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Caring, Mattering and Meaning in Family Business

Caring, Mattering and Meaning in Family Business

This week I’m going to stay with my recent philosophical slant and write about three related subjects I’ve come across, that all deal with the human aspect of business families.

 

I Don’t Care How Much You Know 

I have some “go to” expressions that I’ve picked up over the years and I sometimes have a tendency to think that they’re universally known.

Then when I pull one out in conversation, I get a reaction that makes me realize how useful it really is.

I used one recently regarding the way experts are sometimes dismissed by their target clients as being too much of a “know-it-all”.

The expression I love for that is:

“They don’t care how much you know until they know how much you care”

 

Stakeholder Lives Matter

A few weeks later, I was reading the weekly newsletter of the Family Firm Institute, The Practitioner, which featured a piece aimed at trustees who serve on boards of directors, by Patricia Annino.

The following quote jumped out at me:

“Human nature tells us that if you can’t matter in a positive way, you will matter in a negative way because what is most important is to matter”.

I’m not sure that I ever heard it put that way before, but it really struck me.

The next sentence is also worth quoting, because I don’t think I could paraphrase it any better:

“Human nature also tells us that most people strive for recognition. Having voices heard and questions answered are critical to the ongoing dynamic.”

 

Part of the “One Big Happy Family”

Being part of a business family can be tricky at times.

There’s a group of people, with a common family bond, each with different interests, talents and abilities.

There are also lots of roles to play, in the business, in the family, and for some people, in both.

And at the end of the day, every single one of them

wants to, and even needs to, matter, in some way.

 

Purpose and Meaning

A few weeks ago I heard Kevin McCarthy, author of a number of books about “Purpose”, speak at a conference about family wealth.

He had a great quote right off the top of his presentation that struck me too. Here it is:

“The Enemy of Wealth is Meaninglessness”

Wow.

For some reason another expression that came to mind immediately was this one:

“The opposite of love is not hate, it’s apathy”

 

“Frenemies”?

I don’t know that I fully agree with the word “enemy” in McCarthy’s quote, but I know what he was getting at.

And that’s the fact that people without meaning will quickly destroy wealth, if they have access to it. So in that sense I guess “enemy” works.

But if we look at some opposites, would that make “meaningfulness” the “friend of wealth”?

I’m not sure I’d want to have to make the case for the correlation between meaning and wealth.

 

Wealth OR Meaning?

What happens if we look at the question of which one people would choose, if offered a meaningful life without wealth or a life of wealth without meaning.

I’m tempted to guess that many would quickly opt for the wealth without giving the question much thought.

I’m also inclined to think that many people who made that choice would soon regret it.

 

And For Your Offspring?

Sometimes things can be clearer to us if we remove ourselves from the equation, and instead ask what we would choose for our children instead.

So if you could offer your children a life with lots of meaning, or one with lots of financial wealth, which would you choose for them?

Of course, most people would hope that their kids would end up with both, but I think that too many people likely believe that if you have the financial wealth, the rest will take care of itself.

 

Not So Fast

I know for a fact that there are many members of families that are very comfortable financially who do not feel like they have a lot of meaning in their lives.

Those same people likely also don’t feel like they matter that much to their family.

And if that family has advisers who are great at their specialty, those family members likely don’t care how much they know.

Financial capital is always the biggest focus, but families should worry much more about their human capital.

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Who Messes Up What, Or What Ruins Whom?

Who Messes Up What, Or What Ruins Whom?

This week’s post is one that I’ve been looking forward to writing for a few weeks now, ever since I had lunch with a colleague and relayed this story to her.

It was her reaction that made me realize how simple and yet how powerful it really is.

Considering that I’ve been writing this weekly blog for over five years now, I can’t believe that I haven’t written about this yet.

 

Credit Where It’s Due 

Before telling the story, I should note that I would love to give credit to the person who told the story when I first heard it, but I really have no clue who it was.

It would not surprise me to learn that it was during one of the weekly teleconferences of the Purposeful Planning Institute, because those calls have inspired many of these blogs.

In any event, it’s one of those stories that has probably been played out in various versions hundreds of times, all over the world.

So my version isn’t a true, “verbatim” recounting, but more like a parable.

 

I Worked Hard for All of This

A successful businessman is meeting with one of his trusted advisors, as he begins to think about how he’s going to deal with the considerable wealth he has built up.

He mentions how hard he’s had to work for what he now has, and then adds,

“And I don’t want my kids to screw it all up”.

