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.
New Perspectives on a Flashback Memory
In the summer I love being at my cottage, and when here, one of my preferred spots is on my kayak, hoping to spot some bald eagles while paddling around the Chockpish River.
See: From Upstream to Downstream in the FamBiz
This week I ventured to a part of the river near the first cottage we stayed in here, years ago, and it created a flashback to a memory that part of me prefers to forget.
As I casually related that story to my coach, Melissa, this week, we ended up in some new territory that makes me want to share it here now.
Just a Trip to the Beach
It was a nice day for a trip to the beach, which, depending on the mode of transport, is either a five-minute drive by car, or a twenty-minute paddle by kayak.
So Mom and our daughter were going to drive and my son and I were going to take the scenic route via the water.
I had one “Walkie-Talkie” and my wife had the other, just in case.
“OK, bye, see you there in a few minutes”. Not so fast…
Boat Safety Training Comes in Handy
My wife grew up on a river with power boats, and we’ve taken our share of boating courses, many years ago. One part of the training included using a VHF radio to communicate and to signal distress.
(The protocols on the water and for aircraft are similar if not identical.)
The Chockpish river is not deep, and in places you can run aground, even in a kayak, but there was another danger lurking beneath the surface.
My preteen son (at the time) got into the small kayak and I pushed mine into deep enough water to get going, and was then going to board (mine is a “sit-on-top” model).
Off we go, except…
Did I Tell You About the Moose?
Our neighbour, Doris, had recently recounted a sad story about a moose who “got stuck in the mud, and died” in the river, because she (the moose) couldn’t get out.
That story came to the forefront of my mind, as I too, began to sink into the mud as I tried to board my kayak.
With my son waiting, “patiently”, for us to depart, Dad kept getting in deeper and deeper. This was NOT going as planned.
Did Doris mention that the moose had a heart attack trying to get out? I wasn’t sure anymore.
I was slowly but surely reaching panic mode.
Asking for Help, Before It Gets Critical
I remembered the Walkie-Talkie, and I remembered my radio training. We’re all familiar with “MayDay” as a distress call, when it’s a matter of life and death.
Fewer people know that there’s another signal to call out, before things get that far, but I knew it was time to use it.
I turned on the Walkie-Talkie and said “Pan Pan”.
“Pan Pan, I’m stuck in the mud, and I think I need help”
My wife knew that this was not a joke and that I needed help, and she turned around and came back to help.
The rest of the story is thankfully uneventful, because after seeing her, I calmed down, which helped me stop sinking deeper, and I eventually extricated myself, on my own.
Lessons Learned when Stuck in Real Mud
I hope you never get to the point where you’re literally hip deep in the mud, even in shallow water.
- Don’t wait until it’s “life and death” before asking for help.
- Know how to ask for the right help, and from whom.
- Remaining calm will almost always be helpful.
- The presence of a helper is beneficial, even if they aren’t the ones who pull you out.
Lessons that Families Can Use
- Don’t wait until it’s “life and death” before asking for help.
- Know how to ask for the right help, and from whom.
- Remaining calm will almost always be helpful.
- The presence of a helper is beneficial, even if they aren’t the ones who pull you out.
Did You See What I Did There?
I probably could have made this point without the repetition, but I wanted it to be “in your face”.
Families get “stuck”, and they know things won’t magically solve themselves.
It’s OK to ask for help, you’ll be glad you did.
Invitation:
Send me an email with “Pan Pan” in the subject line, and I’ll offer you two complimentary one-hour coaching sessions.
Preparing for an Important Family Voyage
Regular readers know that I have a certain penchant for metaphors, so this week’s blog post won’t be too much of a surprise.
Having previously shared my frustrations with what people who do my kind of work should call ourselves, (eg. “No Dad, Coaching Is NOT ‘Helping Losers’”) we’re back here once again, if only to demonstrate that we’re no closer to a resolution.
But let’s just say that the word “guidance” has always had a nice ring to it for me, so this week we’ll be talking about the value of a good tour guide.
And since families who own assets together have embarked on a long voyage together, I hope you’ll agree that my metaphor is apt.
“Coaching” Continues to Grow, Including On Me
It has taken me a few years, but the idea of referring to myself as a “coach”, first and foremost, is growing on me all the time.
It probably has to do with the maturity of the industry and the fact that I recently completed my long delayed coaching certification process.
That process included many interactions with lots of different coaches who ply their talents and expertise is a vast array of fields.
Very few of them specialize in working with families who are either in business together or who own significant assets together.
This really is a niche inside a niche.
A Good Coach Can Help Anyone
It is true that a good coach can help anyone, assuming that person is up for it, and not afraid of doing the work.
There are plenty of examples of coaches who know little about any particular domain who have been able to help their clients make great strides despite the coach’s own lack of experience in their client’s particular field.
Going back to the idea of the coach as a guide, I think you’ll agree that someone who’s familiar with the terrain that the client is coming from, the ability of the coach to “get” the client, and truly understand what they are experiencing, is much greater.
That NYC Tour Guide Knew Her Stuff
Imagine visiting New York for the first time and going for a tour. You get lucky and end up with the most personable and knowledgeable tour guide you could ever have hoped for.
So next year, when you decide to go on an African safari for your vacation, would you try to find that tour guide and ask her to lead that “tour” too?
I wouldn’t think so.
When I shared this metaphor with a colleague recently, she noted that she would never go see a male OB/GYN for the same basic reason.
“OMG! You Understood in Five Minutes”
I’m flashing back to a phone call I got last year from someone who had heard me as a guest on a podcast and who then felt compelled to contact me (that’s ALWAYS nice!).
As she related her situation, where she had recently been promoted over her brother, I noted some of the challenges that I guessed she was now dealing with, and she said “Oh my God, you understood in five minutes what nobody else seems to understand!”
Family members who work together have interdependent relationships that are unlike those of family members who do not, it really is as simple as that.
But as I always say, simple is not the same as easy, in fact, in cases like this, it is anything but easy.
Coaching Is Not Just a Skill
Learning to become a coach is something that just about anyone can do, but as with most such pursuits, there is a lot of “self-selection” bias, meaning that a group of coaches can often feel a bit too homogeneous.
And while the type of people who are good at coaching can use their skills to be a great resource to just about anyone, there’s something about the “lived experience” that no amount of training can buy.
Some skills translate to any situation, but others are just part of who you are, based on what you’ve lived through.
Context Is Key
The “FamBiz Context” might be one name for it. Yes, every family is unique, and every family member lives it a bit differently.
But in the end, there are plenty of similarities when you look at the relationships in one family and contrast them with those in another.
Always go with the guide who knows the terrain, and the context.
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