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When a Family Trip Becomes an ExpeditionWhen a Family Trip Becomes an Expedition

It’s Better to Prepare for the Long Haul

This week we’re going back to the world of metaphors, which is familiar territory for me and my regular readers.

The inspiration for this post comes from a recent peer group call, where one colleague had just returned from a trip to the base camp of Mount Everest.

The facilitator of the call said she couldn’t wait to hear about his trip, and he quickly corrected her saying that it was not a trip, but an expedition. 

The next voice on the call was mine, thanking him for the metaphor that I’d be turning into a blog post about family governance, and so here we are.

A Guided Family Governance Journey

Every week in this space we look at the challenges faced by families as they prepare to transition their “enterprise” from one generation to the next.

Note that the word “enterprise” in that sentence is shorthand for “business(es) and/or wealth and/or assets” owned together as a family.

As someone who enjoys working as a guide for such families on their governance journey, I’ve seen first hand how much of an expedition this work can turn into, which is much more involved than a simple “trip”.

I’ve written about this work as some sort of voyage on a few occasions, as well as the fact that my work ends up being a bit like that of a tour guide.

See: Progressing Up the Family Governance Mountain and Going Far? Go Together. I’ve also noted the guide aspect in Choosing your FamBiz Tour Guide.

Just What Are We Getting Ourselves Into?

Another important aspect to consider when thinking about this subject is that most families who embark on this work enter into it without a firm understanding of how involved it can become.

So while the advisor/facilitator may recognize that it can turn into a full-fledged expedition, we’re sometimes better off selling them on a simpler trip, lest we scare them away.

Of course at the outset, even the one guiding the family never really knows the extent and breadth of the work ahead of us all, but because we have experienced other versions of the journey with other families in the past, at least we have an idea of what it might look like.

If a family is only prepared for a trip, it’s best that they have engaged a guide who’s also experienced in expeditions, who can help level the family up and support them along the way.

More Than Just a Day at the Beach

Let’s take a look at this metaphor with the help of my good friend Mr. Google, to see how he can shed some light on the contrasts between a trip and an expedition.

The definition of “trip” is: an act of going to a place and returning; a journey or excursion, especially for pleasure.

For “expedition” we get: a journey or voyage undertaken by a group of people with a particular purpose, especially that of exploration, scientific research, or war.

I’ve got to admit, that last part about “war” threw me off a bit, although it certainly emphasizes the degree of difficulty or danger involved in an expedition versus a trip.

A Group Journey with a Purpose and Some Exploration

Let’s look at some of the words that resonate when considering the world of families preparing to transition from one generation to the next.

It certainly is all about the group as opposed to an individual.

There is indeed a particular purpose, although I can assure you that it is rarely completely clear to all family members, especially at the outset. 

The importance of making sure the purpose is clear to everyone cannot be overstated.

I really love the part about exploration, because when done properly, there is plenty for the family members to explore about each other as they develop their abilities to work together as they integrate the family’s wealth into their future lives.

Discerning the Next Steps of the Expedition

Families and their individual members make progress at different speeds, so the facilitators who guide them need to continuously try to gauge what they can handle next.

It’s also very difficult to plan too far ahead because you never know what is going to emerge next.

As they decide on what values they hold dear, that will affect how they see their vision and their mission.

All of these parts are intertwined and require flexibility and lots of repetition to keep everyone safe on the journey.

Choose your guide wisely.

 

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How Much Wealth Is Enough? (Various Versions)

A Question with Many Different Answers

When you tell people you work with successful families who are planning to transition their wealth or business to the next generation, you often get lots of curious questions.

The queries are all over the map of course, but it usually doesn’t take very long before they want to better understand just what kind of wealth level we’re talking about.

As someone who is loathe to peg a specific dollar figure on this, I tend to get creative with my responses.

While it’s very true that the complexity level of the particular family is more important than their financial net worth, few people are satisfied with that answer.

So this week, we’re going to examine the question, “How much wealth is enough?”, from a couple of viewpoints.

Let’s Start at the Highest Level

Of course the highest level version of the question is a more existential one, i.e. “How much is enough?”, and that one also resonates with the same demographic.