This part of the story likely sounds pretty familiar to many professionals who work with clients who’ve built up large amounts of wealth.

It’s not unnatural for anyone to be concerned that the fruits of their labour might be squandered.

 

The Other Side of the Coin

Later in the discussion, likely in response to a question posed by the wise advisor, the man has a bit of an awakening, and says,

“But I don’t want all my wealth to screw up my kids, either”.

If you’ve read even a few of my blogs, you already know that this was the true “A-Ha” moment of the story for me.

 

The Bad News First

The bad news is that so many professionals who work for such wealthy clients are really only specialists in solving the first part of the problem.

Finding ways to create bulletproof structures to preserve wealth is nothing new for many specialists who pride themselves on how they can minimize taxes, and restrict how the wealth will be used by its intended beneficiaries.

Unfortunately, too many clients are too short-sighted to see that this will also produce many unwanted side effects for their family down the road.

 

Now the Good News  

The good news is that there are now more and more people who understand that only worrying about preparing the assets for the heirs leads to sub-optimal results.

And not only that but people are now also realizing that this is not a question of either worrying about preserving the wealth OR preserving the family and their relationships, it’s actually possible to do both.

 

It’s Not Either/Or, It’s Both/And

In fact, by concentrating on the second part, and making sure that the offspring will be prepared to receive the wealth, you will increase the chances that the family will be able to maintain and even grow the wealth in future generations.

I’m reminded of a blog I wrote a few years ago, Successful Planning: Who Should Be Involved?

It contains the profound quote,

“Plans that are about us, but don’t include us, are not for us”.

That is a verbatim quote, from a different context, but it fits perfectly here too.

 

FOR the Family, BY the Family

It starts with someone recognizing the importance of this. That could be a member of the family, or it could be a wise advisor.

Long-term planning at it’s best is truly long-term, i.e. inter-generational.

If that wealth is to serve multiple generations of a family, the sooner the members of the following generations get involved, the more likely they will be successful.

 

Efficient or Effective?

You could simply worry about the preservation of the wealth, and create rigid structures that are tax efficient and ensure that some wealth will be available for future generations.

That would certainly be more efficient.

But if you want your plan to be effective, get the

younger generation involved as early as you can.

You won’t regret it, and neither will they.

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Informal Authority in Family Business

Informal Authority in Family Business

I like writing about aspects of family business that sometimes get overlooked “in real life”.

Some subjects that you can learn about in business school work OK in most places, but somehow, when looking at a family business, things aren’t that way at all.

 

The Standard Org Chart

Nowhere is this more apparent than with a document that you’ll find in just about any company, the good old organization chart.

There are usually lots of rectangles, connected together by lines, and often looking a bit like a pyramid.

Simple enough, “this person is in charge of this department”, “these people report to this person”, “those department heads in turn report to this VP”, you know what I’m talking about.

 

The FamBiz Org Chart

A family business, especially early on in its lifespan, may not even have an org chart.

When someone finally insists on creating one, the founder may not like it and may even ignore it.

Eventually, as the company grows, they’ll reluctantly agree that one is needed. But that doesn’t necessarily mean that they’ll respect it.

 

Respect My Authority!

The person at the top of the chart will often simply prefer to rely on the fact that they’re at the top and therefore, everyone else is below them and in turn reports to them.

While this is often factually correct, the reporting lines at the lower levels are there for a reason, and employees come to expect that those lines will be respected.

When the owner or founder walks into a department and sees something they don’t like, it’s pretty hard for them to bite their tongue and seek out the person below them on the org chart to relay a message.

In order to “save time” they’ll usually give instructions that the lowly employee feels they have no choice but to follow.

 

Giving Up Formal Authority

The good news is that while this type of scenario is rather commonplace, it is often harmless.

That is, as long as the person who’s giving the instructions is still truly the top person in the company.

When leaders step back, whether formally retiring or just cutting back to let others build their leadership, this can get a bit trickier.

The employees who are given instructions to do something will ususally feel beholden to the oldest person, and do as they say.

But what if what they’re being told goes against what their “real boss” (according to the org chart) has told them?

 

Formalize the Authority

One of the things I like to suggest to family business clients is to formalize the authority.

What does that look like? Glad you asked.

When a business leader steps back or steps out, it is essential that the employees know who is now in charge.

