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Subtle Changes Make a Huge Difference

The ideas for these posts come from all over the place and from people who hail from many different locations

It shouldn’t be a surprise that in the past year or so, a bunch of them have come from webinars or other virtual settings.

This one comes from a webinar hosted by someone I never met, but whose two guests are both friends of mine, even though I’ve only actually met one of them in person.

It was yet another instance where upon hearing a certain sentence, I immediately jotted it down so that I could properly recall it for use as inspiration here.


Not an African Proverb

One of my favourite posts here over the years, which I also recorded as a video, was If You Want to Go Fast, Go Alone; If You Want to Go Far, Go Together.

The lengthy title there is also an African proverb, which served as my inspiration. This week my inspiration comes from Africa once again, but it was from a story told by Nike Anani, a friend I’ve yet to meet in person, from Nigeria.

Nike was a webinar guest, along with Mitzi Perdue, who I have met, and she was relating an early experience of hers as a member of her family business.

Nike had recently returned home to join the business, after working in the corporate world in the UK.  Her return to a smaller, less professional work environment required some adjustment.

 

Questioning Everything

As she put it, soon after arriving, she began “Questioning everything”.  She elaborated, making it clear that her attitude in those early days was less than ideal, and she was not simply asking questions.

While noticing the self-awareness required to recognize this in retrospect, I also made sure to capture the spirit she was conveying about her feeling of superiority based on her corporate experience, and how she was dismayed by how things were being done in the FamBiz.

With the benefit of some hindsight and added maturity, she now realizes how important it is to ask questions, grounded in genuine curiosity, rather than “questioning” how everything was being done.

 

Different Kinds of Questions

Courtroom drama fans and politics junkies are familiar with many techniques of asking questions that are really more about getting their point across.

When thinking about this I also flash back to days when my own kids were much younger and also employed dubious questioning techniques of each other.

I distinctly recall exchanges including, “What? I was only asking a question!”, to which I’d reply “Yes, I know, but ‘why do you always have to be such an A-hole’ is also ‘Just a question’ too”.

I suppose that in many ways that was in fact a rhetorical question on my part, but I digress.

 

Better Questions Require an Absence of Judgement

I’m pretty sure that if pressed, Nike would admit that most of her “questioning” in those early days was also accompanied by a whole lot of prejudgement, where she had already assumed that she knew better than the person to whom she was addressing her comments.

The best questions, as she now realizes, are founded in true curiosity, and in fact include a complete absence of judgement.

Here I’m addressing not only “prejudgement”, but also any judgement when one hears the answer.  See Judgement, Not Judgement.

One of the first big takeaways from my coaching training is that “listening without judgement” is the first thing you need to practice and train yourself to do to be successful.

 

The Family Governance Angle

As we move to wrap this up, I want to look at this topic from the other angle, i.e. the ones who are on the receiving end of the questions, or the questioning, as the case may be.

Most families have what I call an “information asymmetry”, where there are certain members who are in the know and who control much of the day-to-day activity, and others who act as “interested bystanders” much of the time.

The “bystanders” will often have questions, and the insiders do typically “owe” them answers, in many respects.

Insofar as the insiders are able to provide coherent answers, they will also minimize and forestall the potential for questioning from these other stakeholders.

If the attitude of “how dare you question me” is replaced by one resembling “of course you can ask”, that is a recipe for more harmonious relationships going forward.

No question about it!

From Paddling Hard to Going with the Flow

Summer is in full swing and with it come some activities that we look forward to because we haven’t been able to do them for a while.

For me, one of those is kayaking on the tidal river at my cottage in New Brunswick, where I get in touch with nature while lazily paddling around looking at the sky in search of the occasional bald eagle.

Having recently arrived here, I received a text message from a friend asking me if I was enjoying myself, “floating downstream” on my kayak.

Regular readers won’t be surprised that something so simple would become the inspiration for a blog post.

 

Tidal Rivers and Delayed Gratification

While I’m no expert in tidal rivers, I can tell you that sometimes this river flows towards the ocean about a kilometer away, and then a few hours later it will flow in the other direction.

