No Single Advisor Can Do It All
Thinking back to when I had my calling to this work with families, one of the first realizations I had was just how complex such work can be.
A family enterprise has lots of moving parts, especially as the family approaches an upcoming transition from one generation to the next.
Between the amount of wealth involved and the complexity of the family’s situation, there are important considerations that ultimately require the support and advice of a number of outside specialists who serve the family.
Getting these expert professionals to work together makes so much sense, at least in theory, so that the family client can get the best results.
The Theory Versus the Real World
Of course just because something makes perfect sense in theory, that doesn’t mean that it will work simply in the real world.
Thankfully, those who designed the FEA Program where I had that calling already knew about this “real world” challenge, and had purposefully included a team project into the curriculum.
For example, my project team included an insurance specialist, a CPA, a private banker, and me, who at the time was someone still trying to find his place in this field.
I played the role of facilitator, and still very much enjoy that role today.
In fact, as my team came to learn, that role of coordinator and facilitator often turns out to me way more important than the other professionals ever imagined.
Many Challenges and Obstacles Remain
Such facilitators have a key role to play in how the actual collaboration will play out with the family.
To many of the tactical specialists, we are often an “afterthought” because they haven’t necessarily been used to dealing with an entire family.
So many professionals have been accustomed to serving families more in theory than in practice, because they typically deal with only the head of the family or perhaps a couple.
Opening up the service offering to the entire family, which means at least two generations, means that there are many new considerations.
This poses certain challenges that can often be seen as more trouble than they are worth.
Rest assured though, that from the perspective of the family members from the rising generation, this difference is well worth the efforts in the end.
One Direction Only?
While the idea of collaboration is gaining wider acceptance and more advisors grasp the importance of working together, there is still much work to be done.
In fact, there seems to be a sort of “divide” that exists between the folks like me who specialize in the “family circle” and those whose practice involves the “business circle” and the “ownership circle”.
See: Three Circles + Seven Sectors = One A-Ha Moment (I’m referencing another blog from 2013, two weeks in a row!)
Whenever I have a client who needs something taken care of in those other circles, I always happily help them find the right resources and advisors so that they can be well served.
Everyone else I know who works the family circle does the same.
There seems to be a general reluctance for those who specialize in the other two circles to return the favour. Or maybe it’s just me.
Varying Degrees of Complexity Exist
Of course we aren’t talking rocket science here, and relatively simple family situations can obviously be handled by many advisors without the need to reach out for another person.
However, those whose entire career has been built on expertise in a particular domain aren’t expected to be adept and comfortable beyond a basic level of complexity and family conflict.
This is precisely where bringing in someone who has trained for this work make sense.
“Plays Well with Others”
Some professionals hesitate to bring in another advisor for fear of “losing the client”.
I can say with certainty that nobody is looking to “steal” your client.
As children, we all got comments from our teachers that noted how we “play well with others”, and we get that the client family’s needs are what matter most.
What Do I Mean by “Win-Win-Win”?
And in case it isn’t clear what I mean with my “Triple Win”, the first one is the client family and the second is the advisor with the wisdom and courage to bring in another resource to deal with the family circle.
The third and final win is for that family circle expert who helps tie it all together.
Something You Just Can’t Demand
When starting a blog post I often share the genesis of the idea for it, because I like to share the context of my thinking.
It also helps give readers an insight into the variety of eclectic thoughts that can be used as jumping off points, almost no matter the subject.
Today’s idea could literally have come from a bunch of different places, but in fact came out of a scouting report about a hockey player who was drafted by my local team a couple of years ago.
I was impressed with some of the qualitative factors the scout highlighted in the young man, who was born in 2000.
For reference, my children were born in 1999 and 2001, so it was interesting to think of this in terms of a demographic with which I am quite familiar.
Your Wish Is My Command
It’s always interesting to see how young athletes are perceived in society, especially when your children are around the same age.
