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5 Things you Need to Know: Purposeful Planning

Word purpose in a dictionary

Once again this week’s blog comes from a being an interested listener/participant on the weekly teleconference of the Purposeful Planning Institute.

The guest thought leader was Babetta von Albertini, who is a relatively new PPI Member, but who also heads up the Institute for Family Governance, which will have its 2nd annual conference in NYC in January 2018.

That these two groups fit together well should go without saying.  Purposeful Planning and Family Governance could almost be considered two sides of the same coin.

 

Case Studies

The title of the call was “How to Give Powers to Trust Beneficiaries” and during the first part, von Albertini covered the details of two actual case studies that she was involved in recently.

As I listened attentively, I had a bit of an “A-Ha” moment and I realized that Q&A time (where often the questions are replaced by comments) was fast approaching.

I jotted down a few notes about the cases she’d presented, and I concluded that she’d almost given a perfect definition of what Purposeful Planning is (or should be).

 

Jumping In

I was the first person to “Press 1” so I got the floor first (this isn’t unusual for me on many of these calls).

If you listen to the recording, you’ll note that my summary was well received by the host, the speaker, and subsequent participants.

This not only stroked my ego, but also inspired this blog post.

Without further ado, here are:

5 Things to Know about: Purposeful Planning

 

  1. High level, strategic planning

So many of the people who are “experts” in the field of estate planning or succession planning are actually specialists in certain “tactics” that are often employed in the process.

Purposeful planning takes things to a higher level, and looks at things from a bigger picture view, from a higher level.

It truly is a strategic exercise, and it involves the complex interaction of a variety of specialist fields.

 

  1. A team of experts, collaborating together

Because it is complex by nature, a truly strategic effort necessarily involves a variety of specialists.

But a bunch of experts who stay in their silos rarely makes for a great plan. The experts actually need to collaborate and work together to find the solutions that suit the family client.

 

  1. The family is at the center of everything

As I just alluded to, the client is the family, AND the client is at the center of everything. Purposeful planning looks first and foremost at the purpose of the wealth, which is to serve the family.

Too often, estate and succession planning are simply a compilation of tactics put together in a way that sounds great, in the same way that Giorgio Armani looks great on the mannequin in the store.

If it isn’t custom tailored for me, it probably won’t fit, and it will ultimately be uncomfortable and look silly on me.

But I will have paid a hefty price for it…

 

  1. Simplicity is valued over complexity 

The case studies that were discussed on the call also involved a very interesting key step along the way. There were many long legal documents, including a bunch of trusts, but there was also a painstaking review process of those.

The key step was a two-page summary that was prepared for each document, which laid out, in simple terms, what was included in the 60- or 80-page document.

That way, anyone and everyone could actually understand them and discuss them intelligently.

Wow, clarity and simplicity, what a novel concept!

 

  1. Beneficiaries are empowered 

One of the major concepts that I left for last but not least, is that part of the family-centric nature of purposeful planning actually strives to empower the next generation beneficiaries.

How many of us have heard of people who are “trust fund babies” who are actually severely hampered by their position as recipients of funds for little or no effort?

Purposeful planning tries to actually empower them to have a say and some control over their lives, and doesn’t treat them as less capable people who are simply entitled.

 

An Idea Whose Time Has Come

Members of PPI probably already “get” most of what I’ve written above, but sometimes we all need to be reminded of some of these things.

More than that, we need to grow the number of those who get it, and make this planning the rule rather than the exception.

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The Dimmer Switch vs. the On/Off

The Dimmer Switch

The Dimmer Switch vs. the On/Off

This week I’m going to touch on a very big topic that I haven’t written nearly enough about. It’s also a subject that lots of families face, whether they have a business or not.

The idea came to me a couple of weeks ago while listening to the weekly teleconference of the Purposeful Planning Institute.

As I had stated in Huge Liquidity Events – Great News, Right?, there was going to be at least one other blog that came from that call.

The great nugget for this blog actually came from the Q & A at the end of the call. (Many Thanks to Matt Wesley of Merrill Lynch)

 

Having the “Money” Talk 

One of the call participants asked a question about helping their client families have the big talk about wealth.

You know how this goes. Wealthy parents talk to their advisors, the advisors strongly suggest that the parents begin to share information about their wealth with the kids, and the parents usually balk.