When heading out from the dock for a kayaking excursion, I always make sure to go into the flow of the current, so that I can coast back home, going “downstream”.

My wife and I learned this lesson the hard way years ago, when we went rollerblading, not realizing that we had the wind at our backs, only to turn around to go back home and quickly realize our misfortune of having a strong headwind to deal with.

It’s a simple example of delayed gratification, which I love to preach. See Marshmallows and Filet Mignon

 

Climbing the Hill and Coasting Back Down

The flowing river metaphor is similar to the uphill / downhill one that we hear about when talking about where people are in their life cycle.

Older people are described as “over the hill” while the younger ones are continually “climbing” towards the top.  Getting to the top and remaining there are the goal, we’re led to believe, and in many ways that makes sense.

But in the same way that I like to save the coasting part of my kayak trips to the end, why don’t we look at life the same way?

And if we’re part of a business family, isn’t there a way that one generation’s trip down the other side of the hill can serve as a boost to the next generation’s rise?

 

Capitalizing on the Strengths of Each Generation

The “rising generation”, as people like me have been referring to them for some time now, typically have more energy to devote to building their lives and careers, while their elders will normally have more experience.

Similarly, the younger members of a family will be more comfortable with technology, while the senior family members will often have a lot more contacts and long-standing important relationships that they can leverage.

Smart families figure out how to make the most of these complementary strengths, which takes a certain amount of self-knowledge and understanding, along with the ability to set egos aside for the common good of the family.

 

Stepping Away from the Top Spot

The ego component varies from one family to the next, but seems to be rather prevalent in cases where it’s the business founder who wants to remain in charge well past the point where their leadership is what’s best for the business.

Somehow once we get past that first generation transitioning to the second, it’s less of an issue when going from G2 to G3, and then G3 to G4 and so on.

Playing with this hill metaphor in my head, I’m picturing someone stepping off the top of the hill while pulling on a rope, which in turn is helping someone make their way to the top.

I guess there’d need to be some sort of pulley or rappelling device at the top for this to make sense.

 

Many Years in the Making

I don’t want to give the impression that generational transitions should take place quickly.  In fact, properly planned and executed changes in leadership will often take years.

That’s because while we think of these situations as singular events, there are actually transitions happening at several different levels.

There needs to be a lot of coordination to properly transfer all of the knowledge of the retiring leader, as well as the authority, which all takes time, and we haven’t even begun to talk about ownership.

So it’s best to get started early, and be sure to check which way the water’s flowing before you take off.

When listing problems that business families face, communication is usually one of the first things people mention. 

 

Because it’s seen as a “big” problem, many people think that it requires a “big” solution

I beg to differ.


“100 One-Minute Conversations”

The initial idea for this post came from something I saw online recently, that talked about “100 one-minute conversations”, which in most cases are a better way to go than just having one, long, 100-minute discussion.

I wish I’d saved it so I could credit the source, because Googling it didn’t help me solve the mystery.

In any event, it lines up nicely with some of the other things I’ve talked about before, notably here: The Dimmer Switch vs. the On/Off

 

Clearing Up Any Illusions

My favourite quote about communication is from George Bernard Shaw, “The biggest problem with communication is the illusion that it has taken place”.

Let me spell it out just in case you didn’t get it.  

The biggest problem for people communicating with each other is when the person who says something believes that the receiver heard and understood them, and they’re wrong, but they assume they’re right.

Why did I take the time to spell that out? 

Because if I continued this blog while assuming that you understood what I meant, but you didn’t, then I would have been committing the exact faux pas that I was trying to explain.

The Art of Conversation: The Key to Family Communication

Conversations as a Subset of Communication

Of course communication comprises much more than verbal discussions, which are in fact only a small fraction of the entire communication “platform” that any enterprising family uses.

These families need to share lots of information to remain united enough to properly manage the assets they own together.

But while everyone can see what’s written in a family newsletter or on their Facebook page, I contend that it’s in the smaller groups, and the quicker, more regular conversations, that the most important communication actually happens.

Yes, you need to have the big formal, structural communication platforms, but, and it’s a big but, if that’s all you have, then there’s a lot missing.

 

Heart to Heart

The simplest way to make this point is to consider the expression “Heart to heart”. 

