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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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Working with Exceptional Families – Redux

Coming at this Again from a New Angle

There are some aspects of the work that I do with families that are difficult to grasp for many people, including some of my loyal readers.

In conversation, I typically note that I work in a niche within a niche, and have been known to add another level of niche as well.

This week I want to delve into this idea a bit more in writing, even though I did touch on it relatively recently (last year) in Serving Exceptional Families – Proceed Slowly.

Let’s begin by digging a bit deeper into the key word, “exceptional” a bit more, because it sits at the crux of the matter.

In the True Sense of the Word

My good friend Mr. Google is helpful as always, this time bringing me to vocabulary.com, which served up for “exceptional”, among many others, the following:

  • Surpassing what is common, or usual, or expected
  • Syn: Uncommon: not common or ordinarily encountered
  • Syn: Extraordinary: highly unusual or exceptional or remarkable 

My idea in sharing these definitions is to help accentuate just how much of a niche a lot of the in depth work really is.

Working with Exceptional Families - Redux

Universal Applicability of Many Concepts

Of course most of the general concepts I write about here do in fact apply to families and the challenges of having every member remain on good terms with one another.

I had a tag line on the back of my business card years ago that read “Helping families create the harmony they need to support the legacy they want.”

The first half of that, about the harmony, is admittedly pretty universal, as just about every family would be all for improving the ways that each family member relates harmoniously with all the others.

It’s the second part, about the legacy, that is less common, especially insofar as finding families who are willing to bring someone in (and pay them) to help with this part.

There needs to be a certain level of financial wealth, as well as complexity, and of course a desire to maintain family ownership, at least through the next generational transition.

Working with Exceptional Families - Redux

 

Challenges of “Democratizing” This Work

Over the years I’ve heard many colleagues mention a desire to “democratize” this work, and offer it to families who are not part of the “1%”.

I get it, and of course when anyone mentions this idea, many heads begin to nod in agreement. But there are a few challenges to this.

The first challenge is that this typically involves a lot of work, that the family members need to buy into. That’s because they all need to actually commit to doing this work themselves.

You see, while you can (and should) hire people to come and help the family with the work, the family members need to play a very active role.

And of course, most families, even if they are willing to do the work, are not in a position to hire someone qualified and experienced to properly guide them.

“What About Your Family?”

I was recently on a call with a new colleague who had the idea of doing this work with more “regular” families, and I tried to explain these challenges.

He then asked me about me and my own family. 

It was after sleeping on that question that I decided to revisit this question.

My family isn’t exceptional enough for this. My family of origin might have been, but after our liquidity event over 30 years ago, it eventually became clear that we weren’t going this route.

The family I married into also had some potential elements in place, but their liquidity event also made it clear that this wasn’t for them either.

In fact, very few of the families I’ve ever met are good candidates for full blown family governance and continuity planning.

And that’s not a bad thing.

Examples from the Other Extreme

While being labelled an exceptional family is usually a compliment, it’s obvioously not always the case.

I’ve had the misfortune of working with some families that were exceptionally dysfunctional too.

Some members of such families have also proven to be exceptionally narcissistic, exceptionally delusional, have exceptionally high self-regard, and I could go on.

There are of course many families who could use the kind of help I love to provide. Finding the exceptional ones who tick all the boxes is hard work. 

Could yours be one?

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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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Responding to Family Catastrophe – Come Together or Drift Apart

It Can Go Either Way (And One Is Better)

In my work, I get to hear lots of stories about families and how they try to deal with preparing for the future together.

For the most part, the situations remain stable for long periods of time and it’s relatively simple to know what to expect going forward from one year to the next.

Sometimes, however, something unexpected hits the family, and it really throws them for a loop, which seriously upsets the equilibrium, and chaos ensues.

This week I want to talk about how some families are able to respond to such a catastrophe in a good way, while for others it can mark the end of positive relationships.

Examples Abound, Never Black and White

Everyone has heard of the various kinds of events that can occur, but today I’m sharing stories of a couple of families with whom I’ve had recent contact, either via my work or though acquaintances.

One involves a business family that suffered a significant and sudden loss of their financial wealth, and who are now trying to come to terms with their new reality.

The other is about a family whose patriarch passed away relatively recently, at far too young an age, and the subsequent effects of the hole in his family that this left, including the straining of relationships that used to be strong.

I want to share some ideas on how both families can hopefully realize how important their attitude will be in how things play out for them.

