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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.
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.
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.
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.
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.
Learning from Others from Around the World
Some people are lifelong learners and never stop searching for ways to improve what they do, and I don’t think there’s ever been a better time to be one of these people.
I certainly consider myself to be among them.
I’ve just returned from one of the events I love to be a part of whenever possible, mostly because it’s a gathering of like-minded people who live and work in the family enterprise space as I do.
I’m talking about the Tenth Annual Schlesinger Global Family Enterprise Case Competition (SG-FECC) at the University of Vermont.
I’ll Be the Judge of That
I can’t believe that I first participated as a judge way back in 2014, but I wrote a blog about it, so I’ve got proof! See The World’s Only Family Business Case Competition
It’s an honour and a privilege to be invited back again and again, and the bonus for me is that it’s only an hour and a half away by car.
Contrast that with some of the other judges I spent time with over the past few days, who flew in from France, Gautemala, Arizona and Louisiana.
The 19 teams competing this year represented 12 different countries on 4 continents, which always impresses me.
Recall that this takes place in January, in Burlington Vermont.
Academics, Professionals, & FamBiz People
One of the coolest aspects of the event is that the judging panels are always composed of a mix of academics, practitioners like me, and real life people who are part of family businesses.
I love spending time with people who are part of this world but who play very different roles than I do, and that’s what makes this event so enriching for me.
After each team presents their recommendations based on the case facts, a Q & A period follows, which can often become a “make or break” moment for the team of students.
Thanks to the varied composition of the judging panels, the types of questions we fired at the teams were always focused on different aspects of each presentation.
Pent-Up Demand for Being Together in Person Again
As I noted in From Multi-Disciplinary Field to Interdisciplinary Ecosystem, there was also a warm buzz at the event thanks to the fact that we were all together once again.
This event, like many others, continued on despite Covid and the restrictions from being together over the past few years.
While everyone did their best to make those events as good as they could be while being done remotely, there really is no substitute for occupying the same room together.
At the same time, though, the past few years have shown us all just how much can still be accomplished via virtual get-togethers.
Family Businesses Are Common Around the World
With students, coaches and judges from around the world, we were reminded just how prevalent family businesses are, all around the world.
In fact, in some countries that we might label as emerging markets, they’re even more common than in North America.
Different countries means the cultures for FamBiz might have a different feel and flavour, but I love the fact that we can always learn from someone else’s situation.
A Worldwide Family Enterprise Community
The cases used on the days I judged featured family businesses that had already transitioned a couple of generations, and such examples can usually be used as a model for us to learn from.
The family business community continues to grow and solidify, with events like this and organizations like the Family Firm Institute creating opportunities for us all to come together and share what actually works for families.
Typically, small firms learn from larger ones, and new ones learn from older ones, but very much like mentoring it can also work the other way around.
The key is an open-minded attitude and a willingness to learn.
I appreciate all of this and my place in this great community, and every year when I leave this event I have great hope for the future.
The young people who compete at GS-FECC each year always impress me. I’m usually a bit jealous that all of this did not yet exist when I was in university.
Kudos to the whole UVM team!
And the Winners Are….
The team from Wilfrid-Laurier University took home the Undergraduate Division, while the University of Manitoba won the prize for the Graduate Division.
I hope to return for the 2024 edition, to see what else I can learn.
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!
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.
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.
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!)
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.
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!
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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