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Family Wealth – Is Stewardship Still the Gold Standard?

More Options to Consider Nowadays

When it comes to preserving family wealth over generations, one of the biggest bogeymen out there is entitlement, and for decades now that’s what’s been keeping families up at night, and keeping many of their advisors busy trying to prevent.

Most of what I write about here concerns the challenges families face when trying to transition their hard-earned wealth from one generation to the next, and I almost always tie in parts about how the industry that serves these families is continuing to evolve.

This week we’re going to look at the concept of stewardship, which has often been hailed as the antidote to entitlement.

As this ecosystem matures, we’re coming to terms with the fact that while having rising generation family members adopt a posture as stewards is preferable to them being entitled, it may not be the “be all and end all” that some have held it out to be.

 

Better Than the Opposite, But Too Passive

I covered this briefly in The Many ‘Ships of Working with Family, where I added stewardship to leadership and partnership, among others.

Here’s some important background I’m recycling for context:

Definitions of stewardship include words like “supervising” and “taking care of” something, and often include adjectives like “responsible” and “careful”.

Clearly someone who wants to “take care” of wealth in a responsible fashion is preferable to someone who feels entitled to squander it.

It may not, however, be an enduring solution, depending on how much wealth there is, how quickly it can be expected to grow, and how large a crowd of family members it’s expected to serve long term.

 

Entrepreneurs in Each Generation

Some prominent members of the field of family enterprise have long held that it’s important for each generation of a family to renew itself with a new crop of entrepreneurs to keep things going and growing, as the family continues to expand.

In many ways, setting up the expectation that those who follow the wealth creator are simply supposed to maintain the wealth doesn’t always dovetail nicely with the idea of taking the initiative necessary to recreate something new.

I’m reminded of Jay Hughes’ view that those who follow the wealth creator risk getting sucked into that person’s “black hole”, which can exert a strong pull, from which it can be difficult to break away.

 

The Wealth 3.0 Version – Pushback?

During a recent Purposeful Planning Institute webinar on the subject of Wealth 3.0, we spent some time discussing how stewardship fits into that topic.

A participant asked the panelists about how the concept of stewardship might look a bit different from a Wealth 3.0 lens, which provoked a certain amount of unexpected (yet welcome) discussion.

Interesting points were raised about whether stewardship becomes a good outcome for a family, versus the idea of someone becoming a steward as more of a “job description”.

There was also talk about how while stewardship had been put on a pedestal until recently, there’s been more pushback lately, as families are looking at their wealth transitions more holistically and less as a “top down” venture, i.e. “thou shalt steward my wealth”.

I’m realizing that the concluding sentence of one of my blogs from less than a year ago, Finding the Liquidity Sweet Spot for Your Family may already be out of date.

That post ended with “I recommend they also become involved in co-creating their future as stewards of the family wealth.”  which in the context of that piece remains valid, but I might phrase it differently today.

The “Three Orientations” Viewpoint

The views on this question continue to evolve, of course, and a recent whitepaper from Merrill Private Wealth Management underscores an advanced way of looking at this question. See Inheritance Style Whitepaper

That piece notes that there are three different orientations that wealth inheritors can and do adopt, based on Merrill’s research.

In addition to traditional Inheritors (who may be entitled) and Stewards, they introduce the concept of Sojourners to the mix as well.

It may take some time for these ideas to crystalize in the family wealth transition ecosystem, but it’s clear to me that change and evolution to this question is afoot.

While stewardship can be an important part of the wealth continuity plans of many families, for a certain period of time (which might be measured in decades or even generations), it will rarely be a question of “set it and forget it” either.

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On Clergy and Family Meetings

Someone Who Knows “How to Be” with a Family

This blog has been a long time coming.

When speaking with people about my back story, I often bring up my grandmother’s career suggestion to me, but I’m pretty sure I’ve only written about it here once, and that was almost five years ago.

See: Limits to your Sphere of Influence

Over the years, I’ve come across other connections between my work with families and that of the clergy, and most of them have been left in the recesses of my mind.

But a recent Zoom call with a new LinkedIn connection brought this to the forefront once again, so here goes.

“A Priest and a Rabbi Walk into a Family Meeting”

It wasn’t easy to find the proper title for this post, and the sub-head above that sounds like the set-up to a joke was near the top, but was a bit too long.

Let’s begin with my maternal grandmother, who lived with our family for much of my childhood, and what she saw in me.