Those who are driven to build a business do often continue to work on building ever more wealth, even when they have already accumulated more than they could ever spend in their lifetime.

I suppose those like me who work with such people should be thankful that these people exist, because without them we would have way less work!

But this post isn’t about that version of the question.

The spark for this blog came from a lunchtime conversation at a recent conference with someone I just happened to sit next to that day.

Is There a “Sweet Spot” in the Wealth Pyramid?

My lunch companion also works with family clients in a similar tranche of the “wealth pyramid”, i.e. not at the base with those typically labelled as the “mass affluent” or “penta-millionaires”.

Nor do we normally get asked to work with those at the very top, who we may term “mega-billionaires” or even just “regular” billionaires.

In between, there’s a space that normally gets lumped into the “Ultra High Net Worth” (UHNW) category.

The actual dollar values that various people ascribe to the upper and lower limits of that category fluctuate with time and depend on who you ask, of course.

For the sake of simplicity, I’ll share the most common figures I’ve heard, which have the lower end in the $30 – 50 Million area, and the top end somewhere between $500 Million and $1 Billion, give or take a rounding error.

Counting Families, Branches, or Households?

Our conversation got more interesting when we got to the number of family members we deal with, which likely arose when I brought up complexity.

But then I offered my preferred simplifying metric instead, which is to look at the number of households that are to be supported by the family wealth.

Let’s go there now, because this is where my A-Ha Moment from that discussion came from.

The founder starts a business to support one household, that of his immediate family.

Fast forward a generation, and assuming they have three offspring, that becomes four households, as each branch starts their own nuclear family.

When you repeat that after another generation, the numbers can grow quickly.

Numerator vs Denominator, from One Gen to the Next

Whereas at the beginning of this post we were looking at the numerator in the equation, we can’t forget about the denominator, and that’s people or households.

The complexity grows as the wealth level and number of family members increase.

But let’s get to the A-Ha Moment I teased above.

At the lower level of the UHNW space, when you think of a family with, say $40 Million of net worth, that’s significant as long as we’re talking about one household.

If that’s now going to support 5 households (assuming four branches), you’re now looking at a seven-figure dollar number for each, and the threshold for serving such a family may no longer be reached.

Nine-Figures, So It’s Still Eight After Dividing

My “revelation” during that discussion was that you almost need to be looking at a nine-figure number for a family, so that after the next generational transition, you’re still looking at eight figures per household.

Investing the time and effort into family governance doesn’t make sense at all levels of wealth.

Families will only make those investments when they can see the value over the long term, and their tranche in the wealth pyramid can play a big role.

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When Grand-Dad “Isn’t There, Yet”

Each Generation Has Its Own Timeline

Working with multiple generations of a family is always challenging for plenty of reasons.

One of that’s almost always present is the that each person in the family is on their own timeline, based on their age and life stage.

While it may seem counterintuitive, the younger ones, who presumably have a longer life ahead of them, are typically less patient, while those closer to the exit are rarely in a hurry to change things.

This week we’re going to look under the hood at some of these issues from the point of view of a practitioner working with a family, attempting to reconcile some of these natural differences.

An FFI Breakout Session as Inspiration

Regular readers are used to learning that many of my inspirations for these blogs come from conferences I love to attend where peers share their work for the good of the whole ecosystem.

A few weeks ago in Boston at the FFI Conference, I was privileged to introduce a couple of dear friends who were leading such a session, and the hardest part of being their host was that I was also charged with ending it on time, and yet nobody in attendance wanted to leave!

While I took lots of notes, one of them continued to jump off the page at me, and it was the quote, “Yes, but Grand-Dad isn’t there yet”.

My presenter friend was relating a story about a granddaughter who was frustrated with the pace of change in her family, which she shared with their family coach and facilitator.

He was stuck in a role familiar to me and many in the room that day, as the one working between the generations, trying to bring them together.

Close to Home with My Own Clients

It isn’t always Grand-Dad. 

This anecdote rang true for me with a current parent I’m working with, where their rising gen is showing some impatience with the pace of change that the family leader is willing to accept.

