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Celebrating the Global FamBiz Community

I’m writing this post from a park bench in London, the morning after the conclusion of the annual FFI Conference, (my fifth).

The Family Firm Institute has been around for a little over 30 years, and I feel privileged to be a part of its truly global community.

The word “community” created the most resonance while reflecting on an angle for this post-conference blog post.

 

Global in Scale

Here I was, a Canadian in London, checking in to the conference on Wednesday, where I meet Richard, from Australia. As we chat, Xavier from Spain arrives, so I introduce them.

How would I ever have made such a variety of connections if not for these annual trips during which I have built and nurtured this group of friendly colleagues?

From Washington in 2014, to London 2015, Miami 2016 and Chicago last year, I was back in London again.

Regular readers know that I also make an annual pilgrimage to Denver each summer for the PPI Rendez Vous, and also attend the FEX symposia closer to home.

But the global reach of FFI is unique.

 

Let Me Count the Countries

Over a dozen Canadians were there, most of whom I already knew. And because FFI was founded in the US and remains headquartered there, the American presence is quite significant. But its scope goes far beyond North America.

Just last night I was out throwing darts with a Venezuelan who now lives in Brazil, another Australian living in the UK, a couple of Norwegians and five American colleagues.

Others I met along the way hailed from South Africa, Denmark and Switzerland, plus too many European countries to count.
Word has it that 40 countries were represented in all.

Special mention goes out to Edvard, who told me that he and his colleagues have been using my Family Continuity BluePrint all over the Netherlands, after he saw me present it last year in Chicago.

 

 

So Much to Share

Along the way over the three days, so much great information was shared, and so many ideas were presented in the many breakout sessions.

It was a pleasure to join great friends and colleagues Natalie, Elle, and Mairi as we got to lead one session from the front of the room, as we celebrated the Practitioner’s Spectrum.

Our discussion was about the variety of styles we use as practitioners when working with clients, from Counselling and Coaching, to Facilitation and Mediation, to Mentoring and Consulting.

 

The Big Deal about Community

As I stated at the outset, I was thinking a lot about the aspect of community this week.

A few months ago, upon returning from Denver’s PPI conference in fact, I also wrote about that subject, in part, in Wanted: Purpose, Passion and Community.

And as I wrote there, a big part of community is that the people need to want to spend time together.

Towards the end of any of these meetings, discussion invariably moves to “so, how was this conference for you?”

My reply usually includes a favourable rating, adds a few minor complaints, and concludes with the fact that I wouldn’t want to miss it.

 

Building Something TogetherGroup of people walking with yellow background

Between FFI, PPI, and FEX, it feels like we’re on the front edge of a wave of progress and change.

The worlds of family business and family wealth are facing important challenges, as families do the work of transitioning their assets to succeeding generations.

I love coming together with others who work in these areas, to share ways that we can all do a better job. We all want to be reliable resources for these families who are trying to do things better.

It truly does feel like we are building something together, not just for our lifetimes, but for those who will succeed us.

 

 

Many Parallels

There are many parallels between us, and the business families we serve.

We come together regularly because we enjoy doing so, and we have a common cause we are working for, which will likely outlive us all.

Many of our family clients feel as if they are the only ones experiencing their family issues, which of course is false.

As practitioners, we can also feel a bit lonely at times.

Getting together with like-minded colleagues to share ideas and re-energize only makes sense for us as well.

Why not join us?

See you in Miami, October 23-25, 2019.

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Ready to Lead > Ready to Leave

Certain topics come up over and over again in the world of family business.

Today we’ll be looking at two of them, although when you get right down to it, maybe it’s really just one, because they’re often wound pretty tightly together.

As you may’ve already gathered from the title, I’m talking about a changing of the guard at the top.

Some Batons Are Sticky

As I wrote in my Quick Start Guide on this subject, Sticky Baton Syndrome(Ask Prince Charles) there are plenty of cases where the person at the top of a family business is just not ready to leave.

There are all sorts of excuses that are typically mentioned as to why they must remain in place.

Some of them are even true, and some of them are actually good reasons. Many, however, are just excuses, given by people who are simply scared to face certain realities.

bird leading other birds

The Father of the Three Circle Model

In September I was in Niagara-on-the-Lake for the annual Family Enterprise eXchange (FEX) symposium, featuring John A. Davis as one of the keynote speakers.