Note that my career had been laid out for me from a young age by my father, who had started a business before I was born, and was waiting for a male heir, which he finally got on the third and final try.

Oma, for her part, told me a few times that she thought I should become a priest.

My response was to laugh this off as preposterous. Little did I know what lay ahead for me.

On Clergy and Family Meetings

Using Trained, Neutral Outsiders for Support

As I began to work with families, concentrating on the “family circle” and facilitating discussions among various family members, I was constantly searching for ways to learn how to do this work better.

I recall seeing a video on the website of the then Business Families Foundation, featuring none other than John A. Davis, of Three-Circle   Model fame, in which he shared the following:

        “This is the work that used to be done by priests and rabbis”

I began to wonder if my grandmother had me pegged better than my Dad did!

The idea of having someone from outside the family, who could be neutral and who was trained in “how to be” even more than “what to do”, made lots of sense to me.

Learning Bowen Family Systems Theory

Long time readers know that I’ve been a student of Murray Bowen’s Family Systems Theory (BFST) for years, and I even wrote a book about that learning journey.

See Interdependent Wealth

It was during the two years that I was part of the Postgraduate program at the Bowen Center at Georgetown that this clergy angle really hit me.

Those who study BFST come from a few different fields, notably social workers and therapists of various kinds.

The people like me, who mostly work with families around wealth transitions, made up well under 10 % of the students during my time there.

One of the larger subgroups comprised the many ministers, rabbis, chaplains and pastors of all sorts.

Perhaps my late grandmother had seen something in me after all…

The Power of LinkedIn (When Used Right)

I’ve sung the praises of LinkedIn for years, and while not perfect, it stands head and shoulders above every other social media platform for professional interactions and relationship building.

A young man who just entered this field reached out to connect with me recently, and I instantly accepted his request.

He’s a CPA, and just joined an accounting firm to work with their potential family office clients. This is unremarkable so far, but please hang on.

He shared a note with me mentioning that he used to be a church pastor, before becoming an accountant.

Hmmmm, I thought, isn’t that interesting.

On Clergy and Family Meetings

Being “In the Room” During Anxious Times

We set up a Zoom call to satisfy my curiosity about his unusual career trajectory, and some of what he shared with me drives home an important point.

First off, kudos to the accounting firm for recognizing that this man has some useful traits and experience that will certainly come in handy.

My new friend related stories from earlier in his career, when he was a hospital chaplain, which clearly illustrates a point I’ve since shared with many people in discussion.

He talked about being called into a hospital room with a dying man surrounded by his family.

How to BE > What to DO

If you can be comfortable (and comforting!) in situations like that, I think you’ll do just fine running a family meeting.

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On Letting Professionals Run your Family Business

A Different View on a Common Question

I’ve been operating in the family business sphere for about half a century now, if you count from my first memory of being told that I was expected to eventually take over the company my Dad founded before I was born.

Back then, in the 1970’s, family businesses were still considered “less good” than corporations, and were typically spoken about with at least some derision.

Happily, times have changed, at least to some degree, and family enterprises are seen as models in some areas, especially insofar as their cultures are often strong and people want to work for them.

There is still, however, an aura of them being “less professional” than their more corporate counterparts.

When Do You Bring In Professionals?

There are ways to see what people search for on Google and other search engines, and I occasionally ask someone skilled at this to share what kinds of questions people typically ask about family business.

Here’s a recent question he sent me:

                  “At what point should a family business      

                              let professionals run it?”

While this feels a bit like an outdated question, because from where I sit I thought we’d moved past that, the fact that people are asking it means it is worth spending some time on.

My gut says that for anyone asking this question, the word “professional” could likely be swapped out for “non-family member”.

There ARE Professional Family Members Too

The question itself assumes a black and white view of the world where a family member is not professional.

The corollary of that view might then be that a non-family member therefore is a professional.

I hope that I don’t have to explain the absurdity of this view.

But I absolutely do understand where this comes from, and that’s where we’re going to go now.

There certainly are enough examples that we’ve all seen where we’ve witnessed family members working (or at least employed, even if they’re barely working) in jobs for which they are not adequately equipped.

And that’s putting it gently, in some cases.

Family-Owned and/or Family-Operated

Over the years, various people have tried to define “family business” in different ways, and those definitions typically involve some components of family ownership (either currently or eventually) and family operation.

