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Overdue 4-D Connections at FEC Symposium

So Refreshing after Years of 2-D

Far be it for me to declare an end to the Covid pandemic, but it sure feels like we’ve entered back into the land of face-to-face connections with colleagues and clients, both new and old.

I’ve just spent a few great days in Vancouver at the Family Enterprise Canada (FEC) Symposium, and I’m more energized than I’ve been in a long time.

The reasons for my positivity are varied, but mostly stem from so much pent up demand within me and others to actually spend time with other like-minded people, in each others’ physical company.

I can’t tell you how many times I shared face-to-face conversations with familiar people who I had only ever seen on Zoom, in two dimensions (2-D).

I even got so tired of my own joke about this, “So nice to see you in 3-D” that I decided I needed to go a dimension further, but you’ll need to stick around to the end for that punchline.

 

Let Me Count the Ways

FEC brings together two major constituencies, members of enterprising families, and advisors to such families who’ve completed FEC’s family enterprise advisor (FEA) designation. There are now over 400 FEA designates, and our numbers at this sold-out Symposium were well into triple digits.

I got reacquainted with several colleagues whose hands I’d already shaken in years past, and also to finally size up some people I’ve known for a while but whose height I’d been unable to assess thus far.

Not that that’s crucial, but more than one person told me that I’m taller than they expected from our online encounters, where Zoom is the great height equalizer.

I even had a chance to meet a former client in attendance, who brought me up to speed on their family’s progress since I last saw them a few years back.

I also slipped out of the hotel briefly to meet with a current BC-based coaching client who happened to be in Vancouver at the same time.

Thanks to CC who alerted me to his presence and for inviting me to their work meeting; it was so cool to see a group of advisors in the same room together working to develop solutions for a complex family situation.

 

Fun Being Back Up Onstage

By far the key element of my time there that created the most lasting memories was the fact that I had been recruited to co-MC the event over the two main days.

Getting mic’ed up and going up onto the stage to introduce all the wonderful session facilitators was an honour and a pleasure.

Getting to know my co-host, Keita Demming, and developing the rapport required to pull that off relatively seamlessly is a testament to his flexibility in dealing with my “Costello” to his “Abbott”.

The kind feedback I received from so many people, friends and strangers alike, will keep me pumped for months to come.

Something about being in a room full of family business types makes me feel like I’m in my element and that I’ve found “my people”.

 

True and Authentic Sharing of Experiences

The format of Symposium included a few breakout sessions where the family members and advisors went to separate sessions, but the majority of the time was spent together in plenary sessions.

There was lots of magic in those, because of they way they’d been ingeniously set up, which was quite well received.

The main room sessions were mostly panels moderated by seasoned family business advisors, where the panelists came from family enterprises.

The result was so much valuable sharing of true, lived family business experiences, which benefits both family attendees and the many FEA’s in the room.

 

So, What About that “4th” Dimension?

Alright, so what did I mean earlier when I teased about the fourth dimension? Well, so many of the people I’ve met working in this field during the past decade are more than just colleagues, they have become true friends.

And like many friends, when I see them for the first time in a while, hugs are exchanged.

It’s tough to replicate a hug in an online meeting.

Thanks to Covid, we now need to make sure a hug is welcome, and most were.

I’m looking forward to more 4-D encounters later this year, at the PPI Rendez-Vous in Denver in July, and FFI in Boston in October.

We All Know What Happens When We Assume

For me it was Mr. McGee, a High School teacher, who first shared the dangers of making assumptions. I cannot recall the context of this lesson from circa 1980, but I distinctly remember him writing the word “ASSUME” on the chalkboard.

He then said, “You know what happens when you assume?”

The class waited for the punchline. He then drew two short vertical lines, before and after the “U”, leaving three distinct words:

A  S  S   U  ]   M  E

“You make an ASS out of U and ME

That was over 40 years ago and it’s still with me, so let’s just say the message stuck.


And We Are ALL Guilty of It

I’m pretty sure most readers will have heard some version of this tale somewhere along the way, and if not, feel free to borrow the one from Mr. McGee.

And, not surprisingly, all of us are also certainly guilty of making assumptions, because, well, you can’t not make them sometimes!

But what if there were an antidote that we could dream up that could help us minimize those occasions where we risk making an ass out of each other, especially with important people in our lives, like our family members?

Well I’ve got good news, there is one. And we all have some of it in us, and we can improve with practice.

My title has already given it away, but for those of you who already got lost in my prose (and I don’t want to assume that you recall the title of this blog) it’s curiosity.


A Coaching Webinar as Source

The idea for this post came a while back when I was watching a webinar about coaching, and presenter said, “The greatest resistance to curiosity is assumptions”.

I jotted that down because I felt like there was some juice to be squeezed from it.

But as I thought about it from many family business contexts with which I am familiar, I decided to turn it around and focus on the assumptions that too many people make about family members.

Rather than looking at “resistance to curiosity”, I want to concentrate on using curiosity to overcome the many problems that come from not having enough curious conversations.


It Comes Down to Attitude

My guess is that senior generation family members are typically guilty of this a bit more often, but I’m sure it happens in every generation.