If you don’t know who Davis is, he’s one of the co-creators of the Three Circle Model, of which I am a big fan.

See: Three Circles + Seven Sectors = One A-Ha Moment

He regaled the crowd with a presentation about the “Future of Leadership” and then led a discussion with Philippe DeSerres that was also very well received.

But my take-home message from his talk was something he only mentioned briefly in passing, right near the end, which was the inspiration for this post.

The Money Quote

He was talking about getting the timing right when it comes to transitioning the leadership of a family business.

He noted that more and more these days, and from his decades of experience as a leader in consulting to this field, there is one factor that trumps the other.

According to Davis, it makes more sense to make the leadership transition of a family business when the rising generation is

Ready To Lead,

than to wait until the current generation is

Ready To Leave.

Notably, he took the time to spell it out, i.e. “lead, l-e-a-d” and “leave, l-e-a-v-e”, just to be sure we all understood him.

I understood. I hope you do too. But just in case, I will continue…

A man leading other people

Too Soon or Too Late

At the outset of this blog, I noted that these two topics are often connected.

The biggest way this happens is that the current leaders will sometimes subconsciously hold back on giving the rising generation the opportunities to show what they can do.

And one of the major reasons that they do this is because of their own desire to remain important.

What Else Is There?

So many business leaders attach so much of their identity to their role as the leader of their business.

I like to think that this might just be too narrow a viewpoint.
Let me explain. The key to this lies in the Three Circle Model.

Note that the Business circle is only one of the three systems that intersect, and that the “big picture” also includes Family, and Ownership.

Step Back to See the Whole Picture

If the leader of the “business” steps back and looks at the whole picture, including the Family and Ownership systems as well as the Business system with which they are already intimately familiar, they will see many other, greater, opportunities.

If the business is a huge success, yet the family falls apart and the owners end up in a dispute that has various family members “lawyering up” against each other, then just how important will the business success have been in retrospect?

Three Circle = Three Systems = Three Leaders?

If you’re trying to create a true multi-generational family business, you cannot neglect any of the circles.

Each circle ultimately needs its own governance structure, and likely its own leader, or leaders. Someone needs to foresee all of this and line up and prepare those future leaders.

There comes a point in the life cycle of any business leader when their focus should shift from running a successful business to overseeing a complete enterprising family (i.e. all 3 circles)

So you built a great business, congratulations.

If you want it to continue to survive as a family enterprise for generations, you’ve still got more important work to do.

Stop working IN your family business,
Start working ON your business family.

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Marshmallows and Filet Mignon

This week we’re looking into one of my favourite subjects, and we’re going to do it from a couple of different angles.

We’ll start with some psychological research done at Stanford University about five decades ago, and we’ll end with a real life example from my own experience.

The subject is delayed gratification, and I have long maintained that it is the secret to success for most people.

 

I Want It Now

The average attention span of people has been shrinking for decades, and this has only added to many people’s expectation that everything be there for them the second they want it.

I will not get into any debates about young people these days being worse than we were at their age.

I believe that every generation has people from across the spectrum and I have no desire to kick any of these proverbial hornets’ nests.

 

Who Wants a Marshmallow?3 marshmallows on a pink table

Walter Mischel was a psychologist at Stanford who came up with the “Marshmallow Test” back in the 1960’s.

Mischel passed away a few weeks ago, which has resulted in renewed interest in his work, so if you Google his name and the word “marshmallow”, you will surely come across lots of interesting things to pursue (once you’ve finished this blog, of course).

His subjects were children around 5 years old.  The “test” was constructed this way:

Children were brought into a room and given one marshmallow and told that they could eat it now.

Or, if they could wait 15 minutes while the experimenter left the room, and NOT eat it, then they would receive a second marshmallow as a reward.

 

Not As Easy As It Sounds

Apparently only about 200 of the 600 subjects managed to hold off on consuming the treat for the 15 minutes (which surely seemed like an eternity for those who succeeded).

There are lots of interesting videos you can find showing how the kids struggled with the temptation while alone in the room, mostly from more recent versions of the experiment, conducted to replicate the initial results.