There are several ways to do this, and it may be best to use more than one:

 

          – Leadership Handover Ceremony

A formal ceremony in front of the employees, during which the outgoing leader is thanked and acknowledged.

 

          – Bulletin Board or Newsletter

A written message posted on a company bulletin board and sent to employees via a regular newsletter publication.

 

          – A Simple Email to Employees

If there is no newsletter, an email explaining the changes at the top, with appropriate thanks and best wishes.

 

Culture and Leadership from the Top

The new leader needs to be able to put their cultural stamp on things, and it’s next to impossible for them to do so unless and until the former leader has officially stepped aside.

“Officially” is a big word, though, so it’s important that both parties, the one leaving and the one coming in, be part of any such announcement.

The more people who witness it, the better. This is why I have a strong preference for the ceremony.

 

Group Decision, for the Good of the Group

For all employees to be able to buy into the new reality, it needs to appear to be a joint decision, and not any sort of “coup” or forced take-over.

The outgoing leader will hopefully see this as “closure” and resist the temptation to return to a leading role.

If a support role can be identified for the outgoing leader, to still retain some presence (at a much lower official level) that can also be good.

 

Clarity is Key

Few things in any organization are more important that clarity. Clear lines of authority are a must.

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FamBiz: Management vs. Governance

FamBiz: Management vs. Governance

In a family business, there can often be confusion around the questions surrounding the management of the business, and the separate, but equally important area of its governance.

I see it in many places with family clients and this post will hopefully help clarify the differences.

 

Management = Day-to-Day

Management of the business starts with all of the day-to-day actions and decisions that it takes to keep the business running.

It’s about what you can see happening in many areas, and it usually involves all of the activities that are done by the vast majority of the employees.

The management of any business is all about the short-term execution of the company doing what the company has decided its business is.

 

Who Decided?

So in case you didn’t notice, the key word in the last sentence is “decided”. I purposely said that “the company decided”, but in reality it isn’t decided by “the company”.

There are people who “govern” the company and what it does, and then the managers of the company implement those decisions via their management functions.

But then that just begs the next question, which is, who gets to decide? And then there’s another level of that, which I‘ve already addressed here: “Who gets to decide who gets to decide?”

 

Corporations Are Easier

In contrast to a family business, if we look at a big corporation, things are pretty clear. The shareholders elect the board of directors, who decide who the management will be.

There are plenty of layers and checks and balances and there are formal structures and procedures in place to guide all of these decisions.

In a family business, well, usually, not so much.

 

Informal Governance

I used the word “formal” intentionally just there, because it reminds me of the expression I like to keep in mind:

“Formality is your Friend” 

I need to thank Ruth Steverlynck, one of the instructors in the Family Enterprise Advisor Program, for that expression. I’ve used it a lot and will continue to do so.

Family businesses often resist formality because they don’t want it to slow them down. Sometimes it’s simply the founder who has a preference for flying by the seat of his pants.

 

Governance sounds Formal

Regular readers will be familiar with my personal struggles with the word “governance”, and the fact that I have a sort of “love-hate” relationship with it.

It sounds almost TOO formal, to the point where it can actually scare people off.

I try to soften it by repeating that you don’t necessarily have to be overly formal, and that any governance you choose to put in place is best done incrementally.

 

Constitutional Crisis

I read a lot of stuff from the academic field of family business and I see people using the term “Family Constitution” a lot lately. A family constitution CAN be a great thing for a family to have.

BUT, and it’s a huge but, that shouldn’t be the place that you start the governance process.

In fact, I personally would probably never even mention the term “constitution” during my first year of working with a family.

 

Management Confusion

Sometimes company management acts as if they are also in charge of governance, because, well, frankly, they can.

But a family business is a complex system, involving not only the business, but also the family, and the ownership.

These interdependent systems are where some formality and definition of roles and responsibilities comes in.

In fact, the part about figuring out, deciding, and writing down who decides which questions is what governance is all about.

 

Clarity goes a Long Way

There can be lots of ambiguous situations in a family business, and when things aren’t clear, people step on each other’s toes a lot, which can create conflict.

It’s important to clarify which groups of people will be responsible for which decisions.

But sometimes that’s really hard to do.

It really needs to be “hashed out” as a group. Some “horse trading” and compromises may end up needing to happen too.

 

“Don’t Try This at Home”

What can happen is that families will try to work these things out by themselves and end up making things worse.

An independent person, who has no stake in the systems, can go a long way to making these discussions more productive, and more civil! It’s worth trying.