Hard earned wealth typically comes with certain character traits that make those responsible for it reluctant to release the control they’ve always had.

Such loosening of control over decisions rarely happens quickly, and impatience from the younger family members is unfortunately the norm in most cases.

There is no quick fix, and this is just another illustration of the necessity of looking at these questions in terms of a long process rather than a single event.

It’ll take some time before Grand-Dad gets there, and that’s perfectly normal and understandable,

The Human Capital Angle

The beginnings of this post were in my mind the other day during a peer call that brought it back into focus.

A colleague was sharing her frustration with a client who was a business founder, and she noted that he displayed low empathy.

Others on the call noted that this is unfortunately rather common for hard-driven founders.

As someone who believes strongly in the importance of human capital, this bothered me.

When I think about a family’s human capital, it means that every member of the family is afforded the ability to become their best self.

Any family that has amassed significant wealth is in a position to use some of that wealth for the benefit of each family member.

Wealth as a Magnifier

Like so many other complexities that affect families and their relationships with each other, wealth if often a huge magnifier.

A family of lesser means may have similar issues, but the presence of significant wealth can blow things out of proportion quickly.

It’s unfortunate when I see families who have the potential to use their wealth positively for the family’s human capital, but where the low empathy of family leaders creates resistance, and actually decreases it.

A Guide to Accompany the Family on this Journey

Let’s wrap up by looking at the role that a coach or facilitator can play when guiding a family on such a journey.

When people from each generation can sit together and have civilized and productive conversations about sensitive topics like this, progress can be made.

It isn’t easy for families to have such discussions on their own, so the courageous ones bring in an outside, independent specialist to hold the space for them.

It can (and does!) make all the difference in the world.

We can get Grand-Dad there, with some time and patience.

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Carve More Than the Turkey – Carve Out Family Time

A Seasonally Inspired Post

Writing a weekly post on the challenges of generational transitions for families has seen me compose more than 600 of these blogs over the past dozen years.

Almost all of them are what content experts would dub as “evergreen”, that is, not tied to anything in the news or seasons.

Every once in a while, though, I get inspired me to write something that is not evergreen, and this is one such occasion.

Thanksgiving is a huge family holiday in the USA, and as a Canadian who consumes more than enough American culture, I’m actually a bit jealous of our southern neighbours.

Our Thanksgiving feels more like a “second Labour Day”, coming just six weeks later, on another Monday.

A Random Comment During a Presentation

A few weeks ago, in On Learning by Doing and Advising Others, I shared that I managed to get myself invited to the final day of presentations for the FEA Program, where I act as a project team advisor.

It was during one of those presentations that a team member was sharing that their team had managed to encourage their project family to “carve out time” for meetings.

This was the week after Canadian Thanksgiving, so maybe that’s why the turkey carving image lit up in my head.

In reality, though, the image of someone carving a turkey in front of the whole family at the table is much more of an American one.

Luckily, US Thanksgiving still lay ahead, so I made a note to write this post so that it would be timely for readers on the other side of our border.

Convening the Family Regularly and Productively

The reason this idea of carving out time was so salient for me is that I had also recently written about how important it is for families to convene regularly and productively.

In fact, Ideas on Dealing with the Family CRAP was all about that.

I guess this needs to be clarified here because we’re talking about the family getting together to share Thanksgiving Dinner, and this is important too, but what I’m getting at is something different, and very much complementary to family meals.

My major audience is families who either have a business that they run and own together, or who at one time had a business and who now have a certain level of wealth that they are concerned with passing down to the next generation.

It’s great when all family members also enjoy the pleasure of each others’ company over a family meal, either on special occasions or some other regular of irregular basis.

But such families also need to carve out time to talk about things as a family, because all family members are stakeholders in what the family owns, even those who are not part of the business or the current ownership or management of what the family owns.

Separate Meetings to Untangle Family and Business

Families who are in business have a habit of mixing business and family way more than they should.

Subjects get blended together and an effort needs to be made to set aside time for separate meetings, in order to untangle areas between the business and the family.

Family governance, one of my favourite subjects, is all about having family meetings that focus on all family members, as they relate to the business or the family’s wealth that is to be transitioned some day.