In short, as I teased in the title, they can either come together and become stronger for each other, or else they can point fingers, give up, and split apart.

Regular readers know which side I come down on.

 

Different Kinds of Grief, On Varying Schedules

Naturally, there’s an element of grief involved in recovering from any kind of disaster that results in a significant loss. And, as we’ve all heard, everyone processes grief in their own way, and on their own schedule.

The types of grief in the two family examples are quite different, as the loss of a person and the loss of financial wealth are not comparable.

But there are possibly more things they have in common than one may realize, especially when a family is left grieving together.

This is where some of the ideas around attitude come in.

 

Responding to Family Catastrophe – Come Together or Drift Apart

Additional Strength and Resources

When speaking with such families in these circumstances I like to offer a perspective that they might not be seeing, where each person can serve a useful purpose to their other family members by providing strength when another is feeling weak.

Because they each process their grief differently, hopefully at least one of them can be strong for the others when needed, and then the others can reciprocate when things are in reverse.

Regular readers know of my dislike for the word “help”, as in “let me help you”, so that’s not exactly what I’m getting at.

I like to look at it from the viewpoint of being a resource for others, the difference being who approaches whom.

I’m not offering to “help” you per se, but I am offering myself as a resource to you, when you decide you want to avail yourself to that.

 

Picking Each Other Up 

Without this becoming a dissertation on the stages of grief, once shock and denial are in the past, then anger, bargaining and depression are likely areas where one family member can help pick up another from time to time, and the burden can be distributed.

The alternative, which is always sad to see, is when these stages lead to family members dragging each other down instead.

An attitude of “this hurt me more than it hurt you” is easy enough to understand, but it’s difficult to see how that’s helpful to anyone.

Responding to Family Catastrophe – Come Together or Drift Apart

Taking the Time to Make the Time for Each Other

My hope for families trying to come out on the other side of tragedy is that they can learn to take the time to make the time for each other.

Simply being there for one another, even if not much is said, can be so much more important than most people realize.

Yes, misery does love company, but one person with a positive attitude can make a huge difference.

Strength in numbers is possible for families, especially when working through the grief of a catastrophe.

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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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Make Sure Happiness Is a By-Product, Not the Goal

Some Useful Parenting Advice 

Every so often, I’m lucky enough to hear a great pearl of wisdom and manage to jot it down, and it turns into a perfect title for a blog post.

This one came from a presentation I attended at the recent FFI conference in Boston.

Many of the blogs I write are of course based upon the wisdom of others, and I think I do a pretty good job of sharing the credit when it’s due, at least when it makes sense for me to do so.

Let’s jump into the details so that we can then unpack this subject a bit more, as it relates to family wealth and its eventual transition.

Emerging Adults Don’t Always Launch as Desired

The presentation in question was a breakout session entitled “Emerging Adults: Moving forth the family firm”. 

It included three presenters who shared ideas and strategies around helping families get positive results for their family businesses by ensuring that their rising generation members were well prepared for what is expected of them.

One of the presenters, Diana Clark of the O’Connor Professional Group, provided my money quote, towards the end of the discussion.

As someone who has worked in the field of addictions for decades, she had a warning for all parents.

“Don’t make having “happy” kids your main goal; make sure it’s a by-product”, she said.  “Otherwise”, she continued, “they’ll end up coming to see me.”

What’s Wrong with Being Happy?

To be clear, she was not saying that having happy children was not something to strive for.

She was, however, providing a warning that I think all parents should heed, i.e. Don’t make their happiness the primary focus.

The familiar refrain we’ve all heard (and likely even said), “I just want my children to be happy”, can lead to many undesirable consequences.

I touched on part of this way back in 2015, in the post “Over-Parenting: Worse than Neglect?”

What I had labelled “over-parenting” back then included some examples of not allowing children to struggle for themselves, which has as its root a desire to keep them “happy”.

What I think Clark was getting at is that making your children’s happiness the main focus is actually kind of a cop out.

From Dependent to Independent

When you reflect on the roles that parents are expected to play, I’m not even sure if happiness is supposed to be near the top of the list.

To me it is much more of a recent phenomenon, a far cry from the “children should be seen and not heard” that was popular not too many decades ago.

I’ve been a parent for over twenty years now, and it is definitely a work-in-progress. 

Also, times have continued to evolve, and it’s often difficult to swim against the current when you live in a society of instant gratification.