 

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Lessons Learned from Women in Family Business

Guest blog from Kim Harland – Thanks Kim!

Lessons Learned from Women in Family Business

Family businesses account for 50%–80% of all jobs in a majority of countries worldwide.[1] And it seems women are leading the way, doing far better in leadership and management positions in family businesses than those in the non-family business sector. For example, 80% of family-owned businesses have at least one female director whereas only 17.7% of companies in the FTSE 100 have female directors.[2]

To celebrate the key role women play in family businesses, we spoke to a number of leading ladies and asked them to share their advice on range of topics plus give you a few tips on how to apply them to your family business.

 

What makes family business successful?

Across the board, all the women we spoke to felt three important principles underpin family business success – communication, a clear family vision and trust.

According to Lea Boyce, a key advisor at Boyce Family Office (5th generation family business), family businesses also have a crucial competitive advantage over the corporate sector – their nimbleness.

“While non-family businesses are busy having layers of meetings, a family in business has made the decision, got family buy in, done the deal and moved onto the next opportunity. As a result, they are able to be more entrepreneurial,” she says.

Another factor vital to family business success is the induction process for the next generation of family owners. On this topic, Priyanka Gupta Zielinski (author and executive director at MPIL Steel Structures Ltd, a 2nd generation family business), has some important advice.

“As you bring your daughter or son into the business, remember that you are unsettling an existing framework – things will change and you have to be willing to let them. It is important to let your children make their own mistakes. Sometimes their screw-ups will be of enormous magnitude – but remember, at least the worst is happening while you’ve got their back,” she says. “Whenever possible, help your children calculate and mitigate the risk without taking away their sense of ownership of the project.”

 

Your family business check-up

  1. Do you have a formal structure to allow open and honest communication as a family group?
  2. Has your family group articulated and documented shared business and family goals?
  3. Are you harnessing the opportunities presented by your next generation?

What’s the biggest challenge for women in family business?
Many of the women we spoke to believe the greatest challenge they face in business is the struggle to be taken seriously.

Lea says when it comes to families, patriarchy remains the dominant world view so when clients encounter a matriarch running the business they find it very confronting and challenging.

Priyanka feels that even in 2017, there is still a lack of role models for women in business. But she has an interesting idea for change.

“What is needed is a community of feminist men in family businesses who help women along the way by challenging the opinions of other men,” she says.

 

Your family business check-up

  1. Look for role models within your own or other family businesses.
  2. Consider a mentor – it is always helpful to work with others who have been there before you.
  3. Keep in mind that many women in family businesses can draw great inspiration from the men in their lives – their fathers, brothers and husbands.


The benefit of hindsight.

Everyone loves a bit of hindsight and when asked what advice they would give to their 25- year-old selves, our interviewees provided some excellent food for thought.

Looking back, Sara Pantaleo – CEO of 2nd generation family business La Porchetta – has this counsel for young women.

“Fight for what you believe. Gender doesn’t matter so just go for it. Don’t be mediocre. Strive to achieve. I sometimes see amazing, intelligent young women just accept things and I think that’s quite sad.”

Finally, Corrina, a 6th generation member of the Oliver winemaking family, suggests reflecting on one’s partner to see how they can help – rather than hinder – your family business.

“Recognise the key role your husband plays in enabling you to succeed in business and life – with support, not competition or jealousy, and contributing his share to the family.”

 

Your family business check-up

  1. What can you learn from the elders in your family? Ask your older family members the same question we did – “What advice would you give to a 25-year-old version of yourself?’ You might be pleasantly surprised at the answers and what they can do for your business.

We hope you’ve enjoyed these Insights from a few prominent women in family businesses. We have recently published our “Women in Family Business E-book”. If you’d like to learn a bit more about what we do, head over to our website.

[1] Global Data Points, Family Firm Institute, http://www.ffi.org/?page=globaldatapoints, accessed 18/10/17

[2] Imperial College Business School, Leeds University Business School and Durham University Business School, http://www3.imperial.ac.uk/newsandeventspggrp/imperialcollege/newssummary/news_22-5-2013-12-0-36 , Accessed 4/10/17

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The Dimmer Switch vs. the On/Off

The Dimmer Switch vs. the On/Off

This week I’m going to touch on a very big topic that I haven’t written nearly enough about. It’s also a subject that lots of families face, whether they have a business or not.