What makes family businesses different from other businesses is the family element.  Plain old communication might be sufficient for “regular companies”, but for a family business, being owned and run by a family, there needs to be a lot more heart.

I don’t think I’ve ever heard anyone talk about “heart to heart communication”, by I know I’ve heard people mention a “heart to heart talk”, or “heart to heart conversation”.

 

The (Lost) Art of Conversation

Speaking of expressions, we’ve all heard about the “art of conversation”, and I contend that in some ways all of the technology we’ve been using to communicate has made conversing together a bit of a lost art.

But here’s the good news, and I even just Googled it to make sure it makes sense.

You can get better at it, with practice. Yes, I just searched “do you practice art” to make sure, and I got plenty of hits.

Whether it’s playing music, or painting, or sculpting, one improves the more one practices their favourite art.

And so it is with conversations.

 

Small Groups, One-on-One

Conversations can happen all the time, mostly in small groups or even simply one-on-one situations.

They don’t necessarily have to be structured, scripted or planned in advance, and in reality, the more natural and free flowing they are, the better.

Sometimes the hardest thing about them is just making them happen, especially now that simply picking up the phone to call someone seems to rarely happen these days.

 

Conversations With Your Coach

One of my favourite ways of actually putting some structure to conversations is to have them be regularly scheduled.

I have a call over Zoom with my coach every week, and I have calls with my coaching clients typically every other week, which seems to work well.

Having things “on the calendar” might be the best way to make sure that you’re staying in touch enough.

 

Seven Years Later

Way back in 2013 I wrote Having Conversations, Not Just Communicating. And I guess it’s still just as valid today as it was back then.

Some words in English carry either a positive or negative connotation for the most part, yet there are some contexts where this can be turned on its head.

The world of family enterprise seems rife with examples, making it a favourite target of mine here.

One such word is “surrender”, and regular readers won’t be surprised that I’ll look at some French translations along the way.

 

Surrendering:  Abandoning or Yielding?

So let’s start with the French translation we get from Google, where the first word we get is “abandon”. This was also my wife’s reply when I asked her how to say surrender in French.  My reply to her was, “Um, that’s not really what I’m looking for”. 

Of course after I told her that Google corroborated her answer, she gave me “the look”.  I guess that “abandon” has as much of a negative connotation as surrender does.

The second option from Google was “céder”.  For those like me who learned to drive in Quebec decades ago, we know that the triangular yellow road signs we see when merging used to say “céder/yield”.

I’d contend that “yielding” does not carry as much of a negative feeling as surrendering.

 

Negative Examples from Family Business

I’ve got a couple of stories that I can share on this just from the last few months, from families who’ve reached out to me.  I’ll change some details for obvious reasons, but I want to make sure that the feeling of surrender comes through.

Jack and Rhonda contacted me about their manufacturing business that they had started some forty plus years ago.  Their son Frank was now running things, and had been for the past half decade. Frank’s wife was also involved at a pretty high level in the operations.

Meanwhile, Jack and Rhonda had been slowly but surely marginalized into very minor roles, which at first they did not really mind.

It seemed that things were in good hands with the next generation, and they welcomed a more relaxed lifestyle.

 

On the Outside Looking In

The parents remained majority owners, but having now surrendered pretty much all of the day-to-day running of the company, they were having difficulty making progress with their son on the ownership transition, since he saw no reason why his sister should even be in the conversation.

The parents’ surrender in the operations was causing unintended consequences on the ownership discussions.

Let’s switch gears now to another family, where three siblings all co-own a company started by their father, who passed away a long time ago. The company has a full independent Board of Directors, on which the siblings all sit.

 

Surrendering to your Sibling?

One sibling, and not the oldest, happens to be CEO, while another is a VP and the third runs a separate division.

When things were going well, everyone was happy. When things began to go sideways, the siblings who aren’t the CEO had difficulty surrendering the running of the company to the CEO.

In theory, the Board should provide a buffer here, but when there are three equal owners who are also on the Board, that sometimes doesn’t work as well in practice as it does in theory.

 

Positive Surrender… Is that Possible?