 

The Take-Home Message

If you’ve understood that delayed gratification is not easy, that’s great, but you’d still be missing out on the larger message of the research.

You see, they followed up on the kids over the years and tracked their success in life, and they discovered something that I hope you’ll really get out of this story.

The kids who were able to restrain themselved for those agonizing 15 minutes also happened to live much more successful lives, on just about every dimension they measured.

If you can delay your need for immediate gratification, that will help you for your whole life.

 

Good Things Come to Those Who Wait

So where do you think that those young subjects got that ability to be patient and resist temptation?

I won’t get into the specifics because I’m not a social scientist and so much of this ground has been covered by those much more capable than I am in this area, but I have a very short answer of my own.

 

Their Parents.

Now I can’t say if it’s in their DNA or if they learned from observing the behaviours that their parents modeled for them,  (or both) but they got it from their parents, one way or another.

 

The Steak Versus the SizzleFilet mignon - Steak

Here’s my real world example.

Years ago, my Dad had retired to a small farm where he raised breeding cattle.  He hired some of the locals to do much of the work.

He paid his employees nicely and also got into the habit of giving them an annual bonus, paid in meat.

Every year, a couple of animals would “fall into the freezer” as he liked to put it.

 

Did You Try the Meat Yet?

My Dad and I were very much on the same page with many things, but our viewpoints were also quite different.

But when he was making a point, I could usually see him coming a mile away.

One day he relayed this story, about an exchange with one of his workers, the day after they had picked up their side of beef from the butcher.

 

The Look of Dismay

Dad asked if they had a chance to try the meat.

“Oh, yeah, it was great.  We had the filet mignon”.

I can still see the look of dismay, and Dad shaking his head in disbelief.

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Family Office: “WHAT” vs. “HOW”

Family Office: “WHAT” vs. “HOW”

A few weeks ago, in From Family Business to Family Office, I mentioned that I’d start writing more about the family office world. Being a man of my word, here we are again.

I had a bit of an issue choosing my blog title, though.

I began by thinking about the idea of “Strategy” versus “Tactics” in the family office space.

But my bias is to try to stay away from “jargon” terms and use the simplest possible words, at least most of the time.

 

A Thousand Words

Of course when it came time to select a photo to go with this post, terms like “strategy” and “tactics” garnered more interesting search results from Shutterstock than “what” and “how”.

At the end of the proverbial day, though, whether we use the simple questions or the business jargon terms, we’re talking about the same issues.

Ten Years Flew By

The most important idea here is this:

You need to recognize the difference
between the strategy (the “what”)
and the tactics used to accomplish
that strategy’s goals (the “how”).

If you get nothing else out of reading this, my Dad would’ve been pleased. What does he have to do with this, you ask?

It has now been 10 years since he lost his final battle with cancer, and I cannot count the number of times his wise words have been summoned to the front burner of my brain.

“Let’s figure out what we’re trying to do first, and then we can figure out the best way to do it.”

 

Family business office

 

The Family Office (The “Who”)

A family office is typically composed of people, from one to a handful, or sometimes even dozens. (Key variables include the size of the family, the amount of wealth they control, and the level of complexity involved)

The employees of the family office should be working for the benefit of the family, and so they should be concentrating on the tactics, the “how”, and be less involved in the strategy.

Ideally, the strategy will have been worked out by the family, before the family office people get too far down the road of implementing the best tactics.

 

It’s Complicated

I used the term “ideally” because I know that this is often not the way it works in the real world.

But that typically isn’t the fault of those who work for the family office.

Much like the ideas I wrote about in FamBiz: Management vs. Governance, different groups of people have different roles that they should be playing.

When the people who are supposed to play those roles don’t play them, then others will invariably step in and assume those roles.

 

Benefits Come with Responsibilities

Families that have a family office (FO), or who are clients of a multi-family office (MFO), have set up this relationship so that the FO or MFO can serve the needs of the family.

The decision to go this route may have occurred last year or last century, and it may have been decided by this generation of family leaders or by their parents or grandparents.

The fact remains that it was done for the benefit of the family members.

And as we all know, with benefits come responsibilities.