They understand that they should have the talk, but that doesn’t mean that they know how to do it.

 

The Dimmer Switch Analogy

The man who asked the question was looking for ways to help his clients begin the important stage of sharing information about the family’s wealth with their children.

The answer that came back was brilliant, and it is one that I plan on using. Parents often think about this “talk” as an all-or-nothing proposition. They shouldn’t!

It’s not a binary situation, where you go from complete “secrecy” to “full disclosure”.

It’s NOT a regular light switch, where the family was in the dark, and you flip the switch up and now everyone sees everything.

 

Time for your Pupils to Adjust

If you’ve ever gone to the movies during the day and you walk out into the daylight, you know that it takes time for your eyes to adjust.

In the same way, you really don’t want to “blind” your children with everything in one shot.

There is no need to quench their thirst for information with a firehose.

I like the dimmer switch analogy for a couple of reasons.

 

Shine a Little Light

I think the idea of “shining a little light” is the perfect antidote to the idea of “keeping them in the dark”.

And everyone knows what a dimmer switch is, and what it does. It allows you to control the amount of light.

So where should you begin?

 

Why Are We Here?

So let’s say you’ve decided that you can’t wait any longer and you need to talk about your wealth with the next generation of your family. Great. It’s not rocket science.

A frank and open way to get started is to tell them that you love them and that you care about them, now, and for the rest of their lives.

You could also share that you understand that if things go as they usually do, they will very likely outlive their parents, and that’s a good thing.

So, given that, there’s a lot of “stuff” that you have accumulated over the years and you need to begin to figure out what’s going to happen with it all after your gone.

 

One Step At a Time

The stage is now set. You have made them aware that you will be having some important discussions going forward.

And you control the dimmer switch, on both “how much” and “how fast” you’ll shed the light.

You don’t have to do it all today. Or even this week. Or this month. But preferably once you start, you do continue again sometime this year.

They may ask questions. That’s a good thing. You need to respond to all of their questions, but that doesn’t mean that you have to tell them everything they want to know.

Take your time. Turn that dimmer switch very slowly. But do turn it. And don’t turn it back the other way, although I’m not even sure if you can turn this metaphorical dimmer switch back towards darkness.

 

Dialogue > Monologue

You may have pictured yourself giving your family a speech about this subject. I strongly urge you NOT to look at it this way, or to act this way.

The “go slow” approach works well because you can adjust as you go. A dialogue, where you take the time to listen to their questions and concerns, is what you should be going for here.

 

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5 Things to Know: Asking for Help for a FamBiz

5 Things to Know: Asking for Help for a FamBiz

5 Things to Know: Asking for Help for a FamBiz

This week we’re back into the “5 Things to Know” series, and the topic comes from something that happened again recently, happens to others, and will surely happen in the future.

I’m talking about a member of a family business reaching out for help, and then backing off. So here are my 5 things on asking for help for your FamBiz.

  1. It’s Not Easy, or Even Simple

If you’ve read my stuff, you know that I make a distinction between what’s easy and what’s simple.

People who haven’t lived in a FamBiz often think that our issues are “easy” to deal with. My response is that the issues are usually “simple” (i.e. easy to explain) but rarely easy to actually handle properly.

For a family business member to reach out to an external resource is not easy or even simple.

Family businesses almost always have a culture of inward stuck-togetherness that looks down on asking for outside help

A lot of good stuff stems from that type of culture, but a reluctance to ask for help is one of its main drawbacks.

 

  1. It Takes Courage

Because of the family dynamic that “we’re all in this together”, if one member of the family is troubled by what’s going on inside the group, it takes plenty of courage to even think about bringing in an outsider to help.

It’s much safer to stay quiet and hope for the best. That’s why so often they wait until the “pain point” is so great that it becomes a choice between asking for help and simply walking away.

(Note I said “simply” walking away, not “easily”)

Some think that asking for help is a sign of weakness, but it’s really a sign of courage.

 

  1. It Starts and Ends with Trust

I will overuse the word “trust” here, I apologize in advance, but please trust me.

You need to trust your gut on this. When things are bad and there’s no reason to believe they’ll change, trust me, hope is not a strategy.

You already have folks you trust on the outside, so if they’re not the ones who can help, then ask them who they would trust.