It typically stems from an attitude of believing you know things you just never bothered to verify.

“Of course the kids will want to work in the family business” comes to mind for me, personally.  In my case it also came along with a healthy dose of not leaving me any choice.

My Dad knew what was best for me, or so he surely believed. Of course his plans for me also happened to be what he thought was best for him.

He could have been much more curious about what I wanted, but he never allowed himself to go there, just in case he’d learn something he didn’t really want to know.


Someone from Outside the Family as a Spark

So how might one go about sparking the kind of curiosity that I’m talking about here?

When the group of people is always exactly the same, it’s easy to get into a rut, and there isn’t much room for curiosity.

But what happens when an outsider shows up with the group, and that person is curious and begins to ask questions to satisfy their curiosity?

This could be just the right way for some new subjects and ideas to land on the table for consideration.

There are many things I should have pushed back on with my Dad, but I did not, for all kinds of reasons, many of which are more clear to me now than they were decades ago.

Could a well-placed and well-meaning outsider have helped spark certain discussions that could have been started, so that I could shine a spotlight on some of the many assumptions he had made about me?


Recognizing That Something’s Amiss

Sometimes you know that something is amiss and if you take the time to ask what you’re assuming, you’ll likely be onto something.

If you can then get curious and actually ask questions so that you can learn, you’ll be going in the right direction.

This week we’ll look at a couple of subjects that have been written about a lot over the past few years.

I’ve written about the family office space recently, and promised to write about more often.  Impact investing, on the other hand, I’ve not written about, yet.

It’s interesting that more people are beginning to realize that family offices and impact investing actually go together like peanut butter and jelly, or ham and cheese.

I’m not claiming to have unearthed anything new here, but want to comment on some aspects of this combination that give it so much potential.

 

 

Millennials on the Mind

Let’s start with the premise that many family offices are essentially investment vehicles for wealth that is owned by a family.

Let’s add in the fact that these families want to keep their wealth in the family, and that much of that wealth is often liquid wealth, which can be invested in a wide variety of asset classes.

And finally, let’s not forget that when the wealth (eventually) gets transitioned to the rising generation of the family, there are likely going to be some millennials involved.

If you Google “millennials impact investing” you will get all sorts of hits.

Much of the mindset that impact investors bring to the table overlaps almost perfectly with everything that I’ve ever read about millennials.

 

 

Family Engagement

Anyone who works with wealthy families knows that a key obstacle to successful wealth transitions has always been the difficulty in getting and maintaining the engagement of the younger generation of the family.

It’s only natural for young people to want to find their own way in the world, to explore and develop their own passions, and follow their own dreams.

Their parents, who are currently stewarding the family’s wealth, and who may have been involved in creating and growing it, often become anxious when their offspring do not show any interest in these efforts.

 

family Business office

Generational Priorities Converge

So for families who have liquid capital to invest in different asset classes, it isn’t much of a stretch to begin to look at investments in companies or funds that look to make a positive impact in an environmental and/or social fashion.

Impact investing is about making money first and foremost, just not at any cost.  If younger family members can identify potential investments that satisfy both a social benefit along with an opportunity to make a financial profit, it should be a no-brainer to consider such opportunities.

I’m thinking about this from the point of view of a family that is trying to find ways to combine what is important to all generations of the family.

For a family office to look seriously at impact investing even takes into account future generations, including young children and those who aren’t yet born.

 

 

Like Philanthropy, But Different

Some people confuse impact investing with philanthropy, so let’s address the comparison here.

Philanthropy is another way that some wealthy families use to bring the family together and help prepare the rising generation.  Working together on a family foundation is a nice way to learn financial literacy and how to work together with others.

Families who understand and teach their younger generations the importance of giving back to their community have realized that there are lots of win-wins here.

But impact investing is different, because it’s actually about finding ways to invest money for profit, not just out of a sense of charity.

It just isn’t about profit without regard to side effects and unwanted consequences.

 

 

Who Gets to Decide?

Of course it’s easy to say that family offices should take impact investing seriously and start doing it.  It’s another to figure out how to do it, including asking the questions around “who gets to decide?”

We’ve looked at “what” to do (impact investing) and we’ve explored a bit of the “why”, (because of the engagement of all generations), but that still leaves a lot of the “how” questions.

A few weeks back, in Putting “Family” in the Family Office, I noted:

 

Ideally, the goals of the family would also

be taken into consideration too, not to

mention the family’s mission and vision

 

Impact investing needs to be driven by the family’s vision to really succeed.

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

 

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

 

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

 

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

What’s the Difference?

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

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

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

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

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

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

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

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

OK, but where’s the rest of it?

Not for the Mass Affluent

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

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

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

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

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

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

How Do They Get There?

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

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

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

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

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

 

Custom Made Mystery

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

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

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

Family Office

Demystifying Family Offices

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

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

 

Looking to get a head start?

– See chapter nine of my book

SHIFT your Family Business, (the BOOK),

Chapter 9: Towards a Family Office Mindset

  • See this article by Jaffe and Grubman

“Development Stages of a Single Family Office”