Family business Work

Where Are We Going?

I’m going to take a guess and say that most readers are fine with what I’m saying here, but that they may be wondering what my point is.

So here’s where I’m going.

I think that relationships between families and their family offices tend to be out of balance, or off-kilter.

My anecdotal evidence suggests that family office employees often control not just the tactics, but much of the strategy too.

This can be mitigated when the FO includes family employees, but that can also make things worse.

 

Family Alignment: The Missing Link

As I stated above, this is not typically the “fault” of the family office, but usually that of the family.

They need to intentionally work at getting the entire family aligned together, in order to make the decisions that the family office should then be executing.

 

The WHAT, the HOW, and the WHO!

Getting a family aligned so that they can effectively drive the strategy of their family office does not just “happen”, all of a sudden, or all by itself.

It begins with the recognition that it is necessary for the long term good of the family and its legacy.

Recognize anyone?

See also: The Exponential Magic of Family Collaboration

 

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From Suggesting to Managing in the FamBiz

Being fluent in more than one language has many benefits, most of which are quite obvious.

Having lived in Montreal my whole life, I experience this daily. Not a day goes by where I don’t use both French and English.

Facilitation = Making Things Easier

Every language has words that come from other languages, and when you’re fluent in both, some things can seem obvious to you that others might miss.

Years ago in the Family Enterprise Advisor program that I was taking in Toronto, we were in the module on “facilitation”, and some of my unilingual colleagues were a bit unclear on the meaning of the word.

I shared my take, which is that the word “facile” in French typically translates to “easy”, so facilitation is simply “making things easier”.

Some Are Less Obvious

Examples like that one are pretty easy to spot, but others are less striking, such as the one that inspired this post.

The genesis was a documentary I watched this past summer, in French, about Felipe Alou, who hails from the Dominican Republic.

Alou had a great career in baseball, first as a player and eventually as the manager of the Montreal Expos.

Promotion to Manager

Alou started the 1992 as the “bench coach” for the Expos, essentially the “assistant” to the rookie manager, Tom Runnells.

Runnells was the boss, and Alou was there to support him.

But this manager was in over his head, and often sought input from Alou, who was older and had much more experience.

When Runnells was fired less than two months into his first season, Alou was given the top job as many fans had hoped.

Giving Suggestions

Here is where the language thing comes in. The documentary was in French, but most of the interviews were in English, so there were French subtitles.

Alou was explaining, in English, how things were at the start of the season, when he was second in command.

He mentioned that he was suggesting things to Runnells, but then suddenly he was managing the team himself.

The French verb “to suggest” is “suggérer”.

And the French verb “to manage” is “gérer”.

Wait, what?

So, is “giving suggestions” tantamount to “sub-managing”???

male and female business people talking

Sub-Titles as a Visual

If it were not for the sub-titles I was reading (for no real reason, actually, since I understood spoken English!) it would not have hit me.

But there it was for all to read, about the big step Alou had to take to go from “suggérer” to “gérer”, from suggesting to managing.

Stepping Up, One Step at a Time

Now is the time for me to bring this blog into the family business realm. I trust that some readers are already with me here.

Let me relate my recollection of some of my own story as I worked with my Dad, decades ago.

Initially, my suggestions on some subjects were welcomed. As my ideas proved to be good, they were agreed to without much debate.

From Talking to Doing

At a certain point, some of the implementations were also left to me, as I demonstrated that I could be trusted.

Sure, at the early stages, I would clear things with him first before acting, and then eventually I would act and relay the information afterwards.

Eventually, I would do what needed to be done, and sometimes not remember to even inform him.

In many ways, I took the “suggesting” to “managing” steps as Felipe Alou did, but over a longer period of time.

I was afforded this longer timeframe because my Dad and I had planned for a longer overlap.

male and female business people talking
Radical Changes: In Case of Emergency Only

The firing of a baseball team manager is not at all like a family business succession, at least in terms of the way it should be done.

Except in cases of sudden death or accident, a family business will hopefully have the timeframe required to go the slow route.

“They Aren’t Ready”

We hear a lot about the leading generation being unwilling to let go of the reins (see Sticky Baton Syndrome –ask Prince Charles)

Sometimes those who have been running things just don’t know how to get started?