See Progressing Up the Family Governance Mountain

Carve Up the Subjects into Separate Meetings

There are always plenty of subjects to talk about when a family gets together, and when they also run a business together, it’s so easy to just jumble up the topics that get discussed.

When I started working full time for my Dad’s company, I still lived at home, but that didn’t last long because he continued work discussions at the dinner table and into the evening, and I needed a break, so I moved out.

I acknowledge that it can be difficult to keep subjects straight and stay on topic, and that’s why having an independent outside facilitator makes so much sense.

Family members are almost always looking for more clarity, and it’s completely normal for some family members to have more clarity than others, which is why this is so key.

See Clarity for the Family – The Good and the Ugly Versions

It’s not easy to get into the habit of having regular family meetings but it’s such a difference maker, and more families should be having them.

 

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What Does This Family Need, Now?

The Question That’s Always There

Each week here I discuss topics relevant to families who will be undergoing some sort of generational transition in the near future.

This work is complex and always needs to be done on a bespoke basis, because no two families are alike.

But that doesn’t mean that there aren’t some ideas that keep coming back, over and over again.

And sometimes those are the simple nuggets that help clarify things in a way that are more helpful than you could ever expect.

So this week I want to offer up one of the simplest ones out there, and that’s a question I always return to, time and time again.

And that’s why I used it as the title for this post: “What does this family need, now?”

THIS Family, Not That Other Family

It’s only a six-word question, and we’re going to spend the rest of this post looking at half of them in detail.

The first one is “this”, and that’s important for reasons already hinted at above.

Of course we can and will think about other families we’ve worked with before, but that can become a trap if we do it too often.

Every family is different, as already noted, but there’s also a time element to think about, but maybe I’m getting ahead of myself here.

We could also concentrate on the word “family”, to remind ourselves that we’re always considering the good of the whole family, and not any particular family member, which can often default to the one who’s paying us for these services.

What They NEED, Not Necessarily What They Want

The next word I want to highlight is “need”, and that’s because too often we end up paying attention to what the family wants, rather than what they need.

I realize I may be sounding a bit too much like a smarty-pants here, hinting that I know better than the family does, but I’m going there anyway.

Quite often what families come to us for when they hire us, based on what they say they want (because it’s really what they think they want) is not exactly what they really need.

Or at least the overlap of a Venn diagram of what they want and need is not a perfect circle, and usually far from it.

The Importance of Discernment

This work requires lots of discernment, and of course the tact to not point out what I just wrote above as overtly as I just did.

See On Discernment and Resourcefulness for Family Clients

My good buddy Mr. Google says that discernment is: 

         “the ability to see the big picture of what’s going on and 

           then to divine what needs to be done as a next step”

Fans of Patrick Lencioni, will recognize that his most recent book, The Six Types of Working Genius, includes discernment as one of the six.

It’s also one that lands in the top two of my own strengths, along with engagement.

NOW, Not Last Year, Not Next Month

As a family makes progress what they need from their advisors continues to evolve.

What they needed last year is different from what they need now, and if we get too far ahead of ourselves we may inadvertently be leading them into areas they aren’t yet ready for.

There’s a need to constantly try to assess and calibrate what we should be doing next.

Having other peers who also do this work can be helpful in getting some outside perspective on next steps too.

WHAT They Need, And Also WHO

I want to wrap up by looking at something that can be difficult to admit, and that’s the fact that sometimes what the family needs now is actually a new person to come and do this work with them.

It can be very gratifying to get a family to a better place and have them “graduate” from your services.

It’s also nice when you can see that moment before your client and exit before they fire you.

Sometimes a fresh person coming in to work with a family is just what they need, not unlike a sports team firing a coach who has “lost the room” and bringing in someone new with a different style and way of being.

In any event, the constant asking and re-asking of the question, what does this family need, now, is always a good place to return to when planning next steps.

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Where Everybody Knows your Name, and Job

Just Being with Others Who Get You

There are certain times and places where everything is just a little bit less of a hassle.

I’m currently in Boston, after spending the past few days at the Family Firm Institute’s annual conference here this week.

Such events offer an opportunity to catch up with lots of colleagues who do similar work, with similar client families.