The idea came to me a couple of weeks ago while listening to the weekly teleconference of the Purposeful Planning Institute.

As I had stated in Huge Liquidity Events – Great News, Right?, there was going to be at least one other blog that came from that call.

The great nugget for this blog actually came from the Q & A at the end of the call. (Many Thanks to Matt Wesley of Merrill Lynch)

 

Having the “Money” Talk 

One of the call participants asked a question about helping their client families have the big talk about wealth.

You know how this goes. Wealthy parents talk to their advisors, the advisors strongly suggest that the parents begin to share information about their wealth with the kids, and the parents usually balk.

They understand that they should have the talk, but that doesn’t mean that they know how to do it.

 

The Dimmer Switch Analogy

The man who asked the question was looking for ways to help his clients begin the important stage of sharing information about the family’s wealth with their children.

The answer that came back was brilliant, and it is one that I plan on using. Parents often think about this “talk” as an all-or-nothing proposition. They shouldn’t!

It’s not a binary situation, where you go from complete “secrecy” to “full disclosure”.

It’s NOT a regular light switch, where the family was in the dark, and you flip the switch up and now everyone sees everything.

 

Time for your Pupils to Adjust

If you’ve ever gone to the movies during the day and you walk out into the daylight, you know that it takes time for your eyes to adjust.

In the same way, you really don’t want to “blind” your children with everything in one shot.

There is no need to quench their thirst for information with a firehose.

I like the dimmer switch analogy for a couple of reasons.

 

Shine a Little Light

I think the idea of “shining a little light” is the perfect antidote to the idea of “keeping them in the dark”.

And everyone knows what a dimmer switch is, and what it does. It allows you to control the amount of light.

So where should you begin?

 

Why Are We Here?

So let’s say you’ve decided that you can’t wait any longer and you need to talk about your wealth with the next generation of your family. Great. It’s not rocket science.

A frank and open way to get started is to tell them that you love them and that you care about them, now, and for the rest of their lives.

You could also share that you understand that if things go as they usually do, they will very likely outlive their parents, and that’s a good thing.

So, given that, there’s a lot of “stuff” that you have accumulated over the years and you need to begin to figure out what’s going to happen with it all after your gone.

 

One Step At a Time

The stage is now set. You have made them aware that you will be having some important discussions going forward.

And you control the dimmer switch, on both “how much” and “how fast” you’ll shed the light.

You don’t have to do it all today. Or even this week. Or this month. But preferably once you start, you do continue again sometime this year.

They may ask questions. That’s a good thing. You need to respond to all of their questions, but that doesn’t mean that you have to tell them everything they want to know.

Take your time. Turn that dimmer switch very slowly. But do turn it. And don’t turn it back the other way, although I’m not even sure if you can turn this metaphorical dimmer switch back towards darkness.

 

Dialogue > Monologue

You may have pictured yourself giving your family a speech about this subject. I strongly urge you NOT to look at it this way, or to act this way.

The “go slow” approach works well because you can adjust as you go. A dialogue, where you take the time to listen to their questions and concerns, is what you should be going for here.

 

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Fluency: The Key to Becoming a “Personne de Confiance”

Fluency: The Key to Becoming a “Personne de Confiance”

Regular readers of this blog know that I’m a huge fan of the Purposeful Planning Institute and all that they do. So you shouldn’t be surprised that this post has its roots in one of the sessions of the latest PPI Rendez-Vous.

It was on Friday morning, and as usual there were at least two or three other concurrent breakout sessions that I hated to miss, but I had my sights set on Dean Fowler’s talk.

Something in his title, “Interdisciplinary Fluency: The Role of the Personne de Confiance” just spoke to me.

 

Inspired by Jay Hughes

I hadn’t even realized it at the time I walked into the room, but the term “Personne de Confiance” had been written about over a decade ago by none other than James E. (Jay) Hughes.

Hughes is a revered thought leader in the family wealth space, and he’s been a regular at the PPI annual Rendez-Vous up until this year.

Maybe I chose this session subconsciously just to get my Jay Hughes fix.

 

Personne de Confiance? 

You don’t need to be anywhere near fluent in French to understand what Fowler and Hughes mean when they use the term “Personne de Confiance”, as it translates rather simply to “Person of Confidence”.

What you may not realize is that the word confiance in French actually translates to the word “trust” as well as the word “confidence”.

So more than just being a “confidence person” (which has some negative connotations) we’re actually back to that old standby, the “Trusted Advisor”.