I’m not a stickler for detail in such definitions myself, my motto is, if you think of yourself as a family business, then you are a family business.

But there are of course differences between businesses that are simply “family-owned”, yet not (or no longer) “family-operated”.

I daresay that most examples of those that we think of are probably also viewed as being more professionally run.

But they sure didn’t start that way, did they?

Like So Many Things, “It’s a Process”

Getting back to the initial question, about “when is it time” to “bring in professionals”, this is likely the idea people are getting at.

You certainly can continue to own a business with family members, even if no family members still work for the company.

You can serve on the Board of Directors of a family business as a family member as well, even if you aren’t an owner or employee.

There are certainly a number of advantages to situations like that, because it sure is easier to fire someone that isn’t related to you!

Of course few businesses get to that stage until they’ve been around for a long time, typically until at least the end of the career of the founding generation, and more often after a couple of generations of being family-operated.

A Really Long-Term View

This of course requires a really long-term view, and at some point it may become quite obvious that the business and the family have reached that stage already.

When you get right down to it, what are the chances that the best person in the whole world to run say, Ford Motor Company, is actually a descendant of Henry Ford?

My guess though is that anyone asking this question about a much smaller or younger company is likely doing so because they’re witnessing some family members who just aren’t up to the quality level required to do the job “professionally”.

If that’s the case, you may want to speed up the process of bringing in competent management, because if you don’t, you may not have a profitable company for much longer!

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The Many ‘Ships of Working with Family

The Many ‘Ships of Working with Family

Lots of Ways to Look at Managing Assets Together

The inspirations for these weekly missives come from a variety of sources, because writing 52 blogs every year necessitates a wide universe of catalysts.

Some members of my family have accused me of having an “addiction” to Twitter, and I suppose that sometimes it might seem that way, although I believe it’s very much under control (spoken like a true addict, I acknowledge).

And so you might have already guessed that Twitter is the source for the idea behind this week’s post.

Hat tip to Ryan Foland, who tweeted out a post a few month’s back that caught my attention, which stated “PartnerSHIPS are delicate, navigate wisely”, along with a cartoonish image of a captain at the wheel of a boat.

I emailed his tweet to myself, adding “relationships and leadership” to cement the idea for this piece, and put it into my “blog ideas” folder.

Since my “beat” is families who own and manage assets together, I want to explore those “ships” along with a couple of others I since added to the pile.

 

OwnerSHIP

The simplest one to start with is ownership, since it is the fact that people actually own something together sits at the root of the challenges that they face, as well as the opportunities.

It’s much simpler when you own something all by yourself, since you alone can make every necessary decision without even informing anyone else.

The families I work with all own things together, or there is a strong intention for them to co-own assets together in the future.

It’s this “co-ownership” that holds most of the challenges.

PartnerSHIP

That co-ownership brings us to the next ship, which is the partnership. Every partnership has its own advantages and disadvantages, of course, and being a partner in anything with family members just adds to the excitement, for lack of a better word.

When I speak about the work I do, I often make an analogy to leverage used in investing; if you borrow money so that you can make a larger investment, you can make more money, provided of course that you do make money. If you lose money, you also lose more money.

Being in any partnership with family members is wonderful when things go well, but when they go poorly, there’s more a stake to lose as well.

 

LeaderSHIP

In order for any ownership partnership to go well, some form of strong leadership is also required.

I used the term “some form” on purpose there, to highlight the fact that leadership doesn’t always look the same, especially in the case of families.

As a family goes from the first generation (G1) to the second (G2), there’s typically a shift from an autocratic style to something more democratic. 

Ideally, there’s strong leadership of the business aspects, keeping that area strong, as well as some strong leaders of the family as well.

Those roles often reside in the same person in G1, but by G2, and certainly if they get to G3, more than one person will play key leadership roles, even if they’re not “official”.

See The Unsung Role of Family Champions

 

StewardSHIP

One type of leadership attitude and style that’s sometimes adopted is stewardship. Definitions of stewardship include words like “supervising” and “taking care of” something, and often include adjectives like “responsible” and “careful”.

There are worse attitudes a family can take, and stewardship continues to be a style to which many families aspire. 

It does have its drawbacks as well though, such as how it can leave rising generation family members unfulfilled and can see family assets dissipate over time.

See Striving for the “All and Nothing” Inheritance

RelationSHIP

I saved relationship for last because I think of this one a bit differently. This one sort of serves as the foundation for all of the others in my mind, because if relationships between family members start to go sour, all of the other “ships” suffer as a result.