Yesterday someone asked how I was enjoying the event and I replied that it was nice to be able to reply to the question “what do you do?” with a simple answer like “family governance and facilitation” and be met with an understanding nod, as opposed to a quizzical look.

Later on at dinner, a long time friend suggested tying in the title above, from the Cheers theme song, since we were in Boston (thanks AM!).

Knowing Others Facing Similar Challenges

All of those in attendance work with families in some way or another, and we all understand that every family is different, and that’s part of what makes this work interesting and challenging.

Nevertheless, despite the heterogeneity of families, we can all learn from one another, because in many ways, all families are the same.

See The Elusive One-Big-Happy-Family

When the work you do is so niche that most people you meet on a plane or at a party might require a detailed explanation, it can become tiresome to try to give more than a cursory response.

Spending time at a conference with others who face the same circumstances, with families as well as with curious acquaintances, offers a nice respite.

Let’s look at some examples from the past few days.

Mutual Apologies About a Tough Client

It was great to speak with another advisor who’d referred a client to me since the last time we were together.

But because that client situation did not work out great in the end for me or for the family, it was a bit awkward to talk about.

However, over the next day or so, as we interacted with others and shared minor details about the situation, it became funny because we realized that we were each apologizing to the other for what occurred.

He was sorry for the referral “gone wrong”, and I was sorry for the way it worked out too. Not every client is a good match for every advisor.

Imagine my surprise when I learned that the client was now starting to work with another long time friend and colleague.

I offered to share info with them, or not, should they choose to want my perspective on that family’s situation.

Parallels to the Family Business World

Having worked in the family business my Dad started for many years, I am also intimately familiar with the concept of everybody knowing my name, both inside and outside the company.

As I now coach those in similar circumstances, I sometimes refer to their name also doubling as their title, as in “you don’t really need a title, your name tells everyone almost everything they need to know”.

The fishbowl effect for such rising generation family members makes it important for them to have some coaching around this, as well as the opportunity to join peer groups so that they can commiserate with others who get them.

Everybody knowing your name has both advantages and disadvantages, of course.

The Latest Research and Books

The conference is also a good place to learn about the latest research and books available in the field.

I brought along a copy of a book I’d recently purchased because I knew that the authors would be there and I could get it signed by both of them.

I’ve had a grand total of one person do that for me (thanks PH!) and wanted to pay it forward.

Fewer Canadian Attendees

I also got to reprise my role as the unofficial, self-appointed, Canadian Ambassador to any international conference I attend, where I place Canadian flag stickers on the nametags of every fellow Canadian I meet.

For some reason I did not need nearly as many as I have in recent past years, but let’s not go there now.

I did get to use one of my favourite lines around smaller groups than expected, by saying we were going for quality instead of quantity.

Next year will be FFI’s 40th anniversary, and I’m looking forward to gathering with this group again in NYC.

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On Learning by Doing and Advising Others

If You Want to Learn Something, Teach It to Others

As I sit down to write this week’s post, I’m fresh off a couple of great experiences that I’m still processing.

Organising my thoughts to share here every seven days has helped me in more ways than I’ll ever realize, so if any readers also get something out of these posts that’s icing on the cake.

The first experience occurred last weekend, when I facilitated yet another family meeting with a client family, where we made progress for sure, but not in a straight line, and not without some emotions bubbling over.

The second was this week when I attended the final module of the most recent cohort of the FEA Program in Toronto, where all the teams shared their experiences and learnings from the family project they’d recently completed, including one by the team I’d been advising.

You Don’t Learn to Swim by Reading a Book

Let’s address the first part of my title, about learning by doing. 

The kind of work I specialize in is guiding families on their journey as they prepare to eventually transition their business or wealth to the next generation.

There are many technical and structural aspects to such work, all of which I recognize as important, but none of which I personally take care of.

Thankfully, the ecosystem of such professionals is finally learning to appreciate the value of those, like me, who have the knowledge and skills necessary to work with the human beings in these families, concentrating on the relationship and emotional aspects of this work.

These skills are learned by doing, usually first in training in areas like coaching, facilitation and mediation, and then honed in real life work, with real life people and their real life family realities.