Here are the words from that report that struck me:
“In other words, he commands respect,
rather than demanding it.”
Who among us parents would not be proud to hear such words said about our own offspring?Wow, I thought, not bad for a young kid. Of course, everything’s relative, because he’s playing at the College level, so the others whose respect he’s commanding are around the same age, but nonetheless, this is a plus.
And then I began thinking about what makes someone worthy of our respect, and how is it that one “commands it”, rather than “demanding it”?
Let’s go there, since this topic also arises quite often in family situations, especially when it comes to how family members work together over generations.
The Problems with Demanding Respect
Here’s a good quote I came across from Dr. Christian Conte:
“To demand respect is to tell others, “You will respect me!” or otherwise threaten or punish those who do not act according to your wishes. To command respect is to have others observe and admire your actions of their own volition.”
It’s almost like if you try too hard to force it, it doesn’t work, and might even backfire. There’s also a push/pull aspect to it, like using a rope to push something.
Another great line I found comes from Christine W. Zust, who actually confirms what I wrote above: “The only way to command respect from others is not to demand it.”
Respect in Leading a Family Enterprise
Families who have successfully built an enterprise often begin with one dominant leader who was instrumental in the growth of the family wealth, and who thereby commands the respect of the other members of the family.
Where things typically get trickier is after that first generation, where the respect that’s required for continued success now must be earned by someone new, and where there’s not as much of a “top down” view of things.
My father built his business and naturally had the respect of his offspring. Since he died 12 years ago, I’ve never assumed that my sisters would afford me the same kind of respect they did him.
How Is Respect Related to Trust?
I’m not sure why I keep thinking about trust when I’m looking at respect, but they’re surely related.
I flashed back to a blog I wrote way back in 2013 (over 350 blogs ago!)
In that piece, I noted that there are three components of trust, and I think there’s a respect component in all of them.
Trust comes down to reliability, sincerity and competence.
Of course simply being reliable, sincere and competent is not sufficient to command respect, but, I’m pretty sure that if any of them are missing, respect will be a lot harder to command.
Democratic Decision Making
Once a family gets past the first generation wealth creator, the decision-making in the family often becomes much more democratic. There are likely going to be sibling and cousin relationships that make the whole respect question much less of a given.
When a leader in that scenario tries too hard to be like the autocrat who came before, they can get into trouble pretty quickly.
Trying to tell people that they need to respect you just doesn’t work.
Remember, you can’t push a rope!
More Metaphors and Vocabulary Discussions
Just how should we refer to the type of families we work with as advisors who toil in the intergenerational wealth space?
There’s no shortage of monikers, from “UHNW” and “Business-Owning” which I really don’t like, to “Enterprising” and “Intergenerational” that are a bit better.
My latest preference is to refer to them as “Legacy Families”, because they’ve arrived at the point where the combination of their longevity and their accumulated wealth make the family’s legacy rise to the forefront of their concerns.
Distinguishing Features
Of course many of the families we deal with haven’t yet achieved true “legacy status”, and that’s OK too, since the intention to get there is often a key driving force to do the work necessary to get there.
I mentioned longevity, and typically we’re looking at a few generations, meaning that the family and the wealth have remained together through at least one generational transition, and hopefully more.
Dennis Jaffe, noted researcher and advisor to such families and a leader in this field, has set his research cut-off at 100 years or more and often uses the term “generative families”.
I’ve known Dennis for a few years and he’s easily the person I’ve heard speak most often on subjects relating to the successful transition of wealth within families.
Borrowed from your Grandchildren
His latest book is called Borrowed from your Grandchildren, the title of which makes one quickly realize the recommended attitude that’s necessary in such families: to become proper stewards of their assets for the generations that will follow.
I interviewed Dennis for the Let’s Talk Family Enterprise podcast and have recommended his book to my own clients.
The idea for this blog comes from another podcast interview I heard where he mentioned the three major groups that are always present in his study of one hundred, 100-Year families.