When you first contact someone, do they seem trustworthy? Do they listen more than they talk? Do you have reason to believe that others trust them?

Finally, do you believe that they’ll be able to win the trust of your other family members? If not, you’ll probably need to start over.

You can “disqualify” people quickly if you don’t feel you can trust them, but unfortunately you can’t “qualify” someone very quickly.

 

  1. It’s Possibly the Most Important Move You’ll Make

It’s not easy, it takes courage, and it involves that nebulous thing called trust, but what’s the alternative? Is it really “walking away”?

One of the biggest issues in business families, and the main culprit in most FamBiz failures, is poor communication among the family members.

It’s normal for conflict to be present. You probably can’t “solve” all of the conflicts, but you can certainly try to understand them better, so you can manage them.

But that won’t likely happen, until you bring in someone from the outside to sit around the table with you: someone with a different last name.

 

  1. If You THINK You Should, You Probably Should

Timing is everything in life, so when should you reach out for help?

Well, if you’ve been thinking about it, if you can feel it in your gut, trust your gut. If you think you should, especially if you’re lying awake at night thinking about it, then it probably is time.

If you reach out to the right person, they’ll understand everything I’ve written here; how difficult it was for you to reach out, how much courage it took, that you’ll be on the lookout for clues on trustworthiness, and why this move could prove to be so important to your family.

If you reach out and then stop responding, the outsider should give you space but not cut off completely. They’ll “get” the fact that the timing may not be right.

They’ll recognize that you’re dealing with internal issues, and that you’ll occasionally make some progress on your own, and believe that an outsider won’t be necessary, or at least you hope so.

And they might even write a blog about it, and send it to you.

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Combining Strategy and Structure for Families

Different shapes and forms of tents

Combining Strategy and Structure for Families

I got an email a few weeks ago, inviting me to an upcoming Family Office conference, and the wording of the subject line caught my eye.

Now that my thinking on the issue has gelled in my head, I’ll try to turn it into a useful blog post. Here goes.

 

Strategy AND Structure

Let’s begin with the email subject line, so that you’ll get the context:

“Essential structures & strategies from leading families”

The event itself was billed as a “Family Office and Investment Conference”, but the tease in the subject line had succeeded in intriguing me to believe that they might be talking about topics that are much more up my alley (i.e. family issues)

When it comes time to plan the transition of a family’s wealth from one generation to the next, a lot of effort is usually put into finding the best way to structure things.

There are many different ways to accomplish the goal of transitioning the ownership of assets from the current owners to the future ones, and the choice of which way to go will often be driven by the family’s advisors, who each have their particular favourite techniques and structures.

The family client relies on advice from these trusted experts, who are believed to know what they are doing, and strictly speaking, they usually do.

So what’s my issue with this? I’m glad you asked.

 

The “What” Shouldn’t Come First

A family faced with this scenario is really only going to do this once per generation, and few families are experts in knowing exactly what they want, or even knowing what’s possible.

The tactical experts who advise them are just that, “tactical”, they specialize in the “what”, and when a client shows up looking for help, the expert will almost always go back to the “tried and true”.

But what if they’re pulling an old structure off the shelf that they used before for another client whose situation was completely different?

Too few advisors will take the time necessary to explore the “why” questions with their client families, and to think in terms of the overall family strategy, in order to make sure that “what” they are proposing actually makes the most sense.

 

“Why” Should Precede “What”

It’s really useful for the family to have the important planning discussions amongst themselves to plan strategy before engaging the outside structure experts.

As I wrote back in March, in “We Treat Them All Equally – (That’s Good, Right?)”, these discussions are not necessarily done quickly or easily, but they sure are important and worthwhile.

You may be curious as to my selection of the image I chose to accompany this post, perhaps wondering “what’s with all the different tents”? Each of them is a structure, and they are all different, some of them markedly so.

 

Are We All In This Together?

In “Going Far, Go Together” I wrote about families that are planning to stay together for the long term.

What I didn’t stress at the time was the actual question that the family needs to clarify beforehand, i.e. does the next generation of the family WANT to stay tied together, and continue to work together as a shared ownership group.

Too often there is a presumption that the answer to this question is YES, and when that happens you can end up with siblings who are forced into partnership with each other.

If such a scenario is going to turn into a disaster because of the family dynamics, wouldn’t it be better to figure that out in advance, and not go down that road?