You can’t learn to swim by reading books about swimming.

Doing, Teaching, Advising, Guiding

As occurs quite often in my blogs, a random combination of experiences in short order offers me a fresh perspective on things.

First there was an emotional outburst in a family I’m working with, then a presentation by people I’ve been working with in an advisory capacity, sharing a recent similar experience they had.

These experiences then coalesce in my head, and I process it all by writing this post.

Here’s a few notes I jotted down as I listened attentively to the team sharing their experience with the rest of their cohort:

  • When things get loud and then all of a sudden they get quiet, that’s OK.

 

  • Reframing by saying “I think you’re trying to say….” can work wonders when trying to help a family process their different views.
  • Being able to air difficult subjects is a strength of some families we work with.
  • Eruptions in a meeting are a sign that we’re doing good, important work

Sharing Is Caring, And Advancing the Cause

Whenever I work with a project team (I just started with my seventh) I always tell them that the final module, called “KIA”, for Knowledge Integration and Application, is the highlight of the program.

I’ve succeeded in inviting myself to parts of this module a few times and get so much out of it myself.

Participants sharing their experience and learnings, garnered from several months of working together as a multi-disciplinary team, with a real life family, is always enriching.

They’ve just learned by doing, and are all sharing that experience with others, who all just learned by doing as well.

Advising such teams on that journey is fun for me, and I learn so much from that experience.

And then I learn more again as I write about it, which also helps (I think) advance the entire cause.

Everybody into the Pool

I hinted at the swimming analogy above, which I often use when I talk about efforts to learn Bowen Family Systems Theory, so let’s jump back into the pool to wrap this up.

FEA Program participants are assembled into a team after having learned many concepts about family enterprises, what makes them tick, and the challenges they face.

They’re then forced to jump into the pool with a family, and they learn to swim by swimming.

The program provides structure and methodology, making sure the water isn’t too deep, and I guess as a project team advisor, I play the role of the lifeguard.

There’s no better way for all of us to learn together.

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Addressing Anxieties and Aspirations, Again and Again

Some Things Are Always on the Agenda

Working with families who want to transition their wealth or business from one generation to the next is fascinating and challenging.

Part of what makes it fun for me is that no two days are ever the same, because each family is different.

But some parts of the work are reliably predictable, and I always like to try to point those out when I come across an interesting way to do so.

So that’s where we’re going this week, with a hat tip to a long-time friend and colleague (B.E.) who unwittingly inspired this post.

She was hosting a webinar and innocently noted something about “…working with families on their anxieties and aspirations…”

I jotted that phrase down, loving the alliteration, which I later decided to add to in my title.

Alliteration Instead of a Mnemonic

Regular readers may recall that I self-confess to writing these weekly posts for myself, as a way to continue to refine my thinking about the career I’ve found myself in.

Sometimes I come up with a mnemonic way to remember something, which I’ve done as recently as a few weeks ago with Ideas on Dealing with the Family CRAP, or over eight years ago in Start Cleaning Up Your M.E.S.S.

While mnemonics have been a go-to for me over the years, I’m pretty sure this is the first time I’ve used alliteration.

Even though “anxieties and aspirations” barely qualifies, I decided to strategically add “again” for reasons I’ll expound upon.

Family Anxieties and Aspirations around Wealth Transitions

It’s completely normal for families to experience anxieties when thinking about how they’ll transition their business or wealth to the next generation.

My buddy Mr. Google says anxieties are “feelings of worry, fear, or dread”, and I know many family members have such feelings on a regular basis.

Aspirations, from the same source, are “strong desires or ambitions for things you hope to achieve”, and plenty of family members also have many such desires.

When a family is blessed with significant wealth, which some say is a great amplifier, both those categories, the anxieties and the aspirations, become way bigger than for the average family next door.

They Don’t Really Ever Go Away

Families have been dealing with these potential negatives and worries since the beginning of time, and the hopes of what they can achieve thanks to their privileged place are also always there.

For those of us to work with such families, part of our role is to normalize that these feelings are real, they exist, and that the best way to deal with them is to name them and talk about them regularly as a family.

