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.

Say It Out Loud, Really Fast, for Effect

Writing this weekly blog is the main way I communicate my thinking, and it’s a wonderful medium to share my thoughts, for the most part.

Sometimes, it’s not quite as good as the spoken word, because the attempt at humour that I’m going for depends on the ability of the reader to pronounce a word in the exact right way to get a joke to work.

So I hope you’ll all been able to get it, and maybe the accompanying visuals will help.

If not, it’s OK, because the joke isn’t germane to the point, which is that we might do better in our attempts to advise people if we didn’t simply always tell them what they “should” do.

Yet Another “Combo Post”

So this sound-based double-entendre between should and “poop” is the initial inspiration, but on its own, it didn’t have the heft to carry a whole post.

As often happens, an idea sits in my Blog Ideas folder for a while, and then something else will come up and I combine ideas.

A while back, I had yet another exchange with a regular reader in which they relayed something about “changing ‘shoulds’ into ‘coulds’” being healthier when advising families. (Thanks JG!)

The point is that having a family come up with their own solutions is almost always better than having them simply follow the instructions of any advisor.

Let’s Stir In Some Self-Righteousness

Thus far you may be thinking that I’m directing these thoughts to advisors who work with families, and of course I am, but this also applies equally to members of families when dealing with each other.

The final part of the inspiration for this post was a missive from a few weeks ago, On Vulnerability and Self-Righteousness in Families.

Therein, we looked at how those who are self-righteous come from a position of assumed moral superiority over others.

When you add in that element to someone who’s constantly “should’ing on you”, I think you can imagine why such messages are sometimes not well received (even when they are acted upon).

When I say “I think you can imagine”, I do realize that while most people get this, those to whom this message is being directed are unfortunately least likely to recognize themselves.

From Know-It-Alls to “Just Trying to Help”

There are always people who just think that they’re so smart and are also very certain of themselves, no matter the situation.

Many people who grow up in successful families are blessed (cursed?) with such parents.

Most of these “know-it-all” types also convince themselves that they’re coming from a good place and “just trying to help”.

It can be difficult to escape their force field, especially when there’s ample evidence of their success, making their ideas seem like they should be correct.

We can have such people around us at work or within friend or community groups of course, but they’re often most dangerous within a family.

Insidious Within a Family

I’ve had the privilege to work with many family groups, where several people who are related by blood need to work together, in order to make decisions around assets that their family owns for the benefit of the group.

The propensity to “should” on others most often happens between generations, but also sometimes occurs in sibling or cousin groups.

It can actually be even more fascinating to observe in such situations, because it’s rather rare.

And when I say “between generations” you probably default to parents should’ing on their “children”, but in some families the script gets flipped as parents age. 

See My Favourite Oxy-Moron: Adult Children.

The attitude of moral superiority and certainty, which combine to define self-righteousness, is sometimes difficult to watch; imagine living under it!

Mel Robbins – The Let Them Theory

I probably shouldn’t mention a book that I have not read myself, but I will make an exception, based on the reviews it has received and some personal endorsements for it that I’ve heard from people I trust.

I can’t put it better than this, directly from the Amazon listing: “a simple mindset shift, to break free from others’ opinions, drama, and control”.

The book’s title suggests that it’s aimed at the “should’ers”, but that phrase implies that it’s also for the “should’ees”, which makes me want to read it.

It’s hard to get the “should’ers” to stop, so maybe equipping the “should’ees” is the way to go.

Looking at Family Wealth from a Different Angle

A few weeks ago, in Soaking in the RendezVous Experience, Again, I noted that while that blog was all about the lived experience of that great annual happening, there would be future posts inspired by the conference’s content.

And once again, I’m being true to my word.

The final half-day, Thursday morning, began with a great panel that was titled “Fellow Forum on Well-Being”.

It featured a moderated discussion with 5 “PPI Fellows”, all sharing many tips, ideas, and secrets to their success over their decades of serving families.

While it was about well-being, their comments meandered over much broader territory.

Lots of Wisdom Shared, One Unexpected Nugget

I don’t normally take a lot of notes at conferences, preferring to pay close attention instead, on the assumption that anything worth remembering would surely stick.

I’m not sure if it’s because I’m getting older, or maybe it’s because they gave out cool pocket-size notebooks, but this time I came home with many pages of notes, including a bunch from that session alone.

One of the panelists mentioned that at a certain point in his life, he considered one of the key benefits of a family wealth cushion as “the ability to take a risk”.

As someone who regularly deals with families who’ve achieved a certain level of wealth, and who sometimes lament that that wealth can create certain disincentives in the lives of some family members, this resonated with me.

I’m always on the lookout for new and interesting ways to talk about wealth with families, to help them figure out the best way forward for their family.

Finding the Goldilocks Zone

So let’s think about this for a second.  Having a “safety net”, so to speak, sounds like a good thing, doesn’t it? 

Well yes, and….

If you have some family wealth to “fall back on”, you can try certain things that you otherwise could not.