Relationships are precious and need to be tended to consciously, because their quality affects everything else the family does together.

Communication is so important and I always lean towards more communication than less, because a vacuum of communication typically causes more issues and harms more relationships than when there’s plenty of it.

All these SHIPS are delicate, so please navigate wisely!

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No Beef with this Family Resemblance

A Roadside Billboard Creates a Paternal Flashback

My Dad was a very key figure in my life until he lost his battle with cancer way back in 2008.  

Much of the work that I now do with business families emanates from the fact that I was born into the family business that he founded before I was born.

I think about him often, and share some of his more memorable sayings at every opportunity.

But last week, while driving down the highway, I saw a billboard that made me recall something he was passionate about.

It was an ad for Quebec beef. 

A Man Who Was Always Ahead of His Time

Even before the liquidity event of selling the operations of our steel fabrication business, Dad had bought a farm about an hour away from the city, which was something we all knew that he would do someday.

If you are picturing a typical gentleman farmer, you’re partly correct, but you could never put it that way to him.

See Folksy Steve and the Gentleman Farmer

He took an interest in beef cattle, and even though he was new to the game, he dove in and quickly became the go-to cattleman in the area.

Thanks to his newfound passion project, I was able to learn about all sorts of things I never cared to know, like scrotal circumference and why the vet needs to wear arm-length gloves on both hands to do artificial insemination.

But he also saw the big picture for the industry, and was always trying to advance things, including creating a brand for Quebec beef.

Perhaps it was an idea whose time had not yet come, but seeing the billboard featuring an idea he had a couple of decades ago got me into reflection mode.

The Apple Doesn’t Fall Far from the Tree

A few weeks ago in From Multidisciplinary Field to Interdisciplinary Ecosystem I noted a bit of jealousy that I have towards the younger colleagues in my professional network, because they will benefit from the advancements of our work more than I will ever be able to.

Despite my coming to this work relatively late in life, I have seen a number of advances in how the families behind the enterprise are finally getting more of their due, in terms of how we professionals serve them.

If anything, it seems like this is an idea whose time has come, and the industry is still trying to come to grips with how to best serve these families, and not just their businesses.

I have been evangelizing about this in this space and elsewhere for about a decade now, but I had never realized that I was following in the footsteps of my Dad until I drove past that beef billboard.

If He Could See Me Now

Perhaps it’s because it’s the holiday season as I write this, but I wonder what he would think about the work that I’m doing.

About five years ago, in No Dad, Coaching Is Not “Helping Losers” I noted that his grasp about what coaching is and what it isn’t wasn’t exactly firm.

I would hope that he would be glad that I finally found the kind of work that I enjoy and do well, in service of families who can use my guidance to become even better than they already are, as opposed to being losers.

No Beef with this Family Resemblance

The Billboard My Kids Will See 15 Years After I’m Gone

Now I’m trying to imagine what the equivalent to that billboard will be for my kids to see a decade and a half after I die.

This work is very much a niche and the vast majority of people will never actually “get” what I do, but at least the professionals who work with business families will be fully on board with the importance of serving the family members, and not just the businesses they own together.

I suppose that we may then be at what some may call “Wealth 4.0”, as an outgrowth of the Wealth 3.0 that I mentioned a few weeks back in Do Family Businesses Really Fail by the 3rd Generation?

I know that the organisations that I’m a part of are all continuing to evolve in their own ways. 

Whether it’s the Purposeful Planning Institute, Family Enterprise Canada, or the Family Firm Institute, none of them are standing still, and each is trying to keep up with the evolution of the work we’re doing with families.

And like Dad, I guess I’ll continue to try to do my own work with them, and play an important role.

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Do Family Businesses Really Fail by the 3rd Generation?

Taking a Fresh Look at an Old Saying

This week we’re dealing with a subject that gets talked about a LOT by many of the people who work with family businesses, and that’s the adage that family businesses often fail, usually by their third generation.

Personally, I’ve always avoided this topic, because whenever I speak to anyone from an enterprising family, they never ask about these “statistics” and even when they do hear them they usually believe that their family will prove to be the exception.

But I guess it’s probably high time that I at least address this question, so that we can unpack it a bit and see what can be learned.

I’ll Tell You What You Can Do with Your “Shirtsleeves”

Everyone who works in the field of family business and family wealth is familiar with the old proverb “Shirtsleeves to shirtsleeves in three generations”.