As I think I’ve hinted above, there must be some examples of surrendering in a family enterprise that are positive.

The idea for this came in a meditation recording I was listening to called “Learning to Surrender” (by Sarah Blondin; I’m a big fan).

The key to a positive surrender is your attitude, and an attitude of equanimity is what it really takes. See Equanimity: Yours for only $250 Million.

I’ll close with a story about a family I’ve been working with for a few years now.

 

Serenity Soon (If Not Now)

At a recent Family Council meeting, Dad informed his 4 children that he would soon be announcing that he would be stepping back from the Presidency of the business. 

He then added that a few months later, he planned to announce to employees that the rising generation were moving into ownership positions and more senior roles.

Their mother sat beside him with a proud smile, as they talked of plans to travel more while they could still really enjoy it, and to spend more time with their growing number of grandchildren.

I think we can all agree that this sounds like a positive surrender, one many others would love to emulate.

As a coach and facilitator who works with people from enterprising families, one of my roles is to engage with people in ways that are useful to them, as a “thinking partner”.

While I’m a big fan of understanding each person’s context, requiring a certain amount of “explanation”, my real preference is to get to a place of “exploration”, finding the best way forward for each person, and by extension, their family.

With that set-up taken care of, I’d like to explain where I’m coming from on this, before moving into a mode where these thoughts can be explored further.

 

Coach Training and Certification – Check!

Having recently completed my coaching certification program, (with the Co-Active Training Institute, making me a “CPCC”  – or Certified Professional Co-Active Coach –   many of the ideas that came from that program are still fresh in mind, and continue to serve me as a coach, as well as someone who writes a weekly blog.  

This week’s is another example.

One of the aspects of being a coach is that we’re much more interested in the process of coaching our clients, as opposed to getting buried in the content and detail of their situations.  

Our role is to help them see and understand where they are, figure out where they’re trying to go, and then overcome whatever obstacles are in their way.

We’re there to act as a guide, and our training makes us versatile guides; no matter what the situation or obstacles, we’re about the process.  And that process is more focused on the future and its possibilities than on the past.

It’s more about exploration than about explanation.

 

The Rambling Back Story

Some coaching clients love to go on and on, telling their coach about every minute detail of the story that has them in a quandary. 

Many beginner coaches are typically all too happy to think they’re doing a great job of being good listeners, since the client keeps talking. It can feel like a win-win; but alas, it’s typically a missed opportunity.

This is where the wise words of my “CPL”, or Certification Pod Leader, Alex, come in. 

In explaining the importance of interrupting rambling clients, he said, “Coaching is not about EXPLANATION, it’s about EXPLORATION“.

Bingo, there is it, the simple phrase that I’ll never forget.

 

Family Members Who Dwell on the Past

I’m sure that anyone who’s part of a business family will recognize the case of the family member who spends most of their time talking about all of the problems they have to work through, as if to justify their job and pay, because it’s so much work.

When that family member is able to drive all of the discussion, it can really limit the progress of the business, and also the family.

When everything they talk about is an explanation of the current situation, including plenty of excuses and lots of blaming, the focus is on the past, and current obstacles.

 

Focus on the Future – Let’s Explore

Imagine now a family where much of the time is spent on exploration, and talking about possibilities for the future.

Yes, it’s important to understand and appreciate the current context, knowing where we are now, which includes a back story of how we got here.

At some point, everyone already knows that story, though, and rehashing it over and over again, to make clear the obstacles, the errors of the past, the other people who are to “blame” for the shortcomings, and all of the excuses for why things aren’t better, well, all this gets tiring and anything but productive.

What if we get family members together to talk about the future, and how they can all explore, together, a way forward where they all make progress?

 

Coaching, Facilitation, or Mediation?

Whether it’s for one motivated person in a family, or for a family group, quite often the presence of a trained outside person can stimulate more exploration, without the need for excess explanation.

Maybe its coaching for one person, or even several.  It could be facilitation of group meetings that haven’t worked so well without an outside neutral third party.

When things are truly tense, someone who knows how to mediate might be the answer.

What they all have in common is a focus on a better future. Exploring ways forward can work wonders for your family.