The blog about Family CRAP mentioned above is all about Convening Regularly And Productively.

What I didn’t talk about in that piece was that anxieties and aspirations are always on the table, even when they aren’t labelled that way.

They’re just below the surface in almost every discussion.

The Family Is Comprised of Many Individuals

Things would be much simpler if there were such a single thing as “family anxiety”; of course each individual person has their own version.

The same is true of their aspirations.

This is why having a forum in which to discuss these, as a family, is so important.

When rising gen family members understand why their parents are concerned about things, conversations about that can assuage people.

When parents hear from their offspring about some of their aspirations, the family can come up with ways to support those.

Lather, Rinse, Repeat. Again and Again

These discussions are not a “one and done” occurrence. They need to continue to happen over and over.

When I’ve worked with a family for a few years, I feel like the Chief Repetition Officer, because we go over the same ground all the time, and that’s the way it should be.

There are always going to be anxieties, and the ones from 2015 or 2020 are not the same as the ones in 2025. 

And the ones in 2030 and 2035 will be different again.

The same goes for each person’s aspirations, they evolve and change all the time.

Addressing the anxieties and aspirations is never on the agenda, per se, but at the same time, they’re always on the agenda.

And they come up again and again, and that’s a good thing.

Families that make it a point to meet and discuss them will do better than those who don’t.

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Integrating the Wealth into the Family

Picking Up on Last Week’s Post

Last week, in On Family Wealth Integration, Revisited, we ran out of racetrack just as I was getting to something pretty relevant.

So I punted it forward a week and will now circle back to an idea I introduced, but then realized that I couldn’t do justice to in the space I had left.

I’ve become enamored with the idea that a big part of the role I play with some family clients is actually all about helping integrate the family’s wealth into their family.

I also understand that for many readers, maybe most readers, this is far from clear.

I’m used to the fact that the work I do is almost never clear, and I’ve been sharing ideas about it on a weekly basis here for well over a decade in an attempt to mitigate that fact.

I’ve also resigned myself to the fact that even if I continue for another decade, more work will need to be done.

But let’s see how much progress we can make on the idea of family wealth integration.

Let’s Check in with Mr. Google Again

My old friend Mr. Google is always very helpful so I’ll call on him once again here.

He now returns not just links, but also A.I. summaries, and you don’t even have to ask for them, they just show up, similar to ways A.I. keeps showing up unexpectedly and often unwantedly, all over our lives.

The A.I. overview of “integration” is “the process of combining multiple elements into a unified whole”.

For our purposes the two elements we’re combining are the family and their wealth.

While simply stated, this doesn’t mean much to most people, so let’s dig a bit deeper.

The family is comprised of several people, and since I typically work with families who intend to have their wealth last for multiple generations, I’m almost always dealing with parents and their offspring.

Talkin’ ‘Bout My Generation

The senior generation leaders have usually already integrated the wealth into their lives, so the challenge is around helping the rising generation(s) integrate the family’s wealth into their lives.

That leading generation, accustomed to the wealth as part of their lives, can sometimes underappreciate how the family wealth can be difficult for the rest of the family to fully integrate into their lives.

The Merrill report I linked to last week (download available at the bottom of that page) breaks down the journey that most rising gen family members go through during this lengthy process.

It begins with what they label as “Awakening”, which is all about when the young (or not so young) person becomes aware of the wealth that the family has, and that they’re now expected to integrate into their lives.

Let’s not forget that in almost every case, this wealth is not a simple drawer full of cash that everyone can access at any time, for any reason. 

See Inheriting Wealth AND Structures.

Confusion: The Most Difficult Part to Get Through

The stage that follows Awakening is “Confusion”, which has a sub-title that reads “I’m overwhelmed by what I don’t know”.

We’ll spend the rest of this post on this, but I need to share that the final three stages are Perspective, Learning, and Adaptive Integration.

Part of the difficulty in the Confusion stage is that it can be very frustrating, not just to the rising gen who need to work through it, but also to the leaders who can become impatient with the timeline.

And let’s not forget, we’re not talking about one monolithic generation of homogeneous people, we’re talking about individuals.