Handing things off to the younger ones needn’t be done in one step.

Accepting suggestions, and even asking for them, could be a great first step. It’s never too early to begin, either!

The longer the overlap, the easier it is to make it a smooth transition.

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Planting your Family Legacy

I’ve written at least a handful of blog posts over the past couple of years with the word “legacy” in their title.

In the coming years, I will likely write a few more, because it’s a subject near and dear to my heart, and I’m guessing that I’m not alone.

Today’s post will cover some of the important elements that go into a legacy, using nature as an inspiration.

Planting your Family Legacy

One Definition of Legacy

When we talk about legacy related to family wealth, we often assume that everyone has the same ideas in mind when they hear that word, “legacy”.

But for the heck of it, I just Googled the word to locate a “neutral” definition, and this came up:

“Something that happens or exists as a result
of things that happened at an earlier time”

Given both the title of this post and the photo I chose to accompany it, I think this definition is spot on.

If you want to sit in the shade, the fact that Grandpa planted a tree can certainly help!

 

Is Planting Sufficient?

 We can all agree that planting the tree is a pretty big part of the equation, and that without that effort, there would be no tree.

But maybe a tree isn’t the best example here.  When you think about it, the sapling in the photo is actually being transplanted to grow in that particular chosen place.

If they didn’t plant it there, it would have likely grown in its original location.  Aren’t the woods full of trees that just grew there on their own?

Likewise, there is a lot of wealth in the world too, and fortunes are made and lost all the time.

Legacies come and legacies go.

Planting your Family Legacy

How Does your Garden Grow?

Perhaps a better metaphor is a garden or a farmer’s field.

There are more analogies we can use here because there are a lot more steps involved.

You need to till the soil, you need to plant the crops, there’s fertilizer that can help a lot, and you need to water regularly too.

Removing weeds, making sure that the crops are not infested my bugs or disease, and then let us not forget the harvesting.

And then do we eat the whole crop, or do we save some for next year’s seeding?

 

So Many Metaphors, So Little Time

I feel like the metaphors here are endless, and I hope that you’ve found at least one that is new and useful to you.

But I want to get to a couple of other keys points here.

What can we learn from the plant world that we can apply to the area of family legacy?

 

Intention and Attention

Well, going back to the definition I found, the “things that happened at an earlier time” will usually include some serious intention.

Unless the wealth was won in a lottery, there was likely a lot of intentional hard work and risk-taking involved.

The original spark was also surely followed by some diligent and intentional efforts to maintain, preserve, and grow the family’s wealth over a sustained period of time.

In addition to the intention, there is also a constant need to pay attention to make sure that everything that was built up and accumulated is carefully tended to and watched over.

Planting your Family Legacy

People Power

Family wealth is often “created” by the hard work, talent, genius, risk-taking, and luck of one individual.

That person can often take on a superhuman aura.

But even when the pile of financial wealth is enormous, they can’t keep it going forever all by themselves.

There will eventually need to be other people involved in perpetuating the wealth, turning it into their legacy.

 

People + Assets = Legacy

As I wrote last year in “Is your Continuity Planning “PAL” in Danger?” assets alone will not ensure anyone’s legacy.

Of course, if most of the wealth is held inside a business and great people are hired to manage it as a corporate entity, the business legacy can continue long past the founder’s departure.

My bias is towards a Family Legacy, ensuring that the family be the ones who maintain and grow it into the future.

 

Family Legacy Versus Business Legacy

This bias is pretty clear when you to watch this video blog I recorded: What is your True Family Legacy.

Who will lovingly tend your garden after you’re gone?

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The Evolution of Family Governance

Lately, I’m becoming enamoured with the term “Family Governance”, as some regular readers may have noticed.

In fact, I wrote a post just a few weeks ago relating to this subject, “Family Governance: From Filaments to LED’s”.

The subject has undergone an evolution of sorts in my mind.

I’m looking at it in new ways as I learn more, work with more families, and adapt my thinking to the ways other related subjects also continuously evolve.

 

The Family Governance “Field”

 

I’m not sure if we’re yet at the point where we can say that Family Governance has evolved into its own “field”, but I know we’re moving in that direction.

