Wealthy families grapple with the wish to bring children up as “normal” yet to develop the next generation to be able to cope with the responsibility and custodianship of wealth and to find their own meaning and purpose in life.
It can be very difficult for the current head of a family to face the consequences of their own death. Financial planning for this inevitability feels far more impersonal and easily done than planning for it in respect of family members. Yet research shows the more aligned family members are behind a shared set of wishes and values, the better the chance of long term success.
None of this is new. For centuries, families have had trusted advisers to help them address these issues or even to address them on behalf of the family head. Today it is frequently the family office that is expected to deal with these issues. This requires skill to speak on difficult subjects, across generations, to cause appropriate understanding and action.
We need both the knowledge of the issues and the tools available to families with which to address these issues and we need the sensitivity with which to ask the right question at the right time.
This skill is not as easy as it looks. Asking the wrong question at the wrong time can be regarded as interference. Going too fast on the subject can cause some people to “shut-down.” And the subject may never arise if rapport is not firmly enough established to allow fears, insecurities or lack of understanding to surface.
By example, I recently worked with a family in which the current head had been strictly brought up in a way that presumed almost feudal responsibility and matching management techniques. His 24-year-old son has been brought up “normally” yet he was unaware of the extent of the family’s wealth and so unprepared for his future responsibility. Despite the enormity of the family wealth they live in a very low key way. The children take the bus, nobody ever talks about money except by an almost excessive means of denial by which everyone discusses how expensive every day goods and services are. Yet at the same time, there is the super yacht and the vast family house which lie incongruously at the heart of these conversations.
While working one-on- one with me, the young man in question talked about a deep loneliness at not being able to discuss his ‘reality’ with anyone. He was afraid of being generous, financially or otherwise, with his friends having intuited from family conversations that somehow he might be a target were he to do so. In other words, one of life’s ultimate gifts, the ability to share, was in serious danger of being deleted.
Hearing the ‘truth’ about how he felt allowed me to gently raise the subject with the family in a way that was respectful of his trust and request for confidentiality, not critical of how his parents brought up their children and that was deeply respectful of their intent. Yet it also allowed us to build a development plan for their son to better equip him for the future and to allow him emotional freedom within the context of wealth.
I believe this is the type of scenario heads of family offices are faced with more and more often. As such we need to have skills with which to preserve and grow the human capital of a family as much as their financial capital.
In each issue of FOG in 2010 I will be answering questions from heads of Family Offices and family members on the “soft” issues that wealthy families need to address. I hope you will find this useful.