Each person has their own strengths and weaknesses, preferences and desires, learning styles and risk tolerances, and desire to do things together as a family (or not!).

When you then layer in a host of new relationships with advisors, it can quickly become a lot to take in, and it often intersects with a busy time in their lives, starting careers and families.

Why Does It Take So Long? Because It Does!

As I wrote years ago in There Is No Destination, this is all about each person’s life journey.

There’s no question that being part of a family with substantial wealth brings with it many advantages, but that doesn’t mean that it’s all rainbows and roses.

This stuff is very complicated by its very nature, and the family relationship aspect makes it very complex.

It takes time to integrate the wealth into the family, but doing things right usually does.

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On Family Wealth and Integration, Revisited

Is Integration the Newest Buzzword in Our Field?

Each week I share something that’s on my mind related to the world of families who own some sort of enterprise that’s expected to be passed down to subsequent generations.

I’ve immersed myself in this world for the past decade plus, and I’m fascinated at how it continues to evolve.

There’s always been a lot going on in this space, and it feels like it’s accelerating lately, which is generally a good thing.

And I’ve noticed that some advisors are using some new ways to describe the kind of work that I do and would love to see more of.

So this week we’re going to look at the word “integration” and see how it applies to this work.

You may be surprised that I’ve found three different ways to apply that concept to this work. Let’s go.

Integrating the Family Members into the Planning

I’m starting with this one because it’s been on my radar the longest, and some may consider it a favourite hobbyhorse of mine.

I first wrote about this idea back in 2018, in Stopping the Disintegration of Family Wealth.

That post came about when I suddenly realized that the word “disintegration” was actually just the opposite of “integration”, and I thought it was clever to suggest integrating family members into the planning to stop the wealth from disintegrating.

I believe in that concept even more strongly seven years later, although I’m less certain that my idea is as clever as I imagined at the time.

How About “Integrated Family Wealth Management”?

I’m a big fan of the work being done by the Ultra High Net Worth Institute and I have been since they introduced their Ten Domains of Family Wealth model a few years ago.

It’s too much to get into in a single blog post but if this is new to you, I suggest going to the UNHWI website or reading this piece I wrote about it for another website.

More recently, they release what they’re calling their “Wealthesaurus”, which is exactly what you would think it is, if you looked at the two words that it jams together (the first one being wealth).

If you scroll down their list of things they’ve made great efforts to define, you will find Integrated Family Wealth Management.

So let’s see what that is.

A Comprehensive Approach to Family Office Services

According to their definition, it’s a comprehensive approach to family office services that addresses all of the Ten Domains.

And, according to their definition, it also requires the involvement of at least one Integrated Family Wealth Advisor.

That person is “a family wealth advisor with the advanced interdisciplinary knowledge and skill to act as an integrator and team leader in the delivery of services to an UHNW client family”.

I love the fact that they’re naming it and defining it, because it incorporates so much of what I’ve been writing about here for years.

It truly is an idea whose time has (finally) come.

Here’s to more people who do this important integration work, fully understanding what it is and why it’s key.

What About Integrating the Wealth into the Family?

So now that we’ve looked at integrating the family members into the planning and having an integrated advisor who understands both the technical aspects and the relational ones, what’s left to integrate?

I’m glad you asked; it’s the wealth, which needs to be integrated into the family.

This concept leapt off the page for me recently as I’m working with a family that recently had a liquidity event, so instead of the family’s largest asset being a “wealth generating operating company”, it’s now a portfolio of stocks, bonds, ETFs, and other alternative assets, all being expertly managed by their MFO.

At our last quarterly meeting, I assigned some homework, namely the Inheritance Styles whitepaper from Merrill. (You’ll need to click to download the full report from that page)

The first half of that piece details three different ways inheritors act in families, and is quite enlightening in itself.

But the unexpected bonus is the second part of that article, which details the Five Stages of Wealth Integration.

To Be Revisited, Again!

This idea of integrating the family’s wealth into the family is one I will return to next week, because I’ve got a lot more to say about it and not much room left this week.

For families in a post-liquidity event scenario, it feels very compelling to me.

Much more to come next week.

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