That certainly provides one with more flexibility in life choices than not having such a cushion.

And, like any other seemingly good thing, it can be taken too far, in some cases.

Like so many concepts, many of which I try to explore in these weekly missives, it can become a negative, if taken too far.

As I considered this idea, I began to look at it from the viewpoint of many different families I’ve worked with or known, over the years, including my own.

As is so often the case, the trick it to find the “Goldilocks Zone”, i.e. just enough, but not too much.

Not Naming Names, As Usual

Without naming names, because I always need to be careful not to reveal too much here, let’s consider some real life versions of this phenomenon.

Consider a G2 family member who was gifted a certain percentage of the business started by their Dad that was soon after sold for nine figures.

That 8-figure cushion in the pocket of a thirty-something allowed them to move across the country with their spouse and a few grandchildren, much to the lament of the business founder.

Whether or not that ability to take a risk is a good thing or a bad thing depends very much on one’s perspective, doesn’t it?

Or the G3 twenty-something, who talks about the ability to “just be a school teacher and basketball coach”, if that’s what he wanted to do.

Judging by the look on his Mom’s face when he mentions this idea, I’m not sure she’s convinced that that would be a good use of the family’s wealth.  

See Challenges Transmitting the Value of Industry to the NextGen.

The Road Not Taken, But Could It Be?

Another client still has an operating business, so liquidity is not as plentiful, but he also struggles with questions of whether or not to even mention that some family wealth could be available to his offspring for them to consider career choices based on things other than the ability to generate sufficient wealth.

It can be difficult for me to even suggest such ideas to some clients for them to consider.

In my own family, my twenty-somethings have benefitted from educational opportunities many could not afford.

They’re now early in careers, and this question of opportunities to take risks is as salient as ever for us to discuss.

I think that it’s a great way to frame the discussion, and will encourage families I work with to have these intergenerational conversations going forward.

One Is Usually Better, But Not Always

This week we’ll be looking at an idea I’ve touched on in the past, but in a new light, thanks to an interesting exchange I had at a conference I recently attended.

When I crafted the title to this blog, I was convinced that I’d be able to link to a previous post that I’d written specifically on the “Responding Versus Reacting” concept I so often mention when speaking with people, but alas, that blog exists only in my imagination.

I will, however, still be revisiting the idea, because the conversation noted above forced me into a few different reflections: on the subject itself, how universally true I thought it was, and on how I share my thoughts on it.

So far this has been rather vague, I realize, so thanks for indulging my meandering style of setting up these weekly missives.

The Perfect Set-Up for Sharing a Favourite Idea

Allow me to set the context for you. 

It’s the evening before the first day of the conference, so I headed down to the hotel bar to see who else flew in early.

After chatting with some long-time friends and acquaintances at a table, I’m heading back up to my room to get some sleep when I happened to recognize a face from last year at the bar.

Next thing you know I’m offered a drink and I’m suddenly chatting with a small group of mostly strangers here for the same gathering.

One of the men begins relating a story about tension between a father and son, and we start talking about ways the son can learn to avoid similar situations with his own, teenage son.

Next thing I know I’m sharing one of many Zig Ziglar stories I have in my repertoire. 

(Curious readers are invited to type “Ziglar” in the search feature of my website).

Responding Versus Reacting

So I begin sharing the key differences between responding to a situation and reacting to it.

The simplest way to remember it, is to consider a medical situation and how we speak about the interventions that happen at the hospital.

“They gave him medication and he is responding” is always positive, whereas, “He had a reaction to the medicine” is negative.

When we take a step back and compose ourselves and respond to something that happens or what someone says, we have a better chance of things going well, versus immediately reacting without thought, which often escalates a situation.

When taken aback, I sometimes deliberately pause and even say, “I want to take a moment to think about this so I can respond, rather than simply reacting”.

I Thought It Was Clear, Until….

I felt like I’d made my point well and the conversation veered into a few different directions.

But imagine my dismay, when a while later one of the guys was relaying another story, where this time the problem was that someone had become way too complacent with a situation, and the protagonist was not responsive enough.

And as he concluded, he pointed to me and said, “Like you said, he should have reacted!”

Wait, what? 

I felt stumped and was thankful that the number of beverages consumed by all made this fade away as the subject once again got changed.

But I now had some reflecting to do, as my concept had been turned on its head.

Time to Revisit This

I think it was on the plane back home a few days later that it hit me that I needed to circle back and reconsider what happened and how I talk about this important subject.

Did I not explain myself well enough, was there a problem with my metaphor, or is it something else?

I believe I did explain it well enough, but there are limits to every metaphor, this one included.

It is still a good idea, in most cases, to pause and take a moment to provide a considered response to something, rather than simply quickly giving your gut reaction.

And, there are also times when pausing for way too long can be sub-optimal.

Flexibility Is an Asset

We need to recognize the limits of rigidity and the benefits of flexibility in many areas.

How long we take to reflect before we respond is probably one of those areas, but I will continue to err on the side of pausing.