 

I’ve written about Family Alignment a few times in this space, notably here: (blog) 5 Things you Need to Know: Family Alignment and on my website, here (whitepaper) Family Alignment:What IT Is, Why You Need It, How To Build ItAnd I even recorded a video (or Vlog) about it.

Lately, though, there’s a related word that’s been popping up in my life, so I want to talk about how the two words and concepts fit together, or not!

That word, as you can guess from the headline, is “alliance”

 

Designing the Alliance

Some readers know that I’m well into the 6+ month journey of my professional coaching certification process.  This has helped me up my “one-on-one game” when working with client families, and, consequently, the individuals who make up those families.

An important concept in the coach-client relationship is always the “designed alliance” that they co-create, which then defines the relationship they have and how they’ll work together.

It’s not unlike the “ground rules” that a family or any group working together might design to govern their meetings and their working relationship.

 

Dispensing with the Dreaded “Survivor” Analogy

Of course there are other places where the word “alliance” comes up with a different meaning altogether, as reality TV fans will recognize.  I’m a huge fan of Survivor, where being in the right “alliance” is often the difference between winning and losing.

On that show, each week someone is voted off and sent home, while those who remain continue to fight each other for the million-dollar prize that gets awarded to the lone survivor at the end of each season.

Can we all please agree that family business in its best form bears little resemblance to this format?

 

Alignment of Values, Vision and Goals

Families in business together can always benefit from taking the time to define their common values, and to make sure that many of their individual values are aligned for the good of the family enterprise.  

Likewise, a family vision, and the goals the family sets for itself, are typically easier to reach when all of the family members are united and aligned behind a common vision and common goals.

So alignment, in general, is good, and should be worked on.  How about alliances?

 

Where Alliances CAN Work in FamBiz

Alliances in business families can be a bit trickier, especially when certain sub-groups of people, possibly from various branches of the family, begin to work at cross purposes to others.  This is when things can begin to go off the rails.

But that doesn’t mean that there aren’t any ways where certain types of alliances can be beneficial.  Here are a couple…

 

Sibling Groups

When I work with rising generation sibling groups, I might not necessarily use the word “alliance” with them, but it’s usually pretty clear that what I’m encouraging them to do is to act as much like an “alliance” as possible.

Such sibling groups are usually much more likely to get the cooperation with their parents than any single son or daughter would be on their own.

Realistically, sibling relationships will usually be the longest lasting relationships that most people will have in their lifetimes, longer than the relationships we each have with our parents, or with our children.

It stands to reason then, that care should be taken and time should be spent on making sure that these relationships are as strong and healthy as possible. When a group of siblings can begin to think of themselves as an alliance, I think that’s a good thing.

 

Teamwork in Each Circle

When people work together in any of the three circles (family, business, ownership) it can be useful for them to think of themselves as an alliance as well.

If a niece and her aunt are the ones who take care of things for the family council, it can make sense for them to design their work in an allied way.

Likewise, if there is an ownership group that meets periodically, those who lead that set of activities can find strength in allying their activities as well.

 

Design an Re-Design as Needed

And of course let’s not forget the importance of designing and then re-designing all of these alliances as needed, on an ongoing basis.

The time taken to reassess how groups of people work together is always worth it, and the need for these systems to evolve over time as things and people change cannot be overstated.

Get aligned, AND create the alliances you need.

I pride myself on finding interesting topics to write about here weekly.  While the major thrust of my message targets the world of family business and family wealth transitions, the inspiration for my blogs can come from just about anywhere.

This week’s post simply comes from my everyday real life. I always keep my antennae tuned to things that are a bit out of the ordinary or counterintuitive.

These stories can then be artfully turned into useful metaphors, or at least that’s what I’m trying to do.

A Real Pain in the _______

My knees have been an issue for almost as long as I can remember.  My Dad had both knees replaced in his 60’s, so I suppose that’s something else I inherited from him.

Of course the “misspent” years of my youth when I played baseball and was usually the catcher surely didn’t help me preserve whatever parts of my meniscus that were there to begin with.

I had arthroscopic surgery a few years ago and it helped, but relief was only temporary.  My exercise options are now limited, and lately even riding a stationary bike results in pain after only short stints.

