I do. This is what how I help your family.

10:54

And so you help them with, like as I said in the opening, the developmental and relational aspects of wealth, and you do not advise them how to invest their money or how to structure their trusts, and you’re curious why those who do those jobs find it so easy sometimes to venture over to the relationship side. Absolutely. Look, I doesn’t mean that I don’t read the FT every morning, and that I couldn’t hold a conversation about what’s happening in the markets. And it’s important, actually, that if something big has happened that day, you know that that we are able to have a discussion. At no point would I ever think it was my role or duty to advise, or you know suggest how they dealt with their personal finances, legal, tax matters, and I don’t know if it’s perhaps some of the regulatory aspects of it. You know, the certainly in the UK, the financial institutions, legals are far more regulated than unfortunately the family dynamics and psychological. I’m not. Is it the same for you? Yes, pretty much. Yeah. Yeah. So I think there are some blurred boundaries there, where maybe it’s a little bit easier for people on the technical side to fall into the emotional. But the problem is, to any advisor who is listening, who it does fall into that financial, legal, tax, trustee sort of more role.

12:19

I think we have to remember you’re playing. We want to play the long game with these families. We really want to be there, you know, to help them and help their whole families. And if actually you risk that relationship by a young person being overly vulnerable with you with something that you can’t help with, then you know that relationship may not survive.

12:41

Right, and the parents have a choice into who they’re dealing with, but their kids don’t necessarily have a choice, and that’s where I’m reading another line here. An advisor who has managed the parents’ assets for 20 years is not, however well intentioned, a neutral presence in the life of the child. So, can we just spend a minute or two on that neutrality and why that’s important? Absolutely. I mean, I’ve had mentees of mine describe going to their trustee like going to you know HR in your family office, or you know, you just you won’t you don’t want to be fully transparent because you know it’s all going to go back to the head, and the head is your parent, and your and that might be fine in childhood and later life, but have you ever wanted more independence and more you know privacy than in your teenage and 20s?

13:35

So I think that neutrality is really really important, and what I find is that advisors who aren’t careful about that boundary, will be in a situation when that rising gen member has more authority and has more control that they will they potentially leave.

13:52

Just have that independence.

13:54

So the neutrality you talk, you’ve said a couple of times you use the word mentee. So you you position yourself as a mentor to these young clients. Well, really, at our set, so I’m a psychological consultant, and Varah is, who is my right hand, is Dr. Fara Shabi, whose entire thesis was on identity formation of affluent adolescents. So very niche, but you know, at our core, we are a consultant and a psychologist, but if you’re 16, mentor-mentee relationship sounds much more, I think, palatable.

14:28

Right, and so I guess one of the key things you’re offering these people is a safe space and a trusted person that they can share things with, on the understanding that this will not be then turned over to their parents.

14:42

Yes, I think at the start of the relationship, you have to have an open conversation with both the parents and the rising gen to say where the parameters are, where you would break confidence, and that’s also okay. We do that if we have, you know, young people who are at risk of being taken financially advantage of, emotionally taken advantage of. If there are issues with addiction, drugs, alcohol dependency, anything like that, we say to them at the beginning, “Do we have your permission to say this to your parent? And on the whole, they will say yes because they wouldn’t believe there would be a situation that would happen.

15:19

Right. I’ve had the same thing with parents engaging me and asking, you know, how are you going to keep us informed with the progress that you’re making with our kids? And it’s like, no, that that’s for them to tell you.

15:33

It’s not for me. So there’s a certain amount of discernment that goes into what can be shared and what can’t be shared, and more often not. It’s what can exactly, and it is. I won’t name the particular nationality, but I’ve had a few families over the years where it is just far more commonplace, and it’s not for me to judge that. It’s just a different way. But where, if you accept something to your family doctor, your physician. It would be immediately shared with your parents, no matter your age. It’s just far more culturally acceptable than if you have a family GP information is shared. So when I first met them, these individuals from these families said, and I’m assuming you’ll send my parents a report every week.

16:21

To which I was like, okay, no, no, no, that’s not how it works.

16:26

Interesting. So yeah, I guess the cultural part is a whole other element here, and you are in the UK, which is very cosmopolitan, and Canada has many different cultures here as well.

16:39

Does that enter in sometimes into because I often I guess you have the older generation still be culturally from where they might have come from, and the younger ones that you’re dealing with were born in the Western society, and so how often does that become a clash point?

Speaker 2 0:13

You know, I find the biggest clash point, as it were, comes from after college or university, depending how you describe it. So, they the family of origin may still be there. They may be multi generational, but they all send their children to Western universities, UK, US, Canada, maybe some other European. They’re there for three years at a very impressionable time of our lives where your entire tribe, as it were, become your peers who you’re in a house with or in a flat with, and then the parents are upset when they return home with a very different outlook on things. And my advice to parents is before you push them into doing these exams, go to these very good colleges. Yes, absolutely. You know, also be aware what comes with that.