Jaffe calls them the “generative alliance”, but I’ve dubbed them the “generative trinity” because they evoke the “holy trinity”, even though I typically keep my posts religion-free.
The Father, the Son, and…..
For the uninitiated, the holy trinity is “the Father, the Son, and the Holy Spirit”, and considering that Jaffe’s three groups include the “current leading generation of the family” (Father) and also the “rising generation of the family” (Son), the trinity idea feels pretty apt.
You may be wondering who gets to play the role of the Holy Spirit in this metaphor. I hope your curiosity has been piqued, since that’s where we’ll now turn our attention.
Non-Family Employees, Advisors, and Board Members
The third key group of people happens to include a host of non-family professionals, both inside and outside the family’s operating businesses.
We’re talking about key employees who are not family, independent Board members of family companies, family office executives, and of course all manner of outside professional advisors who work with the family over the long term.
Jaffe points out the importance of all of these non-family people in the successful intergenerational transition of the wealth owned by such families, because he continually saw this group of people playing key roles in the hundred successful families in his study.
Outside the Family System, and Bridging Both Groups
When a family business starts out, there’s often some insularity and thinking that outsiders can’t be trusted, cost too much, or that they don’t “get us” enough to be valuable resources.
Families who remain steadfast to that position and can’t get past it are often doomed to limit their success to the human capital of the family, to their own detriment.
While the benefits of outsiders are numerous and varied, one of the areas where their potential input is often overlooked is in acting as a bridge between the current “NowGen” of the family who are leading things today, and the rising “NextGen” family members who are expected to lead in the future.
Independence and Interdependence
Such outsiders to the family are not part of the “family system”, giving them an independent and less biased view of the family members, not clouded by family dynamics.
While that independence is important, these people also often have plenty of interdependence with the two groups, in that their own livelihoods can be intricately linked to the success of the family.
Non-family professionals play a key role in intergenerational success of legacy families that should not be overlooked, nor taken lightly, especially when they work together.
From the Backyard to Twitter
In our backyard we’ve had a rather elaborate set-up of four bird feeders for the past few years, and my wife has assumed the role of the “bird queen”, regularly keeping them filled all summer.
We’re treated to almost daily sightings of cardinals and blue jays, among others.
Thanks to “spillage” the visitors make a big mess below, allowing some local rabbits from the neighbouring golf course to also feed on the seeds, which is a nice bonus.
Of course there are also other, less welcome, rodents.
Acrobatic Squirrels
Witnessing the efforts that squirrels go through to get their share of the bird food, you can only be amazed at their creativity.
They’re also cute enough, and certainly prove themselves worthy of the food they steal from the birds thanks to their work ethic.
It’s been pointed out that without their fluffy tails they’re just rats that know how to climb, but they do have those cute tails.
So many people make the effort to feed only birds and not squirrels that there are literally hundreds of designs of feeders available that have been conceived specifically to thwart the squirrels’ efforts.
The Twitter Cartoon
Being a witness to the heroic efforts put out by both the squirrels and my wife to keep the feeders full for our avian friends, my antennae are attuned to stimuli relating to this constant battle.
Lo and behold while scrolling my Twitter feed recently I noticed a little cartoon that hit home.
The drawing featured a squirrel in a precarious position getting his fill from one of those feeders designed to keep him at bay, much like the one in this photo:
And the Thought Bubble Said…
The punch line was in the thought bubble, which let us in on what the little rodent was thinking as he feasted on the seeds:
“This squirrel feeder sure wasn’t designed very well”
I had not seen that coming, and enjoyed the chuckle.
And then I thought about how this lesson could be tied into the wonderful world of families who are preparing for an eventual transition of their business or wealth to the next generation.
Isn’t That a Bit of a Leap?
I mentioned my antennae earlier, and they’re attuned to this world 24/7/365, so it wasn’t much of a leap for me.