My doctor tells me that I should lose weight and that will help, and of course he’s right.  But I can’t help think that there may be something they can easily “fix” in my joint, to minimize the pain of exercise, which should help with the weight loss.

I know, I’ll get an MRI!

What’s Covered, What’s Not

In Canada, our health care system is run and paid for by the government, and it’s generally very good.  But not everything is covered, so sometimes when you want special services, you need to pay for them out of pocket.

No big deal, I think, I can afford the MRI, because this is what I need to allow the doctors to really see what’s wrong with my knee, and then devise a treatment solution.

Where’s the X-Ray?

Imagine my surprise when the orthopedic surgeon looks at the MRI and asks me “Where’s the X-Ray?”

WTF?  Is he joking, I wonder?  I feel like I sent an email attachment and was then asked to send a fax instead.  Are we going backwards?

Evidently not.

So I ended up going back to the same place I had the MRI done again, and instead of paying $500, this time it was “free” with the simple presentation of my Medicare card.

The Family Harmony and Governance Angle

The first metaphor that comes to mind when I put on my family business consultant hat is one that I touched on a while back, in Behind the Flawed Family Constitution.

The essence of that post was that some families who are unsure of what to do, but who know that they should do something, (and they can afford to do whatever it takes) will often overdo it and decide that what they need is a full-fledged family constitution.

Some of the biggest, most successful families do it that way, so we will do it too.

It’s actually a pretty good sentiment, but it shows a fundamental misunderstanding of how those successful families went about it.

Start Early, Start Small, Start Slowly

There is nothing wrong with having a family constitution. But, and it’s a big “but”, it is not the place to begin.

Families who decide that they need to institute some form of governance should instead follow the steps I outlined in a 2017 blog post, Start Cleaning Up your M.E.S.S.

The acronym “MESS” was something I came up with almost by accident.  But I think it’s a useful way to remember things about “getting started” with big changes, such as instituting governance.

The letters in MESS each follow the word “Start”, as in “start moving”, “start early”, “start small” and “start slowly”.

Start with the X-Ray, Then the MRI

In the same way I went straight to the MRI, many families think that they can take a shortcut, and get someone to help them write up a family constitution, and then all will be right with the world.

But just like the clinic that gladly took my money for an MRI I probably didn’t need, there are plenty of people out there who will take your money and write you a family constitution.

A family constitution needs to be done BY the family, FOR the family.

There are no exceptions.

Conversations: Does “Uncomfortable” = “Productive”?

This week’s post was inspired by a recent Zoom call that I was on with a group of like-minded colleagues.  The group consists of people trained in Bowen Family Systems Theory (BFST), which became an interest of mine about five years ago.

Actually, I was more than just “interested” in BFST; I recently published a book about how it illuminates the field of intergenerational wealth transitions. (See Interdependent Wealth)

In the book, I also share my journey of learning and discovery of the fascinating world of BFST.

 

“Uncomfortable Conversations”

On that call, one colleague related a story about a recent meeting that she had had at her workplace, where some “uncomfortable conversations” took place.

She shared her reaction to the conversations, and how she was able to maintain objectivity towards the subject, not allowing her emotions to derail her thinking, thanks to her understanding of, and training in, Bowen Theory.

During the ensuing discussion, someone referred to that conversation, and dubbed it a “productive conversation”.

And suddenly in my head, there it was, “A-Ha!”, there’s definitely a blog post in this idea. 

I know that lots of business families face these issues around “tough” conversations all the time.

 

Of Productivity and Discomfort

In the example from above, that conversation was deemed uncomfortable, and also productive. My understanding of the productive aspect is that it likely resulted in an ability to move forward on some important matter(s).

If I frame this question around just the area of conversations, I might ask, “Does every productive conversation have to be uncomfortable?”

Or, turning it around, “Is every uncomfortable conversation productive?”

I think everyone would agree that the answer to both questions is a resounding “No”.

 

Avoiding the Tough Conversations

So if we’ve determined that “uncomfortable” and “productive” are simply two adjectives that can be used to describe conversations, and that even though there is some overlap of these groups, it is not a perfect overlap, what is this really about?