And we’ve all heard that there are similar versions in every language and culture around the globe.

And, I’m pretty sure most of us are sick of hearing about it.

Of course, that hasn’t stopped many of the people who advise such families from trotting out that stuff at every opportunity, because, well, it works!

But what I mean when I say “it works” has much more to do with the fact that it works for solution providers, for whom this point of view helps them to sell their “solutions”.

A “solution” is easier to sell when you can point to a clear “problem”.

We’re Looking at the Wrong Question

The image I chose to accompany this blog comes from an ice storm that hit my region almost 25 years ago, in January 1998. (Image has since been removed! Ooops)

The tower that collapsed was one of dozens that could not stand the weight of the ice that had accumulated on the electric wires they carried.

The business my Dad had founded and for which I worked happened to have manufactured thousands of towers like these over the three decades we operated.

After that storm, people who knew we had been in that business would ask my Dad, “How come those towers collapsed?”.

His reply was always this: “You’re asking the wrong question; you should be asking ‘how did so many of the towers stay up’”.

Accentuate the Positive

I hope that my analogy is obvious enough, but just in case, allow me to share my point more explicitly.

While the ice storm that damaged so many of those towers was a “once in a century” type of occurrence, the challenges of keeping a family business (or any business for that matter) going for decades are a constant uphill battle.

In fact, I’d venture to say that family companies actually fare better than non-family businesses in general.

Do I have any stats or studies to back that up? Well, no, I don’t. 

But the “studies” that were done decades ago on FamBiz were not exactly done with the most scientific rigour either. 

That hasn’t stopped those who benefit from them from trotting them out at every occasion, however.

The Wealth 3.0 Version

I’ve felt this way since I entered this field a decade ago, and thankfully now some higher profile colleagues are leading the way to change the narrative around this subject.

I first heard the term “Wealth 3.0” at the RendezVous of the Purposeful Planning Institute (PPI) in 2019, from Dr. Jim Grubman in his closing keynote.

Since then, Grubman has continued to share his thinking via the Ultra High Net Worth Institute. See Wealth 3.0 and the Ten Domains of Family Wealth for much more background.

The crux of that viewpoint lies in the fact that creating structural “solutions” for the business is wrongheaded, whereas focusing on the human capital of the family is what we should be supporting families with.

More recent research has shown that concentrating on the family, rather than any enterprise they happen to create, makes more sense.

Because so many of the experts have traditionally been hired by the companies, though, it’s not surprising that the focus has been misplaced.

The more recent emphasis on the family is welcome and overdue, but not yet firmly implanted in the field of professionals who serve them.

Progress, Not Perfection

Progress continues to be made, however, and we need to be satisfied with making that continue, rather than lamenting that we are not yet at the “perfect” state of the industry.

See “From Multidisciplinary Field to Interdisciplinary Ecosystem” from a few weeks ago for more on this.

We need to continue to make this progress, one advisor and one family at a time.

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Philanthropy as a Doorway to Family Governance

Finding a Reason for Organized Family Discussions

Every week here I tackle a subject relating to families who either work together or own assets together. 

The main thrust typically involves the challenges these families face in organizing themselves in ways that increase the likelihood that they’ll be able to keep a great thing going right through the next generational transition of the family.

That often means I talk about the importance of having regular family meetings and beginning to institute some forms of family governance, which is often a tough swallow for some families.

For certain families, there’s kind of a nice “back door” to this that presents itself, and that’s family philanthropy.

A Subject That’s Long Overdue Here

I’m almost embarrassed that I’ve written so little about philanthropic activities in this space, because family enterprises are often quite generous, especially in their local communities.

When I got into this field, the ideas I had around philanthropy were quite simplistic, eg. Companies makes money, so they give some of it back, that seems logical.

It was only later, when I noted that some families had found it necessary to organize their activities on a more formal basis to actually implement everything required to properly execute their giving, that I realized the wonderful side effect this can have.

The Family Governance Angle

Regular readers recognize that we are now venturing into familiar territory, i.e. family governance.

I typically lament the fact that most families seem almost allergic to the idea of implementing any form of governance, and I fully understand their reluctance.

In my first book, SHIFT your Family Business, there’s even a chapter called “Governance, Ugh!”

So one day it finally clicked, philanthropy offers some families a wonderful onramp to this world, because family giving, done right, actually necessitates many of the steps required for other types of family enterprise governance.