 

Strategy Before Structure

At the risk of harping on this too much, I’ll say it again. Before you decide on the best structures to hold the family assets for the next generation, the family needs to sort out the questions of who is on board.

It can be very tempting to choose a complex solution proposed by a tax expert who shows you to the penny how much tax you can save by going with their suggested methods, but if that solution means the next generation will be stuck in the wrong kind of tent for their trip, what was the point?

A huge tent built for the desert may not be what most of the family needs. Work out the strategy first.

 

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Ownership: The Forgotten Circle of Family Business

The Forgotten Circle of Family Business

Ownership: The Forgotten Circle of Family Business

On the back of my business card, I’ve got a colourful depiction of the Three-Circle-Model that I often use to initiate introductory discussions about the kind of work I do.

Not that it takes long to draw the Venn diagram on a napkin, pad, or placemat, but since I was struck by its simplicity when I was first exposed to it, I now enjoy sharing the insights it can bring.

 

History Lesson

Harvard’s Renato Tagiuri and John A. Davis came up with the model in the 1980’s when they realized that the old “Two-Circle” version was incomplete.

It was always clear that the Family and the Business overlapped, but it was the addition of the Ownership circle that added an “A-Ha” factor.

 

In Flux Versus Static

Interestingly, while the Family and the Business are both pretty much in constant daily flux, the Ownership is usually static or fixed for decades at a time.

But when the time does come to make changes to the ownership of a family business (and it will), those changes usually affect pretty much everything and everybody.

So the term “forgotten” in the title of this blog, is meant to make the point that we don’t usually give it much thought.

But maybe we should.

 

Some Examples

Imagine a family where the senior generation still owns the business while the rising generation members have solidified their place in the day-to-day operations.

At first they will likely patiently bide their time and accept the situation and “obey” the owners’ directives. But as the years become decades, this situation can become much less palatable.

The issues that arise in this type of situation are often framed in terms of “family dynamics”, which isn’t necessarily wrong, but the best solution to the “problem” may actually come from a change to the ownership.

 

Voting Control

Sometimes families realize that ownership should transfer to the rising generation relatively early on, which often occurs at the behest of an outside expert who suggests some beneficial tax-planning strategies for making these changes.

But often the parents can’t resist the temptation to create complex share structures that allow them to maintain control.

Having ownership without control adds a complicating factor to the Three-Circle-Model.

I’m not exactly sure how to do it, but somehow a modified version of the model might be needed to illustrate those situations where ownership doesn’t include control.

But all I’m trying to do here is to illustrate ways that the ownership circle often affects many of the day-to-day family business issues, even if we don’t give it enough thought.

 

Life Events as a Catalyst

Important life events can sometimes be a catalyst to changing the ownership structure. It’s much more fun when these involve a birth or marriage than a death or divorce.

Unexpected deaths sometimes catch families by surprise and hopefully these cases serve as a poignant reminder to others to get their affairs in order “just in case”.

When there’s a long illness that precedes a death, it’s sometimes a blessing, because important moves and discussions can then take place.

Of course in some cases, family relationships are such that even when the writing is on the wall and death is imminent, the family just can’t come together and have a productive discussion and agree on how the future ownership should be structured.

 

Preparing Owners to be Owners

Luckily, for every situation where families are “stuck”, we now hear more and more about families who are working to get out in front of these situations.

Enlightened families are looking into outside coaches and/or education programs that help prepare future owners to become good owners.

While it’s true that no special training is required to own shares in a company, the people who work in the business can tell you that the ownership of the business, and how they interact with and guide the company, has a huge effect on performance.

 

It Starts at the Top

When things begin to go poorly in a business, the roots of the demise can usually be traced back to the top, and that’s the ownership.

If you’re working with a business family and there are some issues that you’re trying to put your finger on as to their source, don’t forget to ask about the current ownership structure.

There’ll often be some good clues there.

 

Photo credit: Richard Legler

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Sharing Some Rocky Mountain Kool-Aid

Sharing Some Rocky Mountain Kool-Aid

I just returned from another fantastic Rocky Mountain experience: four jam-packed days, over two conferences, hosted by the Purposeful Planning Institute.

This has become an annual trek to Denver for me, which will surely continue for years to come.