 

Who’s the Quarterback?

The beauty of most of the PPI Rendez-Vous breakout sessions is their interactivity, and this one was no exception.

Someone threw out the term “The Quarterback” which is so often used amongst advisors who understand the importance of a coordinated approach to serving family clients.

Fowler’s attitude seemed to be that you don’t actually have to be the quarterback to be the “Personne de Confiance”, and I have to agree with him.

 

A Good Number 2

Reading Hughes’s piece on the subject yesterday as I prepared to write this, it struck me that one of the keys to being that “Personne de Confiance” was knowing your place and being comfortable being “a Number 2”.

Of course the Number 1 in this case should be the client/family.

If the client family is Number 1, and I can be their Number 2, should I care if one of the other advisors considers themselves to be the quarterback?

As long as the client ends up getting what they need, I think not.

 

Fluency: Interdisciplinary and Otherwise

Fowler began the session speaking German at the front of the room in order to make the point that it can be very frustrating when you don’t understand the language.

Thankfully there was someone in the audience who also spoke some basic German to engage with him (OK, it was me) to make his point.

I’m pretty sure he used to refer to it as “Multi-Disciplinary” fluency when I first heard him at Rendez-Vous back in 2014. Either way, we’re talking about the ability to understand and be understood.

 

Complexity in Spades

The fact is, family wealth is complex business, and families who have a great deal of it need professional help managing it, figuring out how to keep it, and finding the best way to pass it down to succeeding generations of their family.

They need legal advice, they need experienced CPA’s and tax advisors, and they need a whole bunch of other qualified specialists from other fields too. (See Sharing Some Rocky Mountain Kool-Aid).

 

Who Understands ALL of This?

Most people who specialize in one area don’t naturally have the ability to see the bigger picture and many don’t even really care about the other pieces of the puzzle.

I Googled the word “fluency” and here is the second definition, (the first one dealt with foreign language ability):

 

“The ability to express oneself easily and articulately.”

 

Trust, Clarity, and Coordination

If the client family is Number 1, they’ll most likely crave having a “Personne de Confiance” who can make and keep everything clear.

The multiple advisors whose work must be coordinated also benefit from clarity.

The family client will trust the person who can articulate everything clearly.

That person, or Personne, will need to be fluent in many areas.

Est-ce que c’est clair? Alles klar?

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Sharing Some Rocky Mountain Kool-Aid

Sharing Some Rocky Mountain Kool-Aid

I just returned from another fantastic Rocky Mountain experience: four jam-packed days, over two conferences, hosted by the Purposeful Planning Institute.

This has become an annual trek to Denver for me, which will surely continue for years to come.

 

Four Going on Five

I first attended PPI’s “Rendez Vous” in 2014 and returned again the following year. Last year, they added something new, an additional conference called “Fusion Collaboration”.

I decided to do both in 2016, and I jumped in with both feet again this year.

There was some confusion again, on the part of some attendees at either or both this week, about the difference between these two conferences.

I came up with an analogy that got a great response from everyone with whom I shared it, and the title of this post gives you a clue as to what it’s about.

 

Try Some of this Great Kool-Aid

Fusion Collaboration, the newer portion, is aimed at technical professionals who deal with business families, and families of wealth, and its goal is to introduce these more transactional folks to some of the other, deeper ways that these clients need to be served.

The presenters at Fusion are mostly specialists who work on the less technical aspects of wealth transfer, in what I like to call the “family circle”.

Many people used to call these the “soft side” (and still do), but now it’s more often dubbed “relational”, or “family dynamics”.

Fusion Collaboration is PPI’s attempt to get them to try Purposeful Planning Kool-Aid and “get them hooked”.

 

Let’s Swap Kool-Aid Recipes

By Wednesday evening, Fusion was wrapping up, and many of the lawyers and accountants and transactional specialists were preparing to depart, only to be replaced by a fresh crop of attendees.

The people who came for Rendez Vous, for this, its seventh incarnation, didn’t need to be enticed to drink the proverbial Purposeful Planning Kool-Aid.

Most of these people already subscribe to “Kool-Aid Aficionado” magazine, and they bring their Kool-Aid mixing and serving tips and recipes to share with their friends.

Besides the relational experts, many traditional transactional professionals who’ve become Kool-Aid fans also attend this conference regularly.

 

What’s In this Stuff?