Philanthropy Experts Abound

The professional circles in which I travel and connect also contain philanthropy experts on a regular basis, and it is amazing how much we have in common.

On the podcast that I often host for Family Enterprise Canada, Let’s Talk Family Enterprise, I once did an episode with a colleague, Dr. Sharilyn Hale, called How Philanthropy Can Support Both Family Governance and Legacy.

Yet it still never clicked that I needed to share this idea with my blog readers. Like I said, this is long overdue.

In the organisations I belong to, including the Family Firm Institute (FFI) and the Purposeful Planning Institute (PPI), I regularly interact with professionals who work with families to support their philanthropic activities.

I guess I’m starting to realize how much we have in common.

When There’s No Operating Business (Anymore?)

One way this situation suddenly appears is right after a liquidity event, when the family realizes that now that they no longer own and operate a business together, many things are different. 

See Huge Liquidity Events – Great News, Right?

Yes, they now have much more liquid wealth to handle and organize, but they’ve lost that common asset that they used to rally around and identify with, likely much more than they ever realized at the time.

How do you get a family excited about rallying around a pile of money?

Well, one answer, one that seems to be gaining in popularity, is very much centered around philanthropy.

It takes work and intention to do this well, especially if the family leaders have realized that doing this in a way that will last beyond their own lifetime, they will need to do this as a family, and not just by one or two people.

Building a Strong Foundation

Whether the specific vehicle(s) the family chooses to use include a family foundation or not, it will be important for every family to build a strong (figurative) foundation upon which they want to structure the family’s giving.

That important work includes defining the family’s values, which needs to be done pretty early on. Likewise, co-creating a vision and mission can also be important pillars that can help strengthen a coherent effort that all family members can get behind, and possibly also be involved in executing.

This will involve figuring out how they are going to communicate and make decisions together, as well as solve problems as they arise.

And as regular readers will recognize, I just laid out the key elements of family governance, right there in that last sentence.

Indeed, philanthropy offers many benefits for the family, not just for society!

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The Iterative Cycles of Family Wealth Continuity Planning

It’s All Interconnected and It Never Really Ends

Every week in this space I tackle an issue related to the challenges families face when trying to ensure that the wealth or business they own will be successfully transitioned to the following generations of their family.

I’ve been doing this for a decade, and have yet to exhaust the topics on which I enjoy sharing my thoughts.

Sometimes the subjects are narrow, as they’ve been recently (see Should I Join My Family Business and Getting your MBA to Lead your Family Business: 5 Things to Consider), and other times, like this week, they’re reallllllllllly broad.

I’m not sure how to narrow my thoughts down into one post, but I’ll give it a shot.

Complex Subjects, with Lots of Moving Parts

Wealth transitions affect people from different generations of every family, and often deal with ownership and control going from a small group of people to a larger one.

Each person brings their own desires, needs, and expectations, making this work fraught with potential conflicting views and ideas.

There’s no “one-size-fits-all” method, although many professional experts in a particular subset of the field may try to make you believe otherwise. 

I’ve recently been involved in a few different discussions and activities that made me realize how much of this work defies a linear approach, and is in fact very iterative and cyclical.

Few circumstances in this world lend themselves to a simple “do A, then B, then C, then D, and you’re done”.

Instead, when you get to C, you may realize that some elements of A need to be revisited, and the work done in B may now be irrelevant.

And This Is All a Good Thing

Lest readers begin to think that I believe that this is bad, well, NO, it actually has to be this way, assuming of course, that you want it to work.

Indeed, oftentimes experts have “shoved” their A-B-C-D process onto an unsuspecting family, which makes everyone happy and relieved in the short term, only to see most of it unravel once the family needs to actually live with the result.

With complex issues that involve so many parties, it is not realistic to think that a couple of people will be able to come up with the ideal plan for all right off the bat.

And even if you could, all those affected by it would not feel any ownership in it because they were not involved (or even heard) during its creation.

Planning and Governance Must Evolve Over Time

Whether we’re talking about structural elements of planning for which you involve experts in law, trusts, and taxes, or the family dynamics aspects that lead to what I call family governance, the same holds true.

You need to start by trying to figure out what you want, then you need to have discussions about it with those who will be affected by it, then you need to speak with experts and get their input.

Then you go around again, taking what you learned from the experts and sharing it with those who will be affected by the decisions.