My guess is that it’s really about the fact that even though we know a conversation could be productive, it will often be avoided if it is expected to also be uncomfortable.

I know there’s no rocket science in that last sentence.

 

Necessary Conversations

In my notes to capture this as a blog topic that morning, I included the word “necessary”, because that word also came up for me as I considered the idea.

How many “necessary conversations” are being avoided, simply because they’re expected to be uncomfortable for someone?

Probably way too many to even begin to count.

 

Preparation and Culture

I want to share a few ways that we can have more productive conversations, that won’t necessarily be “comfortable”, but will at least be less “uncomfortable”.

First off, when people are prepared for a conversation, they can be more ready to hear things that they don’t always like to hear. When you can brace yourself before you fall, you won’t get hurt as badly as when you can’t.

Another important element that you can work on, is creating the proper culture for these conversations.  If you can be in the habit of creating a safe and supportive space, that can certainly help with the comfort issue.  

The more often you get together with people, raising some difficult issues and dealing with them positively, the more this can become a habit, and eventually part of your culture.

 

Make It a Regular Forum

In fact, one of the recommendations I typically make to families who say they really want to get serious about their planning for their eventual intergenerational wealth transition, is to begin to have regular family meetings.

These meetings don’t necessarily need to be held frequently (monthly or quarterly) but there should be at least one or two a year.

The important thing is to make sure that everyone knows that there will be an opportunity to have important conversations, around matters that will affect the whole family, over the very long term.

 

Start Slow, Add “Big” Topics Later

The initial few meetings can be used to get the attitude and culture right, hopefully dealing with simpler issues at the outset.

With time, some of the more sensitive topics will typically be added to the agenda, as people will have become used to working on important aspects around how things will evolve.

Hopefully, you can be productive, without being uncomfortable.

 

This week I want to talk about the “4 D model” that I’ve heard David York speak about on a few occasions.

Now, lest you think that the word “model” is being used here in a positive sense, as in “a model that you should follow” or “role model”, please erase those thoughts immediately.

And furthermore, if you think that I’ll be arguing against York’s views, again, that ain’t it either.

York coined the term “4 D Model” to describe what has been going on for far too long, and we are in full agreement that there is a better way to go.

 

Background and Context

I first met David York in Denver a few years ago, at the annual Rendez Vous of the Purposeful Planning Institute (PPI).

Regular readers know that PPI is one of my absolute favourite organizations and that the Rendez Vous in July each year is the one gathering each year that I never miss.

I personally see York as one of the rising young stars in this field and love the way he conveys his important message.  This TED Talk of his is a great example.  His books are great too.

 

Traditional Estate Planning

York has long described the traditional “4 D Model” as follows:

Dump, Divide, Defer and Dissipate.

He’s also well aware that many of his estate planning attorney colleagues continue to follow this model.  Let’s look at the 4 D’s one by one.

DUMP

This is the part where the assets of the parents are transferred to their offspring upon death, usually after the second parent has died.   Little is done to transition any wealth while the parents are still alive, because that might require some real thought.

DIVIDE

This refers to the fact that upon death, those assets will be automatically divided equally between the offspring, regardless of any other circumstances, like ability, needs, etc.

DEFER

The deferring is mostly about trying to avoid paying any taxes until absolutely necessary.  So delaying any transfers of assets is part of that strategy too, because if you can’t avoid paying taxes, deferring them as far off into the future is the next best thing.

DISSIPATE

The final D is mostly about the results, as the family’s wealth dissipates after applying the first three D’s.

When the wealth has been treated in this way, with financial wealth as the sole issue of concern, and where no effort was ever made to involve those who would inherit it, it shouldn’t be surprising to learn that in many instances, that financial wealth will be handled by the inheritors in ways that could be described as sub-optimal at best.

 

More Purpose, Please

So far we’ve spent lots of time on how NOT to do the work necessary to transition wealth from one generation of a family to the next, and now it’s time to look at some positive moves a family could make to do a better job.

Notice that I said “moves a FAMILY could make” because ultimately the onus is on the family to do what is right for them.

Unfortunately, most families rely on outside experts to help them with this important work, and if a majority of advisors are stuck in the “old ways”, it can be very difficult for families to get the kind of help they really need.