There are certainly some analogies and metaphors that I can derive from this cartoon, but I’m not sure that any are conclusive.
But we can have some fun kicking them around, so I hope you’ll join me here.
Your Family of Birds
I think it’s pretty safe to assume that the birds that you want to feed are the family members. You want them to have food so that they survive and thrive and keep coming back.
So who are the squirrels? This is where it gets more confusing, or maybe just more fun.
The squirrels could be all the other forces of nature that work against families who are trying to avoid the fate of families who succumb to the “shirtsleeves to shirtsleeves in three generations”.
What About the Cartoon Squirrel?
We can’t hold anything against squirrels in general, because they’re just doing what their instincts are telling them to do, and they also need to eat.
But what about the particular squirrel from the cartoon, who actually thought that the food was being set out there for him?
I have an idea about who he represents and I need to be careful how I put this.
In my role guiding families through their intergenerational transitions, those families invariably work with other professionals who take care of the legal, structural and tax minimization details.
On occasion, some of those experts can take on a bit of a squirrelly attitude.
Don’t Do It “Bass Ackwards”
I suppose they’re also only doing what their instincts tell them to. When families approach such experts not knowing what’s most important to them, priorities may get skewed and tax avoidance or limiting what heirs can do may end up driving things.
To me when the structures are put in place before the family has figured out what their legacy should look like, it’s kind of “bass ackwards”.
You really should figure out the family part first and then get the pros to draft the perfect structures to fit that.
The priority needs to be the birds, not the squirrels.
Subtle Differences Can Be Huge
Some subjects are complex by their very nature.
For example, when you take a business that already has its own complexities and overlay a family system, the overall complexity necessarily increases.
But does that mean that everything also needs to be complicated?
Regular readers will recognize that I’ve re-entered the fun world of discussing vocabulary, and looking at the meanings of similar words, to see what we can discern from their subtle differences.
The world of family business, along with all its variations like “enterprising families”, “families in business”, “dynastic families”, “legacy families”, (I could go on) is complex enough already, simply by virtue of all the interdependent relationships they contain.
So how do you make sure things don’t get too complicated?
Complexity Without Complications?
Please recall that these are top of mind thoughts in a blog, not scientific research in a thesis. Thanks. Here goes.
Complexity is used to describe things that happen automatically or naturally, while complications are man-made and result from a person or people intervening for some reason.
So if the complexity that comes from family members working together in a business, or owning assets together, or managing property as a group, is innate or natural, then there isn’t anything we can do about that.
We need to come to the realisation that things are complex and learn to live with that reality, and deal with it accordingly.
What Can We Control?
Yes, things could be simpler, i.e. less complex, if we weren’t in a situation where we were managing the family relationships along with the business/financial/ownership responsibilities.
Many families eventually get to a stage where this becomes too big of a burden and then decide to separate who owns what or how things are managed, because the complexity outweighs the benefits.
Those situations are especially unfortunate when that result comes from the fact that the people involved were simply unable to avoid some of the complications that they somehow added to the situation.
Man-Made Complications
My “A-Ha” moment as I considered how to write about these two words came when I realized, while in the shower, that complexity is a reality that we need to accept and live with, while complications are things that we can and should work to minimize.
By my logic here, you can’t even truly simplify complexity, since it “is what it is”.
What we can do is to try to make sense of the inherent complexity of a situation by using models to map out what’s going on, so that everyone can get a better understanding of what the complex systems are, and how they’re inter-related.
Tagiuri and Davis’s Three Circle Model does this extremely well, and has been successfully used for this for over 40 years now.
See Three Circles + Seven Sectors = One A-Ha Moment
The Law of Unintended Consequences
Families who’ve managed to stay together through the complexity inherent in co-owning assets together over generations have succeeded because they managed to keep things as simple as possible, since they’re already complex enough.