In fact, the field, as it stands, also feels like it is evolving in its own right.

If you’re interested in it, or even curious, please join me in New York City in January for the 3rd annual conference of the Institute for Family Governance.

I’ve attended the two previous editions, and my blog on the 2018 version can be found here: “Realistic Family Governance Goals.”

 

How to Make Family Governance “Stick”

So in terms of the evolution of family governance, we’ve already got the fact that the term has been growing on me and evolving in my mind, and the fact that the field is also evolving.

But the main point of this post that I’d like to make is how important it is for Family Governance to evolve within a family, if it is to have any chance of “sticking”.

Yet as more people discuss a certain topic and it seems like it’s growing legs and becoming “a thing”, there are always some who try to figure out how to sell the idea to others, with a view towards making money at it.

I supposed that’s to be expected, much as I mentioned last week when we discussed the family office space and the “business opportunity” problem there.

 

FOR the Family, BY the family

From my perspective and experience, when governance is thrust upon a family, either by one family leader from above, or by “experts” from outside, it is likely doomed to failure.

My go-to expression for this is “FOR the family, BY the family”.

Notice that I did not say for the family by one family member, or even for the family by experts chosen by the family.

You cannot buy governance off the shelf; it is not a product.  Of course, that doesn’t mean that there aren’t people who will try to sell it to you.

The Evolution of Family Governance

No Stone Tablets

Any family that’s interested in successfully transitioning their wealth from one generation of their family to the next will need to invest some time and effort into developing the governance structures and systems that will help them achieve that goal.

Unfortunately, there’s no set of “stone tablets” that Moses is going to arrive with, listing the Ten Commandments of family governance.

I hear you, “OK, Steve, so it needs to evolve. But from where, and how???”

 

Start with a Family Meeting

 

You really need to call a family meeting and throw the subject on the table.

Someone from the leading generation, (usually “Dad”) has to call everyone together and make it clear that they want to make sure that the family will be prepared to eventually take over the family wealth in all its forms.

They should explain that they’d like to ensure the smoothest transition possible and that this is the beginning of a series of regular meetings that will be used to establish the “who, what, when, where and how” all that will happen.

The first meeting needn’t be long, because family members will need time to adjust to this news.

But please don’t leave until the next meeting has been scheduled for a couple of months down the road.

 

Start Where You Are

Governance is all about three major questions:

  • How will we make decisions together?
  • How will we communicate?
  • How will we solve problems together?

Don’t expect the answers to just materialize without any work.

 

The Good News?

The good news here is that just figuring out where to begin and how to start the governance process, so that you can see how it all evolves, is the best way to ensure that it will actually work.

It’s a PROCESS, and how you get there is even more important than where you get to!

Get moving, keep going, and watch the evolution.

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From Family Business to Family Office

Welcome to a new theme here at Shift your Family Business, (the website). In some ways it’s long overdue, and in others, well, it’ll be more of the same.

 

I’ve begun to realize that I haven’t written nearly as much about the Family Office space as I have about Family Business.

 

Of course there’s a huge overlap of topics that suit both areas, and these have been covered here at length.

 

But for some reason, I get way more questions from families about operating their businesses than from those who’ve made the transition to managing and transitioning their wealth.

What’s the Difference?

If you stop anyone on the street and ask them what a family business is, everyone will give you some kind of answer that would score at least a few points on any grading key.

I daresay that if you asked “what’s a family office”, a lot more people would ask you to repeat the question, or would have only some vague idea of what you were asking about.

I consider myself to be pretty good at explaining complex things in simple terms, and this one is a big challenge.

In the simplest explanation, a family office is a formal structure set up by a family to manage the family’s wealth and everything that goes with it.

Family Business Office People Working
I’m Too Sexy for my Wealth

In the last decade or so, the term “family office” has been discovered and co-opted by many professionals who work in the area of wealth management.

I come across examples regularly that make me shake my head, where I see this very broad term used as a label to describe a very narrow service offering.

The image I have in my head is of a hot dog stand with a sign that says “smorgasbord”, where you can have your hot dog with mustard, or ketchup, or both!

OK, but where’s the rest of it?