 

Four Going on Five

I first attended PPI’s “Rendez Vous” in 2014 and returned again the following year. Last year, they added something new, an additional conference called “Fusion Collaboration”.

I decided to do both in 2016, and I jumped in with both feet again this year.

There was some confusion again, on the part of some attendees at either or both this week, about the difference between these two conferences.

I came up with an analogy that got a great response from everyone with whom I shared it, and the title of this post gives you a clue as to what it’s about.

 

Try Some of this Great Kool-Aid

Fusion Collaboration, the newer portion, is aimed at technical professionals who deal with business families, and families of wealth, and its goal is to introduce these more transactional folks to some of the other, deeper ways that these clients need to be served.

The presenters at Fusion are mostly specialists who work on the less technical aspects of wealth transfer, in what I like to call the “family circle”.

Many people used to call these the “soft side” (and still do), but now it’s more often dubbed “relational”, or “family dynamics”.

Fusion Collaboration is PPI’s attempt to get them to try Purposeful Planning Kool-Aid and “get them hooked”.

 

Let’s Swap Kool-Aid Recipes

By Wednesday evening, Fusion was wrapping up, and many of the lawyers and accountants and transactional specialists were preparing to depart, only to be replaced by a fresh crop of attendees.

The people who came for Rendez Vous, for this, its seventh incarnation, didn’t need to be enticed to drink the proverbial Purposeful Planning Kool-Aid.

Most of these people already subscribe to “Kool-Aid Aficionado” magazine, and they bring their Kool-Aid mixing and serving tips and recipes to share with their friends.

Besides the relational experts, many traditional transactional professionals who’ve become Kool-Aid fans also attend this conference regularly.

 

What’s In this Stuff?

If you’re curious about the main ingredient in this enticing beverage, it was nicely summarized by PPI’s founder, John A. Warnick, in one slide, which read:

                      Purposeful Planning   =   “Client-centric”   +     “Family-centric”

Most professional advisors already recognize the importance of putting the client’s needs and desires at the heart of wealth transition planning,

They also usually understand (in theory, at least) how important it is to bring next generation family members into the picture, preferably early on.

 

Secondary Equals?

Many of those who’ve traditionally driven the discussions around the pieces of wealth and business continuity, and transitions to the next generation, would consider themselves the primary drivers of this important work.

That may be true in the strict “transactional” sense, but more and more families are demanding a more holistic approach, which naturally involves a host of other experts from different, perhaps “secondary” domains.

Ideally, a collaborative group, or better yet, a team of advisors, will work together to figure out and design a complete inter-generational solution, along with the client family.

In order to do this work efficiently, and effectively, it really helps if the advisor team can work as collaborative equals.

 

Who Are They?

To give you an example of the types of specialists I’m talking about, here are some words and titles from some of the business cards I collected this week.

  • Legacy Advisor
  • Independent Trustee
  • Family Enterprise Advisor
  • Facilitator
  • Coach
  • Consultant
  • Psychologist
  • Gift Planner
  • Communications Specialist
  • Family Dynamics
  • Philanthropy Consultant
  • Family Legacy Advisor

And I know I’ve easily missed at least a handful of specialties.

 

July in Colorado 

After the opening dinner of Rendez Vous, as a table exercise, the “Elders” in attendance were asked to share with the “Tenderfeet” why we keep coing back every year.

At my table, most agreed it was the people, all of whom seem to come for the right reasons, i.e. to serve families better.

It’s also a great place to fill up on information, ideas, best practices, contacts, and lots of hugs too.

Oh, and Kool-Aid, of course!

Hoping to see you in Denver in 2018.

Would you like a glass, or a whole pitcher?


Links to previous Rendez Vous blogs:

2016SWEET SECLUDED RENDEZ-VOUS

2015RENDEZ-VOUS WITH A PURPOSE

2014THE RISING GENERATION IN FAMILY BUSINESS

 

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A Pitcher, a Golfer, and a Baby Bird

Baby bird

A Pitcher, a Golfer, and a Baby Bird

Whenever I hear a really good analogy, something in my brain gets triggered, and I want to find ways to remember it, perfect it, and share it.

When people ask me how I come up with blog ideas every week (for over 250 weeks now, and counting) I usually note that the difficult part isn’t in having enough ideas, it’s having too many.

So when I hear the same analogy coming from two completely different areas, I take notice, and I try to find ways to combine them into one blog.

