Eight Pieces of Advice for Families and Family Offices

How you can effectively manage wealth transfer

Underlying the mechanics of setting up a family office or choosing investments are the structures and practices that make family offices — and the families they serve — succeed. Five experts with different types of family office experience talk about what’s important for families managing wealth.

Andy Busser, president, family office with Pitcairn

Andy Busser, Pitcairn

Transparency

Be really clear with everybody on what the rules are and why, who is making what decisions and why. The more transparency you have, the less resentment you’ll have. The corollary is what not to do: Don’t hide things from your G2s and G3s. It’s always a difficult exercise for parents to figure out, ‘When do I tell my kids that they’re going to be responsible for a lot of wealth?’ It comes down to the dynamics between the parents and the children and the ability of the children to process things. But the sooner the parents can get comfortable being transparent with their kids, the more likely it is that the kids will make good decisions later in life. The specific dollar amount may be less important than, ‘You’re going to be responsible for some family assets, and here’s how you should think about that.’

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Steve Lytle, The Agnew Company

Steve Lytle, Family Shareholder, The Agnew Company

Clarify the family’s goals

“Using the family office as a vehicle, you’re trying to do two things at the same time: First, you’re providing a launchpad for people to pursue their personal wellbeing, and at the same time, you’re creating this Venn diagram to assess if there’s enough overlap of values, principles and desired outcomes in the center for the family to cohere around.”

Rebecca Meyer, partner with Relative Solutions, a consulting firm that works with families and family enterprises

Careful conversations around transitions

Rebecca Meyer, Relative Solutions

People often think about a transition as an event that happens and creates something new. But transitions are really long, unfolding processes that take time. They require a lot of conversations that can often be dismissed as a waste of time, or require conversations about things like death or agency or meaning that people don’t have the language for or don’t know how to get started talking about. These conversations are high stakes and there’s potential conflict.

Get comfortable with wealth

Several areas related to people’s comfort with wealth are:

  • An ownership mindset — a sense that it belongs to you, that you have agency and legitimacy with the wealth. This is often not a simple thing for those who didn’t create the wealth.
  • A willingness to shoulder the responsibility: Wealth is a thing that you have to take care of.
  • The capacity to manage the wealth — the knowledge and the skills.
  • An abundance mindset — the belief that the wealth enhances your life and the lives of others. You can have a lot of something but still have a scarcity mindset.
  • A sense that you can make your way in the world, that you’re not totally dependent on this money for your existence.

Pat Soldano, president of Policy and Taxation Group, an advocacy firm for family office economic and tax issues, and a long-time family office services provider

Pat Soldano, Policy and Taxation Group

Adapt to the family’s needs

Family dynamics play into everything. Sometimes the professionals in the family office think their job is making sure they have the best investment returns or the most cutting-edge estate planning tools or they’re saving the most tax dollars. That may not be what the family wants at all.

Family governance and education

Families have to have a structure where they know what’s going to happen: How are they going to govern themselves? How are they going to govern the wealth? If they have a family business, how are they going to govern the business? They need to agree on it.

Danielle Oristian York, executive director and president of 21/64, a nonprofit consulting firm that works with multigenerational families and their advisors

Give all family members agency

Danielle Oristian York, 21/64

Most families need to create a collective identity. Rather than just taking grandfather’s identity, it’s looking around the table and saying, ‘Where did we come from, and who are we today?’ They also need an awareness and effort to distinguish between individual wealth and collective wealth – and match that awareness with agency and then education. That means framing and understanding family wealth in terms of agency: What does this mean for me in terms of my life choices? Having a lot of money is an attribute of who you are, but it doesn’t define you. Having conversations where numbers are just shared is very boring because there’s no agency – there’s nothing to do about it. Or it can seem scary. The storytelling around what it takes, and how much work it is, and what we do with this money is a way to contextualize and keep the money as a tool, rather than money as an identity.

Embrace change

Change is a constant force that allows us to survive. If we’re not changing, since the world is changing, it means we will be extinct. Making friends with change allows people to be much more effective. Knowing who you are and being connected to values — both your own and the values that guide the family — helps families be successful.

About the Author

Margaret Steen

Margaret Steen is the editor of FO Pro, The Family Office Professional. Based in Silicon Valley, she has written for Family Business Magazine for more than 15 years.


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