After getting their input, you can go back to the experts again with plan 1.1 or 2.0, and get advice again.

And then repeat.

Even when you have something that works and that all agree on, that will only serve for a certain time (although it could be for years) until circumstances have changed and a new, refreshed, and better suite plan will be needed.

Regular Dialogue Where These Subjects Are Safe

Back in 2020, in How to ACE your FamBiz Succession Planning, we looked at how Alignment, Clarity, and Engagement are important elements to keep in mind.

I could have added that making sure your family has a regular forum where dialogue around these subjects is allowed, expected, and safe, is also a key success factor.

We’re talking about important subjects that deeply affect the lives of every family member, so if you’re trying to do the best job you can for all of those people, you need to have them involved, and do it in a positive and intentional manner.

Did Anyone Say This Was Supposed to Be Easy?

I know that the desire for an end point or “destination” is very strong, and nobody can “argue with” that.

But, assuming that you really want to prepare everyone and everything as best you can, then you really need to think about all of this as being more of a journey instead.

Try to enjoy this journey, even though it will not always be easy.

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Where’s the Puck: Family Wealth Hockey Analogies

A New Season Is Upon Us, So…

As another season of Canada’s favourite sport begins, it feels like a good time to share some analogies from the world of hockey, that happen to fit nicely with some of my views on the subject of family wealth, and how best to prepare to transition it to future generations.

As a lifelong Montrealer, who was spoiled to be alive for 10 Stanley Cup wins by our beloved Canadiens before I finished High School, hockey holds a special place in my life, and my heart.

Although “Les Glorieux” are approaching three decades of drought, hope springs eternal, although probably not for another couple of seasons, as a roster rebuild is now on.

Our new coach recently said something during a press conference which got me thinking about some hockey analogies to write about here.

Offence Versus Defence

There’s a very simple one we can kick around a bit, about the importance of both offence and defence for a winning team.

If you have lots of scorers and lousy goaltending, you can try to win every game 8-7, but that’s not sustainable.

If you have the best goalie but can’t score, you need to try for a 0-0 tie and hope for the best in overtime.

My wealth analogy includes the risks involved in trying to make lots of money (score goals) versus making sure you don’t lose too much money (defence and goaltending).

Most families that achieve lots of wealth did so by playing exceptional offence for some time, and then need to focus on defence, since that game is played over decades and generations, not three 20-minute periods.

The asset allocation angle version might be the saying, “nobody ever got rich investing in bonds, but lots of people stay rich that way”.

Wayne Gretzky’s Famous Quote

We should also look at the most famous quote from one of the greatest players to ever lace up a pair of skates, Wayne Gretzky:

     “Skate to where the puck is going, not where it has been.”

Indeed, we need to always be looking forward, not backwards, as we think about the wealth the family now owns, and how we plan to transition that wealth into the future.

The thing about intergenerational wealth, though, is that it is INTER generational.

That implies that the people in the current leading generation, who likely control that wealth, won’t be around forever, and so it behooves those folks to look to where not only the puck is going to be, but where the other players on the team will be.

The Guys Without the Puck

The Canadiens had their worst season in decades last year, and fired their coach midstream. Then, they turned heads by hiring someone who’d only ever coached his teenaged kids’ teams.

The team showed new life as he brought a fresh philosophy to the group, and he was then signed to a new long-term contract.

As the team prepared for the new season, during one of his many press conferences, he noted:

 

                         “I don’t coach the guy with the puck.

                          I coach the four guys without the puck. 

                           The guy with the puck is the present. 

                           The other four guys are the future.”

– Martin St. Louis

They Are All On the Team NOW

The team has lots of young players, who are playing alongside more experienced pros, but they’re all on the team now, sharing the ice together.

Yes, there’s a farm team too, preparing some future players who aren’t yet ready, but the “four guys without the puck” are all being coached to play well together now.

Too many families spend too much time concentrating on the guy with the puck, hoping he’ll continue to maintain his scoring prowess forever.

It’s a Team Sport

Working to transition your family’s wealth from one generation to the next is the ultimate team sport.

Coaching the ones who don’t yet have the puck is key, as is having the one with the puck understand that winning the game will involve passing the puck to others.

Learning to play well together is also a big part of success too.

Often the wealth creator had early success in an individual sport more like golf or tennis, where success as a “solo artist” is the major success factor.

Once you bring the family in, get inspired by team examples instead.

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