 

The Pitcher

Last week I was watching a Cubs game on TV, and Jake Arrieta was on the mound. The colour commentator was John Smoltz, a former pitcher himself, and a Hall of Famer too.

He was talking about issues Arrieta had been having with control, and Smoltz mentioned that he was working on finding the right grip on the ball in his hand as he threw his pitches.

“You’ve got to think of the baseball as if it’s a baby bird”, he said (I’m paraphrasing here) “You don’t want it to fly away, but you don’t want to squash it either”.

This sounded very familiar to me.

 

The Golfer

Years ago, when I still played golf (or rather “tried” to play golf) I was having issues with a really bad slice.

A slice is when you aim the ball at the green, and you hit it and for the first second that you watch it, you’re really happy, but then the ball just decides to take a right turn, often into the woods.

I don’t recall exactly where the advice I heard came from, but I absolutely remember reading or hearing the story about the bird.

“Think of the golf club like a baby bird, you don’t want it to fly away, but you don’t want to squash it to death either”.

 

Business Family > Family Business

So what the heck does all of this baby bird stuff have to do with family business? I’m glad you asked.

When people think about family business, they usually think about the business part of it. In the term “family business”, the word “business” is the noun.

My preference is to talk about the “business family”, where the word “family” is the noun.

I think I’ve been pretty consistent with this, as even the secondary title of my 2014 book, SHIFT your Family Business, is “Stop working on your Family Business, Start working on your Business Family”.

 

Parenting

When I meet with members of a business family, it usually doesn’t take very long for issues to come up that have a lot more to do with “parenting” than they do with “business”.

And it’s the parenting part that brings us back to the baby bird analogy. As a parent myself, I too have struggled with the temptation to grip the bird too hard.

As a former child, I can tell you that at times I felt like I was a little too “directed” in my life. Being “directed” is a close cousin of being “squashed”.

 

If you love someone…

It saddens me when I meet people in their 40’s or 50’s who work in their family business, and it becomes clear after a short time with them that they’re not really there because they want to be.

If they could hit the “rewind button”, they would have made different choices. Unfortunately, there is no “rewind button”.

These issues almost always stem from the baby bird being gripped too tightly.

Instead of just throwing more balls than strikes, or too many lost golf balls, the consequences are much worse.

 

Go Fly Now

When the baby bird is held in your hands for too long, it will never learn to fly on it’s own.

Even worse, when the time comes that the bird HAS TO fly, and it can’t, because it never got the opportunity to learn to fly on it’s own, parents will often criticize them for not having what it takes.

 

Too Loose > Too Tight

While you may think that it’s simply a matter of finding the right balance between gripping too loosely and gripping too tightly, that may be true for the golfer and the pitcher.

For the parent, gripping too tightly causes far more problems.

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5 Things you Need to Know: Family Vision

Family standing on the side of the river with their kids pointing at something

5 Things you Need to Know: Family Vision

A few weeks ago in Family Business: How Do Values Fit In? I touched on the idea of a “Family Vision”, and I’ve been meaning to get back to it, so here goes.

I’ve decided to make this one of my occasional “5 Things” pieces, much to the chagrin of my wife, who wonders why five is always my go-to number. (It just is, Dear, it just is.)

  1. Values Should Come First

Before you do any work on a family vision, it really makes a lot of sense to do the values work first. The vision is about the future and where you want to go together.

“Oh cool, the future!” you might think, and you may be tempted to jump right in and skip over the values part, but I recommend against it.

The values are about where you are now, and hopefully what all family members agree on about where they are together.

It’s kind of important to know that before you try to figure out where you’re going to go together.

  1. Common Vision Is What You Need

Just as it is important to understand the values that family members have in common, it should go without mentioning that a family vision is supposed to be a “common vision”, for the family, by the family.

But I am mentioning it, because sometimes there is someone in the family who needs to be reminded of this.

A family vision that comes from one person only, and that has been carved in stone by its sole creator, will not be worth the stone tablet it is printed on.

  1. It’s about Discovery and Co-Creation

Once you’ve figured out the values and committed to the concept of the common vision, it really becomes an exercise in discovery and co-creation.

One key is just being curious about where different family members see possibilities, which can open up discussions that you hadn’t thought of before.