If you’re curious about the main ingredient in this enticing beverage, it was nicely summarized by PPI’s founder, John A. Warnick, in one slide, which read:

                      Purposeful Planning   =   “Client-centric”   +     “Family-centric”

Most professional advisors already recognize the importance of putting the client’s needs and desires at the heart of wealth transition planning,

They also usually understand (in theory, at least) how important it is to bring next generation family members into the picture, preferably early on.

 

Secondary Equals?

Many of those who’ve traditionally driven the discussions around the pieces of wealth and business continuity, and transitions to the next generation, would consider themselves the primary drivers of this important work.

That may be true in the strict “transactional” sense, but more and more families are demanding a more holistic approach, which naturally involves a host of other experts from different, perhaps “secondary” domains.

Ideally, a collaborative group, or better yet, a team of advisors, will work together to figure out and design a complete inter-generational solution, along with the client family.

In order to do this work efficiently, and effectively, it really helps if the advisor team can work as collaborative equals.

 

Who Are They?

To give you an example of the types of specialists I’m talking about, here are some words and titles from some of the business cards I collected this week.

  • Legacy Advisor
  • Independent Trustee
  • Family Enterprise Advisor
  • Facilitator
  • Coach
  • Consultant
  • Psychologist
  • Gift Planner
  • Communications Specialist
  • Family Dynamics
  • Philanthropy Consultant
  • Family Legacy Advisor

And I know I’ve easily missed at least a handful of specialties.

 

July in Colorado 

After the opening dinner of Rendez Vous, as a table exercise, the “Elders” in attendance were asked to share with the “Tenderfeet” why we keep coing back every year.

At my table, most agreed it was the people, all of whom seem to come for the right reasons, i.e. to serve families better.

It’s also a great place to fill up on information, ideas, best practices, contacts, and lots of hugs too.

Oh, and Kool-Aid, of course!

Hoping to see you in Denver in 2018.

Would you like a glass, or a whole pitcher?

Links to previous Rendez Vous blogs:

2016: SWEET SECLUDED RENDEZ-VOUS

2015: RENDEZ-VOUS WITH A PURPOSE

2014: THE RISING GENERATION IN FAMILY BUSINESS

 

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“Yellow Light Family” – Proceed with Caution

“Yellow Light Family” – Proceed with Caution

Last week’s post (Happy to Be Wrong on FEX) talked about the great symposium I attended in Halifax earlier this month.

If you’re a regular reader (thanks!) you know that one of my best sources of blog material comes from these kinds of events.

I often do some sort of “Top 10” of things I picked up, but I’m going to devote this blog to one specific presentation I attended.

In coming weeks, I’ll likely dig in to a few other memorable sessions from the FEX conference.

 

Green, Yellow or Red Zone?

The symposium had a good mix of sessions; a couple for families only, others just for advisors, but most were open to all.

In this advisor-only session, Jim Grubman of Cambridge Family Enterprise Group presented “Green, Yellow or Red Zone Clients”.

He introduced the concept of the “Two-Axis Model” of wealth advising, with technical issues along the X-axis (horizontal), and personal and family dynamics on the Y-axis (vertical).

In each case, the model ranges from low complexity to high, from left to right and from bottom to top.

The colour-scheme was reserved for the family dynamics axis; green at the bottom, yellow in the middle, and red at the top end.

 

Technical Bread and Butter

Grubman mentioned that as you go from left to right on the “technical axis”, more complexity is usually seen as a positive for advisors.

A family with complex technical needs is often a plus, in that it allows you to showcase your abilities to solve their issues, and to charge accordingly.

The more people, entities, trusts, and jurisdictions a family has to deal with, the more the advisors will relish the task. At least the best advisors do.

 

The Family Dynamics Axis

The vertical axis, on the other hand, where family complexities increase, can be a very different story.

This is where the “traffic light” comes into play.

The low complexity families, with little of no conflict, anxiety, addictions, etc. are where most advisors prefer things to be.

Green is good, because there’s no family stuff to trip you up.

As you begin to see any of those issues, you leave the safety of the “green zone” and get into the yellow territory. At this point many who advise on technical issues (legal, tax, trusts, accounting, cross-border, etc.) quickly feel like they’re out of their depth.

Sometimes it doesn’t take much to raise the proverbial red flag, and get the advisors to scratch their heads wondering if they will be able to resolve the family issues.

 

Break It Down

Here’s where the real value of the presentation came for me. Rather than simply looking at the family dynamics question globally, Grubman breaks it down into several components.