See Stopping the Disintegration of Family Wealth
Those who cannot manage to keep the wealth of the family together often fail because someone introduced some extra complicating factors into the situation.
Ironically, this is often done with the best of intentions by someone, but thanks to the law of unintended consequences, these moves sow the seeds of the family’s ultimate demise.
Two Main Instigators Come Up
One of the ways the complications show up is when one family member has what I playfully refer to as a “superiority complex”.
You know the type, I’m sure. They feel like they have earned or simply deserve an outsized portion of the wealth or their say over it.
This can lead to actions designed to allow them to benefit from this, and when other family members react negatively, things go south in a hurry.
The situation was already complex enough, but now it’s too complicated.
The other major way to overcomplicate things is to focus way too much time and effort on the financial wealth, at the expense of the human, intellectual, and social capital of the family.
Well-meaning professionals propose complicated structures designed to minimize taxes and/or limit people’s control over things, and the additional complications this introduces is enough to kibosh everything within a few years.
Enterprising families are already complex enough. Don’t make things even more complicated.
Both Are Needed, But Not in the Same Places
So many issues that families face in transitioning their wealth from one generation to the next come down to questions around timing.
You’ve got people from different generations, so you automatically have different realities relating to their current life cycles, which naturally make them feel certain urgencies that others might not appreciate.
Somehow things often go better after everyone has had a chance to share their viewpoints in ways that others can suddenly understand, but that doesn’t happen often enough, so let’s talk about that here.
The Bigger Picture: An Upstream View
Most of my blogs are “evergreen”, meaning that they can be consumed at any point in time, because they don’t depend on current events or seasons.
I’ve diverged a bit this year, thanks to the pandemic that had me refocusing topics this past Spring, and lately there’s been lots of focus on my summer weeks at my cottage.
One advantage to a nine-hour drive to my cottage is the time it affords me to listen to audiobooks, which are my favourite way to make the drive productive and enlightening.
On my last drive there, I listened to Upstream, The Quest to Solve Problems Before They Happen, by Dan Heath.
It was great and I recommend it, because it actually gives some great perspective on Systems Theory, and an appreciation for how important it is to look at how things are connected.
The Time Element in Systems Theory
If this is feeling a bit like a déjà vu it might be because I wrote From Upstream to Downstream in the FamBiz a couple of months back, and there are only so many “stream” blogs one can write.
That blog concluded with my suggestion to get moving early on eventual transitions, and that segues nicely with this week’s message.
Towards the end of Upstream, Heath has a great line about where to be patient, and where to be impatient, which bring us right back to our timing issues.
He tells us to be:
Patient for Outcomes, and Impatient for Actions
If you’re like me, you’ll want to pause the recording for a minute and make sure you got all of that.
Pre-Digested Wisdom
Well, this isn’t a recording, it’s a blog, so you don’t have to stop listening, rewind, grab a pen, and make sure you got it all, because I already did that work for you.
Plus, now I’m going to spell out the key take-away, which I’ll gladly do because Heath, who’s written and sold quite a few more books than I have, is saying something really important, and it also happens to fit right along with stuff I’ve been saying too.
Here’s the simplest reworking of this advice into my own words:
“Hurry up and get started, but don’t be in a hurry to finish”
I’m reminded of a blog I wrote a couple of years ago, There Is No Destination, which was inspired by a quote I had recently read, “There is no destination, it’s ALL journey”.
Being Impatient for Actions
Procrastination is probably the biggest enemy of successful wealth transitions in families. Put simply, people wait too long to begin the work.
It’s funny because work itself is not usually something that families who’ve been successful in building a business are “allergic” to; they’ve typically got a strong work ethic, which is how they got to the point where they’ve accumulated enough wealth to make a difference in the lives of all family members.
I’ve stated this plenty of times, going back to my first book in 2014, SHIFT your Family Business, in which the word SHIFT is an acronym, where the “S” stands for Start!
It’s impossible to start too early.