Not for the Mass Affluent

Financial institutions typically like to attract the clients with the most wealth, and they also have products and services geared to lower levels of wealth too.

There are terms that get used in their industry to segment different wealth levels, and they kind of make my skin crawl when I hear them.

There are the “mass affluent” with “only” a few million dollars, then you get to HNW (high net worth) and eventually UHNW (ultra HNW!)

Who qualifies for what level of services varies over time and from one institution to the next.

Let’s just say that family offices have historically been for families in the upper reaches of society, and so anyone who markets their services as “family office” is trying to be seen as more “big time”.

That, and the hope that families will use their services because then they can talk about “their” family office at cocktail parties, I guess.

How Do They Get There?

Historically, family offices are set up once a family has achieved a certain level of liquid wealth, and/or a certain level of complexity.

Liquid wealth is money that can be quickly transferred from one asset to another, like cash, stocks and bonds.

Family operating businesses and real estate are usually considered “illiquid”.

The most common way a family arrives in the land of a family office is after a liquidity event, i.e. the sale of a family business.

See: Liquidity Events in a FamBiz: Pros and Cons Part 1 and Part 2

 

Custom Made Mystery

But every family is different, and so every family has different needs.

Most families are not 100% sure of what they need, and they have an over-abundance of providers who are trying to convince them that “I am your solution”.

There’s an expression in family office circles that “If you’ve seen one family office, you’ve seen ONE family office”.  There are no two the same, nor should there be.

Family Office

Demystifying Family Offices

From discussions with families, acquaintances, and peers, I realize that some demystification is overdue.

So look for more frequent posts on this fascinating subject in this space going forward.

 

Looking to get a head start?

– See chapter nine of my book

SHIFT your Family Business, (the BOOK),

Chapter 9: Towards a Family Office Mindset

  • See this article by Jaffe and Grubman

“Development Stages of a Single Family Office”

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The Importance of Family Vision

It’s been over a year since I wrote about Family Vision specifically, so I think I’m due.

(5 Things You Need to Know: Family Vision)

 There are of course more than five things that anyone could say about every subject, and family vision is one that I think should be discussed more broadly, more deeply and more frequently.

But first I’d like to go back to the first keyword in the title that I decided to put on this post, i.e. “Importance”.

Questions Around Importance

A natural place to begin would be to ask “why” family vision is important.

But since this is my blog and I make the rules here, I’m going to “zag” instead of “zigging” and answer a few different questions instead.

I hope that no one thinks I’m acting like a politician when I answer a different question than the one that was asked.

My Dad used to say “You can do whatever you want, but don’t become a politician, because then even your friends will think you’re an a**hole”.

(My son recently reminded me of this, so yes, I have passed it down!)

 

– For Whom is Family Vision Important?

Making sure there’s a clear family vision isn’t an important consideration for every family.

In fact, I’d bet that most families have never even thought about this at all, and that’s OK.

But I don’t write these blogs for most families. I’m reminded of something my Aunt said to my Mom after she read my book, SHIFT your Family Business. “Oh, that’s a book for rich people”.

Well that isn’t the word that I would’ve used, but she isn’t wrong either. Most of what I write is geared towards “the 1%”.

I like to think that my ideas are just as valid, generally, for all families, but realistically, the higher up the wealth spectrum the family is, the more likely my thoughts will resonate with them.

 

– When Is Family Vision Important?

Just as family vision is not necessarily important for every family, neither is it important at all times.

Years and even decades can pass during which it never becomes salient. So when is it likely to become important?

Essentially, as soon as more than one generation of adults is involved, I believe that it is high time to think about working on a family vision.

As soon as the wealth that has been created goes from being the wealth of its creator to the wealth of the creator’s family, having a family vision becomes important.

When the wealth creator goes from thinking about “my wealth”, to “our wealth”, the paradigm has shifted.

 

2 kids walking down a road

– Where is Family Vision Important?

So assuming that a family is actually one for whom family vision is important, and that they are now at a point where the wealth is considered to be “family wealth”, where does the vision actually fit into things?

Discussions about family vision usually begin in the context of a family meeting.

If a family fits the profile based on the first two questions (“for whom” and “when”) but still hasn’t begun to have regularly scheduled family meetings, then that’s the most logical place to begin.