In many cases, one thing sets off alarm bells, but others are hardly any concern.

For example, the sensitive issue could be the family’s level of conflict, their communication style, addictions, perceived fairness, or lack of governance systems.

When you can put your finger on it with greater detail, you’re much better placed to deal with it.

It can also help to look at “state versus trait” variables. There could be a situational factor at play, which may just be temporary. (Traits are fixed, while states are transitory)

 

Isolate the Issues

When the advisor team can share their views using this type of breakdown, they can pinpoint the issue more easily.

A family that looked red, or “very yellow” can look much less daunting once you see that there is really one key issue that is flashing, and that the others are pretty green.

 

Coordination and Collaboration

Now I’m gonna switch from what Jim Grubman was saying to Steve Legler’s take.

No single advisor will be able to handle a family with any complexity above green, on either axis.

Technical professionals work together to solve the family’s asset-related issues. On the family dynamics side of things, the same should also be true.

Families will benefit from advisors who can coordinate their activities at a minimum, and hopefully even collaborate.

 

Inter-Disciplinary Fluency Helps

FEX’s FEA Program helps advisors develop the inter-disciplinary fluency they need to properly serve families.

Knowing what families need, and how the pieces all fit together, is key. And so is being able to work together.

Tools like Grubman’s help us all do a better job for families.

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There Goes the Neighbourhood

This past week was a little out of the ordinary for me as I took a quick trip to my cottage to get away and clear my head. My intention was to rest and plan, but instead it turned out that I was pretty productive.

I’m not sure if that makes it a successful week then, but as someone pointed out to me, sometimes a change is as good as a rest.

Good Fences = Good Neighbours

One item on my agenda during my visit to the cottage was to deal with a part of our property on which there is a building that’s in need of a lot of work. After initially considering demolishing it or carting it away, we are looking at salvaging it instead.

A neighbour from two doors down asked if he could purchase it and fix it up to rent to his sister who’s moving to the area.

After discussing it with him, I went to see the local land surveyor who had drawn up the plans a few years ago.

Sidebar: As a fan of languages, I’ll point out that the French term for Land Surveyor is “Arpenteur Geomètre”. An “arpent” is an acre, so that makes the profession one of “Acreage Geometrist” as a rough translation.

Warring Neighbours

While making small talk with the man, he noted that he was being more selective in choosing the jobs he’s taking on at this stage of his career, sticking to the “easy ones”.

It turned out that the degree of difficulty he was referring to has zero to do with the complexity of the land, and everything to do with the people who own the land.

All this time I had imagined that the profession of land surveyor was all about surveying land (and acreage geometry), but as it turns out, most of the stress of the job comes from the people who own the land.

Working with drawings, driving stakes into the ground, using a transit (the scope instrument on a tripod), calculating the square footage, well, that’s the fun stuff. Standing between warring neighbours who are each arguing that the line should be “further over that way”, well, not so much.

Déjà Vu All Over Again

When my new friend related this aspect of the job, I had a bit of a flashback. A few years back when I first became a member of PPI (Purposeful Planning Institute), I joined one of their weekly thought leader calls.

I’m not 100% sure who the guest was that week, but I recall that they got their start advising families after being called in to mediate a number of sticky situations. I also recall the guest stating that he now tries to avoid those types of clients, preferring to work with good families, helping them become great.

Professional Stress

So if the land surveyor is stressed out by the fighting neighbours, and the family advisor is stressed out by family fighting, how bad must if be for the parties on the INSIDE?

What can be done to lower the level of conflict and to help everyone coexist? Neighbours are kind of “stuck” with each other, and families even more so. Their interdependence is pretty high.

Sounds like some good, clear rules and guidelines would be helpful. Once again, it comes back to governance. (See Governance Aaaah!)

Drawing the Boundaries

Right now I own the land that is being re-drawn, so it is the perfect time to figure out where the stakes will go into the ground to divide the property.

Things are calm, and I control both sides, so I can divide it as I wish, and will make it clear what I am offering to sell to my neighbour BEFORE we make the deal.

When you look at your family situation, and how things will shake out when the next generation will be in control, are all of the lines and boundaries clear and well understood?

Although we hope and would like to think that our kids will just get along, hope is not a strategy, and many families who ended up feuding used to think the same thing.

Bottom Line: Draw the lines in times of peace, don’t wait for the fighting to start, because then it is MUCH more difficult.

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