Discovering areas where younger family members have passions and finding ways to create a vision together can be very powerful.

If you’ve built a particular business that may or may not excite the younger family members, wouldn’t it make sense to at least hear their ideas and try to find ways for everyone to have a stake in the family’s share assets?

    4. You Can’t Rush This Stuff

One of the bigger misconceptions about any of this values and vision work for families is how long it takes to actually do it in a thoughtful way.

It may sound tempting to try to schedule a few hours or even a day to do all of this. Yes, you could do it that quickly and you could conceivably get some value out of such an exercise.

Ideally, and for best results, this kind of work is NOT done quickly, or in one shot. My preference is to do the values work in two separate sessions first, before even getting to the vision.

Also, the larger the family group, the longer you should expect it to take.

Remember, “If you want to go fast, go alone, if you want to go far, go together”, as I wrote last year (Going Far? Go Together).

    5. It Doesn’t Happen by Itself

One of my favourite expressions is “these things don’t just happen by themselves”, and that’s certainly the case here too.

There can actually be quite a bit of work involved just in getting a family together, and then to get them all to understand the importance of the task at hand.

Depending on their ages and their previous involvement in important family discussions, it may take some convincing for them to actually believe that their input will be welcomed and heard.

The word “intentional” really fits well here. There needs to be an intention to do the work that needs to be done to discover and co-create a family vision.

Make the Investment

In my book SHIFT your Family Business, the letter “I” in SHIFT stands for “Invest”, and it’s all about investing the time necessary to do this important work.

Of course there is a financial investment that goes along with this, but for families with considerable wealth it’s a drop in the proverbial bucket.

The time required is the biggest investment, but those who take the time to get it right will be rewarded by the resulting legacy.

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“Yellow Light Family” – Proceed with Caution

Traffic Light in Family Business context

“Yellow Light Family” – Proceed with Caution

Last week’s post (Happy to Be Wrong on FEX) talked about the great symposium I attended in Halifax earlier this month.

If you’re a regular reader (thanks!) you know that one of my best sources of blog material comes from these kinds of events.

I often do some sort of “Top 10” of things I picked up, but I’m going to devote this blog to one specific presentation I attended.

In coming weeks, I’ll likely dig in to a few other memorable sessions from the FEX conference.

 

Green, Yellow or Red Zone?

The symposium had a good mix of sessions; a couple for families only, others just for advisors, but most were open to all.

In this advisor-only session, Jim Grubman of Cambridge Family Enterprise Group presented “Green, Yellow or Red Zone Clients”.

He introduced the concept of the “Two-Axis Model” of wealth advising, with technical issues along the X-axis (horizontal), and personal and family dynamics on the Y-axis (vertical).

In each case, the model ranges from low complexity to high, from left to right and from bottom to top.

The colour-scheme was reserved for the family dynamics axis; green at the bottom, yellow in the middle, and red at the top end.

 

Technical Bread and Butter

Grubman mentioned that as you go from left to right on the “technical axis”, more complexity is usually seen as a positive for advisors.

A family with complex technical needs is often a plus, in that it allows you to showcase your abilities to solve their issues, and to charge accordingly.

The more people, entities, trusts, and jurisdictions a family has to deal with, the more the advisors will relish the task. At least the best advisors do.

 

The Family Dynamics Axis

The vertical axis, on the other hand, where family complexities increase, can be a very different story.

This is where the “traffic light” comes into play.

The low complexity families, with little of no conflict, anxiety, addictions, etc. are where most advisors prefer things to be.

Green is good, because there’s no family stuff to trip you up.

As you begin to see any of those issues, you leave the safety of the “green zone” and get into the yellow territory. At this point many who advise on technical issues (legal, tax, trusts, accounting, cross-border, etc.) quickly feel like they’re out of their depth.

Sometimes it doesn’t take much to raise the proverbial red flag, and get the advisors to scratch their heads wondering if they will be able to resolve the family issues.

 

Break It Down

Here’s where the real value of the presentation came for me. Rather than simply looking at the family dynamics question globally, Grubman breaks it down into several components.

In many cases, one thing sets off alarm bells, but others are hardly any concern.

For example, the sensitive issue could be the family’s level of conflict, their communication style, addictions, perceived fairness, or lack of governance systems.

When you can put your finger on it with greater detail, you’re much better placed to deal with it.