Speaker 1 1:07

And I wonder. I was thinking about this as I was preparing. It feels to me like wealthy families or wealthy people are like the last group that everyone can still demonize. You can’t talk about people’s sexual orientation or their race or whatever, but then if there’s billionaires, all of a sudden everyone’s allowed to talk about how bad they are. Is that something that you’re facing with the people who are growing up in these families through no fault of their own are getting painted with a brush like that?

Speaker 2 1:40

It’s a huge part of the work, Steve. It’s really, really important as well, because you’re quite right. It is the last area of a sort of open season. You can say whatever you like, and somehow, it’s acceptable. Unfortunately, the media does not help it. You know, most of the Western world and beyond have both a fascination and hatred towards people with wealth and you know great resources, and then you have shows like Succession and Billions and The White Lotus and The Perfect Couple that all sort of perpetuate this this view of them, which, as you and I know, for the majority of the time is not the case by any means. Now, we tackle this in a couple of ways. One, we think it’s important to prepare families much younger for this. Now, parents will have grown up without a mobile, without a cell phone, you know, without social media, so they will have, as a normal, unfortunate rite of passage, received some negative flak during their life, but not at the instant access and level that my clients are receiving it at. So we say to them, you really need to start from a younger age, preparing them how to respond to this in a way that is both, you know, graceful and you know does the job respectful without becoming aggressive or defensive, because unfortunately that will only perpetuate this idea. So we actually have a range of scripts that we help them run through, which range from “I’m interested in your opinion, “I feel like I can talk to this more and give some more insight, or “No, thank you. I won’t hear my family disrespected in this way-that’s the end of the conversation. So there’s all of that, but I don’t know if you saw this earlier in the year. In in May, we have the annual Sunday Times Rich List. I don’t know if you have the same.

Speaker 1 3:35

We have similar things here. Yeah,

Speaker 2 3:36

and there was a big feature on Dallington and myself and Farah, and we were approached by the paper to do this as a, you know, an opinion piece based on the Great Wealth Transfer and trying to understand the psychology of young adults growing up in wealth. What was written was slightly different, and I have learned, I have learned maybe the hard way, but what amazed me was how grown adult, you know, employed employer founders can write on public platforms like LinkedIn, like Instagram, like Facebook, how much they hate this group of society when they are employed, because you can see on LinkedIn where people are employed, and some of them are employed by the clients that I look after, and very well. So it was it was a real firsthand taste of what that must be like for them. So I even more empathy.

Speaker 1 4:41

So, are you saying that that article that came out in May, you expected one thing, but then when you saw the finished piece, it was altogether different?

Speaker 2 4:49

Yeah. In fairness to the writer, I was completely naive in the respect that I didn’t realize. Maybe you do, and others do, that whoever writes the piece, markets the piece, promotes the piece, and does the headlines are all different departments.

Speaker 1 5:05

Ah, so any nuance that you might have had and assumed has gotten lost somewhere in the translation along the broken telephone through getting it out there.

Speaker 2 5:15

So let me let me give it to you this way, Steve. What was you know the psychology of affluent adolescents turned into the Nepo baby whisperer, because that will get more clicks.

Speaker 1 5:28

Of course, it will. Yeah, and I guess it didn’t leave you with the result that you would have hoped for, but you did get a lesson out of

Speaker 2 5:36

1. Well, not only that, but the really positive result of it was also that it started a big old debate, and I was very much welcoming of it because, unfortunately for them, most of the people who wrote negative comments about my client group only proved the point that we were making.

Speaker 1 5:54

Aha! Okay.

Speaker 3 5:56

Yeah.

Speaker 1 5:56

You have a line in the article I’ve been quoting from: “Psychological awareness should ground advisory work, not lead or define it. And I want to just spend a minute or two on on what you mean by it should ground it but not lead or define it.

Speaker 2 6:13

So in that, of course, I’m referring to again the more technical advice, your financial, legal tax, etc. And it is very important that you have a good base level understanding of how this family works. For example, if there is divorce, if there have been issues of mental health or addiction, etc. these factors will impact how they think and act financially and legally. So it is important that you know some of this and that you are psychologically aware how it may impact their decisions. At the same time, should that change all your years of experience and qualification? I think it should inform it absolutely, and in some cases, it probably will impact it in a greater way, but you want to use it in a way that informs the work, but it doesn’t lead it.

Speaker 1 7:06

Right. So do not assume that you are an expert in something that you have no training in just because you’ve discovered something about a family and you’re curious and you think, well, I want them to like me, so I’m going to help. And sometimes trying to help is not doing what we’re hoping will.

Speaker 2 7:24

Exactly.

Speaker 1 7:26

Okay. I want to spend a couple of minutes on just. Are you able to share some stories that might capture how you’ve been useful to a family in a way that was surprising to the parents or to the mentee.