Being Patient for Outcomes
Transitioning wealth is not an event, it’s a process. And while some processes are better to rush through, this is one that is better when it takes longer.
The two (or three) generations need to take their time and incrementally move decisions and actions from the NowGen to the NextGen.
When you’ve started early, you give yourself time to change course, slow down as needed, and be flexible, (the F in SHIFT) without having to start from scratch.
Adjusting your Timing and Re-Calibrating
This is truly a process with no real end, because even after the elders have left this earth, their wisdom will remain, to be passed to successive generations.
And we should never be in hurry to finish that job.
Wordplay Rears Its Head Once More
Regular readers will recognize my penchant for engaging in interesting wordplay in this space whenever the opportunity presents itself.
Thanks for indulging me once again.
There’ll even be a “sidebar” bonus, because last week I didn’t have space to include another tidbit that fits into this category, and I hate to let a juicy bit of trivia slip by.
A Client’s Defiant Daughter
This one begins with a coaching client of mine who was sharing a personal story with me (as clients typically do) about his daughter.
The young woman was being defiant, and they each stood their ground. I’ll spare you the details of what happened for privacy reasons and since it’s still a work in progress (what isn’t?).
Let’s just say that her defiance became a focus of our discussion together.
It was funny because during our previous call, before a bit of a summer break, he was pleased with some of the progress he’d been making in his relationship with her.
I’d even given him some ideas around allowing her to choose the ways that she participated in certain family projects, rather than having Dad point her in the directions he preferred.
Playing the Translation Game
Neither of us actually used the word “defiant”, but it was certainly an adjective that could have applied to what he was relaying to me.
A few days later, when the word defiant came up, during a meditation recording of all places, a bell rang in my head (I mean a proverbial bell here, not the one that ended the meditation).
I thought of the noun, “defy” and a close and related French word, “défi”.
The English translation of the word “défi”, is challenge.
Ding, ding, ding.
If the Defiant One Challenges You….
So how should you react when a defiant one challenges you?
Inspired by “fighting fire with fire”, my conclusion is to challenge them back.
It isn’t even that far off from where I had him exploring with her a while back, letting her choose her own way to be involved.
Maybe all we need to add is a bit of a challenge to it, to encourage her to not only make it her own, but to really make the most of it and outdo herself.
Translation Sidebar
Last week, in Stuck in the Mud? Don’t Wait for “MayDay”, it pained me to not have space to include some more “bilingual trivia”.
Did you know that “MayDay” actually comes from the French “M’aider” (roughly “help me”)?
Likewise, the term “Pan Pan” that was also featured last week, also comes from the French “panne”, which is roughly a “breakdown” for example regarding one’s car (“mon auto est en panne”).
Hats off to any creatives who thought the “pan” in Pan Pan was about being in the pan just before going into the fire of “MayDay”.
End sidebar.
What Do the Defiant Want?
Let’s get back to the matter at hand, i.e. finding appropriate ways to handle family members who are defiant.
First off, it may be worth taking a moment to think back to how we might have handled situations when we were their age.
This spring when many people had young adults return home unexpectedly, many of us got to live a situation that had both positives and negatives.
When my wife was less than thrilled with the reactions of our two homebound college students, I quickly reminded her that if I had been forced back home at their age, I might be a bit churlish too.
I’m Impressed. Please Continue.
I’ve shared with anyone who will listen how impressed I am with today’s young people. I’m hopeful for the future of our world, largely because I have faith in our young people to do a better job than those who are running things now.
For those of you who agree, and who are lucky enough to have young adults in your family, I think you should share that feeling with them.
“I’m Impressed” is something most people enjoy hearing.
“Please continue” to impress me, might just be the kind of challenge that will keep them moving forward.
It seems like something worth trying, and is clearly a Win-Win.
And it sure beats trying to deal with constant defiance.
There’s energy in defiance, and if you can harness it like a martial artist, maybe you can even make it work for you.
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