It can also help to look at “state versus trait” variables. There could be a situational factor at play, which may just be temporary. (Traits are fixed, while states are transitory)

 

Isolate the Issues

When the advisor team can share their views using this type of breakdown, they can pinpoint the issue more easily.

A family that looked red, or “very yellow” can look much less daunting once you see that there is really one key issue that is flashing, and that the others are pretty green.

 

Coordination and Collaboration

Now I’m gonna switch from what Jim Grubman was saying to Steve Legler’s take.

No single advisor will be able to handle a family with any complexity above green, on either axis.

Technical professionals work together to solve the family’s asset-related issues. On the family dynamics side of things, the same should also be true.

Families will benefit from advisors who can coordinate their activities at a minimum, and hopefully even collaborate.

 

Inter-Disciplinary Fluency Helps

FEX’s FEA Program helps advisors develop the inter-disciplinary fluency they need to properly serve families.

Knowing what families need, and how the pieces all fit together, is key. And so is being able to work together.

Tools like Grubman’s help us all do a better job for families.

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Father’s Day Introspection 2017

That Time of Year

Every year when Father’s Day rolls around, I get mixed emotions. Being a father is truly the greatest joy of my life, and this weekend will be my 18th as a father, but also my 9th without my father.

When I work with members of a family, I like to help them see things from each other’s points of view, and asking them to project forward or backward many years comes naturally to me, stimulating conversation through curiosity.

Asking a father to think back to when he was at his son’s current age will naturally shift his viewpoint.

Likewise, having a son project to when he will be his Dad’s age and imagine what that could be like, forces him to adopt a different mindset.

 

My Own Journey

For the first few decades of my life, I only saw Father’s Day from one perspective.

When our son was born, I developed a new appreciation for the third Sunday in June, as I was now a father too. Having my father still around then, I got to experience the “dual roles” of son and father.

I didn’t get to enjoy too many of those, unfortunately, as my father was struck down too soon by cancer, so now I am back to only one way of experiencing this special day.

 

Father–Son Experiences

This past week I was in Halifax for the Family Enterprise Exchange’s (FEX) Symposium, where there were plenty of father-son teams and stories.

(There were of course mothers and daughters too, but this is my Father’s Day blog and I’m a guy, so please excuse the gender slant this week.)

Whether it was a father and son on the stage, recounting the evolution of their relationship, or members of a family at my table during one of the sessions, I couldn’t help comparing what I was seeing and hearing to my own experiences.

It felt like most of the relationships I witnessed were healthier and more open than the one I had with my father, and much closer to what I feel like I’m living with my son (and daughter).

 

Objectivity Problem?

I can’t be sure of my biases here, but I think I’m being pretty objective.

Were these isolated examples of great family relationships?

Was my view of them skewed by their efforts to show “good behaviour” in public?

Was it a sign of the times that younger generations have got the father-son relationship figured out better?

I can’t be sure, but I do know that the fact that my Dad and I were in a family business together certainly DID have an effect on our relationship.

 

“We’re Not Gonna Do That”

I shared a fundamental story of ours many times during the FEX Symposium, one that I wish had turned out differently.

In the mid 1980’s my Dad had joined CAFÉ (Canadian Association of Family Enterprise, forerunner of FEX) while I was completing my Bachelor of Commerce studies at McGill.

Those studies were part of what I understood to be my “duty” as his only son: to fulfill my “destiny” as his successor.

One day he told me that many of the advisors who had spoken at CAFÉ events were very much against the idea of hiring your kids right out of school and straight into the family business.

I recall looking at him with a hopeful twinkle in my eye (which he clearly didn’t read the way I had hoped), waiting for the next line.

At that point he put his hand on my shoulder and “reassured” me with, “But we’re not gonna do that!”

Once again, he decided for we.

 

Wait, Why Not?

My hope is that modern day sons would have the courage to say, “Wait, why not?”

I really wish that I had, and if my son were faced with such a situation, I hope he would too. But I don’t plan on ever putting him in that kind of situation.

And for any other father-son team experiencing this question, please resist the temptation to taking this short cut to working in the family business.

 

Worth the Wait

If it’s right, it’ll be even more right, later.

Let your kids become their own selves first, outside their parents’ shadows.

It is worth it for them, and it will be for the business too.