Speaker 2 7:42

Absolutely. Okay. So one of our programs we run three. One of them is a Rising Gen program, and that’s exclusively and specifically for siblings and cousins from family enterprise owning families. They again fit into our sort of group of around 16 to, but more up to 30 for this particular group, but there are always six siblings and cousins. The group will range in anything from maybe four to 20 people. Now, quite often, the family think they’re approaching us because they want this rising generation to be better informed on all the technical aspects, which we say to them, absolutely, you do need that. That’s not us. We can recommend wonderful people. I’m sure you also actually have a lot of this in house within your single family office and within the business. We can help you draw that out. But they’re the right people for this. What we find, and to give one perfect example, is we always say to parents, the current generation who are hiring us per se. There are only ever three options for your family business. It remains family-owned, family-run, which requires something of you and something of them. It remains family-owned but professionally run, which requires them to become owners. And being an owner of responsible one is not a passive position, or it’s sold. That’s option three, and everyone thinks, “Oh, that’s the easy route, and we’ll come into a lot of you know, into a lot of cash. But as we know, there are lots of problems with that. Helping the rising gen understand what those three paths look like for them, both on the technical side with that right advice, but also on the relational side. If one or two of you need to work in the family business, what does that mean for the rest of you and how you relate to each other? If actually no one does and professional management takes over, is there any resentment? Did any of you want to? And what if you’re all becoming owners or shareholders? Do you know what the responsibilities and rights of that are and what a good one looks like, and actually, if the family business is sold and you all come into a lot of cash, what’s holding this family together? Are the relationships strong enough? So, through approaching us for one thing, they’ve often found they need to address all of this together, and of course, we always prioritize the family, the relationship first, and say that both of these things need to happen. You need to address the family. You also need to do the technical piece.

Speaker 1 10:07

So the technical piece, yeah, I love it when people say, “Oh, we need to have you know financial literacy, as if that is then sufficient. That once they can read a balance sheet, they’re good. But there’s so much more, and so you don’t even do that part. You hold on only to the relationship, and meeting with a cohort of family members and helping them have those important conversations and to learn about what their future responsibilities might be.

Speaker 2 10:38

Absolutely, and part of that is also inheriting relationships with advisors that fall into that technical part. So the bit that we do touch on that might, again, is collaborative with the technical, is when our families do have a single family office, which many do. We make it our a big, you know, point of ours to get to know them because we’ll be around for a couple of years, not forever, but we’ll be around for a couple of years. It’s really important that you know us, you understand what we’re here for. If we ask you to host a session on an introduction to trusts or how does wealth flow in this family, it’d be great if we could sit in on that. If you’d allow us to, it’d be helpful because we can see by watching this group how it lands for them, and which of them are overwhelmed by this, which one are feeling quite excited by this, etc.

Speaker 1 11:28

It’s amazing the differences that we have, even in a sibling group, right? When you’re working with family members together, that some of them are so into it and catch it, and some are so disinterested, and yet the parents usually look at them all as well. They’re all my kids, and I love them all. So they sort of put them at the same level, and they’re not. And it’s hard for them sometimes to even express that to their parents.

Speaker 4 11:53

Yeah,

Speaker 1 11:54

Jessica, this has been fascinating, and unfortunately, we need to start to wrap up soon. So I’ve got a couple of final requests that we usually have from guests before we go. The first is a book recommendation, and the second is one piece of advice for our listeners. Can we start with the book that you think would be worthwhile for those interested in the subjects that we spoke about today?

Speaker 2 12:16

Okay, so I thought long and hard about this before because I was convinced that all of your audience would know all of the main books that I was going to recommend. So, actually, what I would like to recommend is for those who read The Atlantic publication. There is a fantastic series on parenting by Russell Shaw, and it is I think it’s six or nine parts, but it’s really thoughtful. It’s you know a five-minute read per page, and whether or not you are a parent or an advisor, you will find this really useful.

Speaker 1 12:51

Okay, great. We’ll find a link for that and put that in the show notes. Now, lastly, then one piece of advice that you can leave us with for those who advise families or who are part of enterprising or wealthy families.

Speaker 2 13:04

Okay, so I wouldn’t say this is a controversial piece of advice, but it is important to say, and not everyone likes it. The founder, the matriarch or patriarch altogether, the people who are exceptional at building businesses and creating wealth are not always the most comfortable when it comes to parenting. That is not to disregard everything they do and what they try to do, but sometimes I have heard them say point blank, “When I walk into the threshold of the home versus the office, I know which one I feel I have more of a place in. And so my advice is, when you are looking at your client, if they are the parent, look at them as just that-a parent. They may be a founder, they may be a mass wealth creator, but they might need a little bit support, more support on the parenting side than you think. And our job, I think, is to reduce the shame of that. To say, you know what, this is tough. Each family is unique. What you may need may be X, Y, Z, and I’m here to support you with it.

Speaker 1 14:10

Excellent, fantastic. The time flew by quickly, as it always does. Jessica, thanks again for joining us and sharing your expertise with our audience.

Speaker 2 14:18

Thank you so much for having me, Steve. It’s been a real pleasure.

Speaker 1 14:21

Listeners, if you haven’t already subscribed, please do so. Make sure you never miss any of these monthly episodes. Thanks again for joining us on Steve Legler. Until next time. If

Speaker 5 14:34

you enjoyed today’s episode, you can subscribe to us on Spotify, Apple Podcasts, or any other podcast app. And don’t forget to share this episode with family, friends, and colleagues.

Transcribed by https://otter.ai