…the rain is gone.
Jimmy Cliff was not an advisor to business families, but he certainly put his finger on one of the bigger issues that families are faced with as they try to figure out how to make sure that their legacy makes it to following generations.
It has nothing to do with making the rain stop, and everything to do with CLARITY.
This all sounds so simple, doesn’t it, that making things clear is what you need to do, and if and when you do that, the rest is easy. Well, as important as achieving clarity is, it is rarely easy. But it is an essential first step.
OK, so what are we talking about here? Maybe I need to be more clear. True enough, because I could be talking about a whole lot of different things here, right? Well, yes, and maybe I am.
We are talking about business families, or UHNW (Ultra High Net Worth) families, or legacy families, and we are talking about when they get to the important decisions that need to be made surrounding the passing of their wealth to their succeeding generations.
The senior generation and the rising generation each see things from their own point of view, and a good deal of what they each feel is important will often remain undiscussed.
Let’s now add in the professional advisors to the family, from the accountants and lawyers to the wealth managers, bankers, insurance people and tax specialists.
Each of these trusted specialists also tends to see things from their own professional perspective, and since each one is armed with their own specialist hammer, they will often see every family’s issue as being just their kind of nail.
All of the parties are well meaning, competent, and intent on arriving at the best possible result for the family, because they all know that while it is not easy to beat the odds, this family has just what it takes to pass on their wealth for many generations to come.
After listening to a variety of ideas from their trusted advisors and even the members of the rising generation of their family (who will play instrumental roles in seeing the plans through), the leading members of the family who must ultimately decide on various courses of action are often hesitant to act.
The finger pointing can now begin. The rising genration can point at their parents and blame them for not trusting their children, the lawyer can blame the accountant, the insurance person can blame the tax guy, and Mom can blame Dad.
All along, the missing ingredient was clarity.
Here are just a few of the items that were probably not made clear, either because everyone assumed the answers where understood and agreed upon, or because they required discussing issues that are just no fun to talk about.
- What are the main goals for the family; to run a business together, to run a foundation together, to share use of the family real estate, to raise future stewards of the family legacy, or for everyone to do what they love and happily gather as a family at holiday time?
- How important is it to minimize the amount of taxes that the family will have to fork over to the government when each person passes away?
- Do the people who are expected to play key roles in carrying out the plans actually know what those plans are, understand those roles, and agree to carry them out?
- Are there other family members who may be expecting to play certain roles who are being left out?
- Is anyone being conveniently blind to poor relationships that exist, and hoping that when these people inherit assets that they are to manage together, they will magically become great business partners?
Now I never said that making these things clear was simple, and I guess after looking at these questions it is easy to understand why these things get overlooked in the name of action, any action.
But as professionals helping families, we have to do a better job of helping families “see all obstacles in their way”.