When starting out, I always suggest that families identify the smallest logical group of people to convene, usually the parents and their adult children. In-laws and children can be added later.

When I say, “regularly scheduled”, that doesn’t necessarily mean frequent.

Having a regular annual meeting will often suffice, and that’s preferable to having a few ad-hoc meetings over a few months and then not getting together again for three years.

– What is Family Vision Anyway?

Just what goes into a family vision will vary from one family to the next. No two families will go about figuring theirs out the same way, either.

The actual “content” or result of the vision is less important than the process the family goes through to define it.

If the family can answer the question “Where are we all hoping to go together?” I think that they’re well on their way.

Is it a family credo or motto? Yes, possibly. Is it a mission statement? Yeah, maybe that too.

Is it carved in stone? Well, maybe, eventually, but I’d suggest writing it down in pencil first, just in case.

So when’s the next family meeting?

Video version of (5 Things you Need to Know: Family Vision)

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Wanted: Purpose, Passion and Community

Wanted: Purpose, Passion and Community

 

When I was in Denver a few weeks ago for the annual Rendez-Vous of the Purposeful Planning Institute, I met a bunch of interesting people, as usual.

Having been there the past five years, I’m starting to see many familiar faces each time I return, which is great, of course.

And I always meet interesting new people every year as well.

Attendees come from a whole bunch of different backgrounds and professions, and occasionally I meet folks from areas where I’ve had no contact or experience.

Such was the case with the young women I met from Koplin Consulting.

Addiction TreatmentCommunity in family business

Koplin offers in-home counselling, treatment and recovery services for those working through addictions.

I’m fortunate to not have ever been in the market for those services for my family or for client families – yet (?).

I ended up at the same table over meals with all three of their representatives at the conference and I found them very refreshing.

During one of these discussions, it was mentioned that the key to successful recovery usually involves people finding strength in three places: Purpose, Passion and Community.

The “Trifecta”

When I hear about something that works in one area of life, I’m compelled to see if it could also apply elsewhere.

So today I want to look at those three elements from the perspective of families who are hoping to transition their wealth down through the generations.

I just searched each of those words on my website to confirm that I have actually addressed them all in this space over the years, several times, but not yet in the same post.

Family Purpose

For a family to be successful in passing down their wealth to the rising generation, it’s really helpful if they have some sort of shared purpose.

When a family undertakes the work necessary to figure this stuff out, they often start by trying to analyze everyone’s values first.

From individual values, they typically try to identify a handful of common values that everyone in the family can agree on.

Finding a common purpose becomes easier once you’ve decided on those shared values.

Individual Passions

Just like everyone has their own set of values, each individual will have their own passions.

But unlike the values, where we hope to find a few in common, to help lay out a clear family purpose, the individual passions should be looked at for each person separately.

Everyone has different things that make them tick, talents that they exhibit that set them apart, and activities that they do so well that when they’re doing them, it doesn’t ever feel like work.

Human Capital

The special talents, skills and passions that each person possesses are part of the family’s “human capital”, and ways should be found to leverage each person’s individual strengths.

Families that are able to harness the best from every member of the family will have a much easier time keeping their family wealth together for coming generations.

Part of a Community

When it comes to the “community” aspect of a family, I think the most common element is how much time

family members actually spend together.

Time with the family

And while that isn’t something that you’d measure with a stopwatch, there really is no substitute for “face time” in the old sense of the word.

Technology has made it much easier for people who are physically separated to be in regular contact, and that’s great, but to be successful at keeping their wealth in the family over generations, some regular contact is a prerequisite.

Wanting to Spend Time with Family

As I work with various families, it’s pretty easy to see which ones have got the community aspect figured out and which ones never will.

In many ways, it has more to do with wanting to spend time together, and looking forward to lots of interaction than it does with the amount of time they actually spend as a group.

Putting it All Together

Families wanting to benefit from the Purpose-Passion-Community idea can do so by spending time together working on their common values to drive a shared purpose.

They should allow each member to work their own passions within that, though, and not try to make everyone the same.

There’s no substitute to spending time together, with everyone bringing their best self. Good luck.

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