I’ve always felt that one of the primary parental responsibilities is to make sure that our offspring progress from a state of dependence upon their parents to a state of independence from them.

What a child needs a parent to do for them at the age of 5 is different from what they need at 10, and at 15, and at 20 and 25.

From Independent to Interdependent

When dealing with the families I work with professionally, those who’ve built up a significant asset base, that they hope to transition to the next generation of their family, making sure their offspring are independent is only the beginning.

I urge these families to work towards a state of interdependence, because that’s what is necessary to increase the likelihood of success.

I believe that Clark would agree that trying to make sure that those who succeed us become independent, and capable of functioning as adults in every way, is way more important than making sure that they’re happy all the time.

In fact, when parents succeed at this, their children will more likely be happy, as a by-product, as she suggested.

A Tale as Old as Time

This can get quite complex, and the struggle to get it right is a story that’s been around forever.

Getting parenting right is tricky, especially when you can do everything for your kids. It’s hard to say “No”.

But having them never require addiction treatment is probably something we can all agree is a good thing. 

Best of luck (that helps too!)

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From Multidisciplinary Field to Interdisciplinary Ecosystem

The Continuing Evolution of Our Professional Space

There’s nothing like a conference with peers, who come at our work with enterprising families from a variety of different professions, to stimulate reflection about the journey we’re all on.

When that conference (FFI Boston ’22) is the first big get-together in 3 years, it’s even more impactful.

And, when that conference has as its theme the future, it makes members of that community even more reflective and inspired.

Please join me as I continue to process all of what I took in, along with all the debriefing I’ve done with colleagues since then.

See Now What? After the Great Meeting

From Multi-Disciplinary to Interdisciplinary

Let’s begin with the insightful framing of an FFI Award that was shared by this year’s recipient. Jack Wofford received the annual FFI Interdisciplinary Award for 2022 at the FFI Fellows breakfast on Friday morning.

Wofford is an attorney who has a long history of acting as a mediator in all sorts of multi-party disputes, including many involving enterprising families.

During his acceptance speech, he made a point of stating that the name of the award is “interdisciplinary” which he contrasted with another, oft-used similar expression, “multi-disciplinary”.

Hmmm, I thought to myself, I’d never thought about this distinction before.

A Multi-Disciplinary Field, Requiring Interdisciplinary Effort

There is no denying that the people who serve family firms come from a multitude of different disciplines, this has been known and acknowledged for decades.

What is more recent is the understanding that in order to do this work well, and not just in our original silos, requires some effort to be able to work with people from disciplines different from one’s own.

Many professionals do not even really recognize this, and even among those who acknowledge it, my guess is that there are only a small minority who really do a good job of learning how to do it well.

Perhaps that’s one of the reasons that it merits its own award.

From Field to Ecosystem

The title of this post hit on two parts of the evolution of the professional space in which I and many readers endeavour, the part about the disciplines, as well as the issue of how we label the area in which we all work.

Let’s switch gears and take on the second question.

The A-Ha Moment for this came during an off-site dinner that I attended with what we called “Team Canada”, which was a wonderful opportunity for many of us Canucks to spend some time getting to know one another a bit better.

Without naming names, I was seated next to a friend and colleague who I happen to know was born about two and a half decades after I was.  Across from him was a woman I know, who I also understood to be much younger than my late-50’s.

As it turns out, they had already compared notes and were born in the same year.  I was suddenly quite jealous, but maybe not for the simple reasons you might guess.

Entering and Ecosystem, Not Just a Field

I had my calling to do this work relatively late, and so I’ve been trying to make up for lost time for a decade now.

I’m jealous of these two professionals not just because they are so much younger, but also because they both seem to have found work that really suits them and that they enjoy.

And, the field has continued to evolve, to the point where it is now so much more than a plain old field, it has become an ecosystem in its own right.

The opportunities for those entering this space are so much better defined and available now than they were even a decade ago.

The Family Enterprise Parallel Version

I always like to draw some sort of parallel to the situations involving business families in these posts, so let’s do that before we run out of room.

Any FamBiz going from the founder’s generation (G1) to the next, offers some complexity and opportunity, and things to work on.

But when you see a family where there are active members in G3, G4, and G5 (and so on) that’s when things really get interesting.

Just as the young professionals I spoke about have plenty of opportunities, I’m also jealous of the rising generation members of such families, because they have a much broader path of opportunities ahead of them too.

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