Truck dumping grabbage

Involving More Parties – Inside and Outside

If the Four D model has survived this long, it’s largely because it’s very efficient.  It’s quick and relatively easy.

Making purposeful plans involves a lot more people so it naturally takes more time.

The first group of extra people are the other family members.  How can you make important plans for the next generation without involving them?

I don’t know, but most families have done it that way.

 

Multidisciplinary Advisors

The other group of extra people that need to be part of the solution are the advisors.

Every great plan will need to include input from a variety of outside specialists.  Ideally they will collaborate for the good of the family.

But most importantly, most of them should only be brought in after the family has figured out the most important questions around how they want the wealth to serve the following generations of the family, not before.

Rendez Vous 2019 will feature a breakout session featuring David York as well as one featuring Steve Legler and Joshua Nacht.  We all hope to see you there.

Back in September in From Family Business to Family Office, I finished up by noting that I’d be writing about the family office space more frequently going forward.

I diligently followed that up four weeks later with another post on the topic, Family Office: “WHAT” vs. “HOW.  But that was more than two months ago, so this is slightly overdue.

Coincidentally, I just came across an article from a recent issue of The Economist on the subject, which I found interesting, called: How the 0.001% invest.

 

 

An Investment Vehicle

An important angle of that story is evident from their secondary title:

“The family offices through which the world’s

wealthiest 0.001% invest are a new force in

global finance that few have heard of”

The story makes the point that some of the giant family offices from around the world are making waves in the financial markets like never before, which is causing them to be talked about even more.

I typically don’t talk about the “0.001%” very much, on the assumption that they are already quite well served, and because they constitute a tiny fraction of people who could ever use my services.

 

Where is the Family?

I typically write about things that actually concern the families themselves, even though most people care only about their money.

The number of people who would bend over backwards to cater to the “super-rich” to manage their wealth is huge.

The number of people like me who want to be a resource to those families as they manage the family aspects of their intergenerational wealth transitions is comparatively tiny.

So it’s up to me to ask the question, then, “Where is the family in the family office?”

 

 

Family Members as Clients

Well if the story from the Economist is any indication, nobody really talks much about the family members themselves, preferring to concentrate on the family’s wealth, and ways to increase it.

This also happens to be where most of the professionals make their money, by helping the family office make money.

The members of the family, for whom all of this work is ostensibly being done, are rarely mentioned.  They are, though, the “clients” of the family office.

Because every family office is unique to the family it serves, it is hard to know how many of them actually have deeper levels of family involvement in the work the family office does.

 

 Meeting room for family

Values, Goals, Mission, Vision

Because many family offices come about as the result of liquidity events in family businesses, many of the same issues are often found there.  Some are simpler than those in an operating business, while others are more complex.

See: Huge Liquidity Events – Great News, Right?

Hopefully, the family office is not simply making investments based on maximizing returns, if those investments would go against the values of the family.

Ideally, the goals of the family would also be taken into consideration too, not to mention the family’s mission and vision.

This, of course, pre-supposes that the family has worked together to define their values and agree on the goals, mission and vision of the family.

I’d guess that very few family offices are currently benefitting from that kind of guidance from family clients who’ve done that important work.

 

 

Family Office as a Catalyst

Regular readers know that I like to harp on the importance of having someone “with a different last name” around the table at meetings.

It’s important for family meetings to run well, and so having a facilitator who is not a family member is the best way to go.

Someone from the family office could be well placed to handle such a role.

 

 

Multi-Family Office Opportunity

For large single-family offices (SFO) there’s really no excuse for not doing the important work of involving the family and preparing the rising generation.

For multi-family offices, (MFO) the idea of offering assistance with family meetings is an opportunity to differentiate their services from those who are strictly investment managers for high-end clients.

 

 

Check Before you Sign

This is not a new idea, of course.  Many firms tout their assistance with family matters on their websites and in their pitches to potential family clients.

There is, however, a huge variation in the service levels that different firms out there can offer their clients in this area, so if part of the reason you are looking into an MFO is for help with family dynamics, be sure to ask LOTS of questions first!