As a tree grows, it is often helpful to prune some branches to make space for other branches to grow. As families grow generationally, “pruning” – allowing some family branches to exit – can be beneficial both to the main family group and to the group that chooses to exit.

As families grow, so does the diversity of family members. Managing the diverse needs and expectations becomes much harder. Unless the family business is always growing, it can be hard to support a growing number of owners. There can be ripples of discontent that can lead its members to seek escape. Also, you are never alone when it comes to engaging in conflict with other family members. Other family members are inevitably part of the mix.

Many large business families have a mechanism whereby a family member can leave the business and remain part of the family. Where such a mechanism doesn’t exist, an exit may require something as dramatic as selling the business. Because family businesses have emotional as well as financial value to the family, this can lead to regret and further discontent.

Simply having a mechanism for exit is of paramount importance. If not, family members can feel trapped.

A case in point was Megxit, where membership of the royal family is based on performance as a family member, so they could not just step back. There were no structures to internally manage change, adversity and conflict. Sadly, their only option was to leave completely.

Consider This: Does your family have an exit mechanism for family members? Are any family members involved out of a sense of obligation rather than because they choose to?

Actionable Generational Wealth Succession: 

For more in-depth, thought-provoking discussion points and further commentary on family and business conflict resolution, access my Familosophy newsletter archives by signing into our newsletter https://DavidWerdiger.com. We will send you the archive links from there.

#familyoffice #wealthmanagement #conflictresolution #strategicmanagement 
#nextgensuccession #intergenerationalwealth #governance #leadershipdevelopment
#entrepreneurship

The post Pruning the Family Tree appeared first on David Werdiger.

source https://davidwerdiger.com/2023/07/pruning-tree/

You might think conflict in family business is predominately around business performance. Wrong. At the core, it’s most commonly about the ‘people’ side of things: ineffective communication, and not recognising the different needs, interests & capability of family members.

Evolutionary psychology tells us that we behave more altruistically toward the relatives with whom we share the greatest genetic overlap, and more with our maternal than paternal relatives. This means as the family group grows deeper generationally, relatives are less likely to let an issue go because it’s a family member.

In this framework, blended families pose a challenge because of the lack of genetic overlap. This is even more difficult because legislation has failed to keep pace with the times, leading to increasing conflict and litigation.

Conflict can be mitigated by focusing on principles rather than people, and staying away from making decisions (or setting policy) with particular people in mind. It’s best to develop the principles before you need them – that way family members can agree on them without the bias of a specific situation.

Change is hard for most families, so framing ideas as extensions of existing ones rather than new ones can reduce push back. They are easier to accept when perceived as evolutionary rather than revolutionary.

Consider This: What are the most common sources of conflict in your family business? Do you notice any patterns around these conflicts? Do you have forums where conflict can be aired and dealt with?

Actionable Generational Wealth Succession: 

For more in-depth, thought-provoking discussion points and further commentary on family and business conflict resolution, access my Familosophy newsletter archives by signing into our newsletter https://DavidWerdiger.com. We will send you the archive links from there.

#familyoffice #wealthmanagement #conflictresolution #strategicmanagement #nextgensuccession #intergenerationalwealth #governance #leadershipdevelopment
#entrepreneurship

The post Family Business Conflict appeared first on David Werdiger.

source https://davidwerdiger.com/2023/07/family-business-conflict-4/

Q: We’re just approaching a liquidity event. How do I get my twentysomething children involved in our plans for philanthropy?

A: Stop right there. You might be 10-20 years late.

Many families do things in the following order: create wealth, extract liquidity, then give charity in a big way. Now, that makes plenty of sense. You can’t give charity in a big way until you have the liquidity. And creating a foundation as a vehicle to perpetuate giving is usually most tax effective when done in conjunction with a liquidity event. But this process leaves out the most important step: the “why”.

If you want children to be involved in family philanthropy, it needs to be aligned with the family’s collective values and purpose. And the philanthropic behaviour should be modelled by parents as early as possible in the lives of their children. That can happen even if the family wealth or circumstances are not yet at the level for the giving you’d ultimately like to do.

Our children are smart and super perceptive. They look at what we do as an indicator of what is important to us. They are quick to spot inconsistencies (which to them might mean making money from oil and then donating to save the planet). By the time they reach their early teens, these attitudes are largely well entrenched.

Note that I’ve evaded the original question. It’s never too late. It’s just a lot harder to start doing philanthropy and engage your children when they are already young adults.

Consider This: Does your family have a consensus regarding its philanthropic activities? How was that consensus reached? Do you discuss your philanthropy with your young children? How passive (writing cheques) or active (time and talent) are you in philanthropy?

Original articles: https://www.tapinto.net/towns/east-hanover-slash-florham-park/sections/business-and-finance/articles/raising-charitable-children, https://www.worth.com/how-to-find-your-voice-as-a-next-gen-philanthropist/, https://www.forbes.com/sites/francoisbotha/2019/07/28/three-ways-to-embrace-the-next-generation-of-family-office-leaders/#79c0cd6f6d90, https://www.forbes.com/sites/oliverwilliams1/2019/04/24/what-happens-when-billionaires-children-inherit/#107bf42f4e92

Actionable Generational Wealth Succession: 

For more in-depth, thought-provoking discussion points and further commentary on family and business conflict resolution, access my Familosophy newsletter archives by signing into our newsletter https://DavidWerdiger.com. We will send you the archive links from there.

#familyoffice #wealthmanagement #conflictresolution #strategicmanagement #nextgensuccession #intergenerationalwealth #governance #leadershipdevelopment
#entrepreneurship

The post Q&A: Charitable Children appeared first on David Werdiger.

source https://davidwerdiger.com/2023/07/charitable-children-2/

Murray Bowen, pioneer of family systems theory, viewed the family unit as a complex social system where family members interact to influence each other’s behaviour. Rather than being a collection of individuals, it is better viewed as a whole.

On that basis, we can consider the physical and emotional ‘health’ of a family as both the health of each individual family member and also the health of the interactions and relationships between them.

Conflict is inevitable in family systems, and it comes in various forms. Where there is open communication and trust, conflict could be better described as healthy debate, and is essential to avoid stagnation and to bridge intergenerational gaps.

Too often, conflict is a proxy: family members might argue over a business decision, but in fact they are playing out deep-seated family issues like jealousy and favouritism. That can be addressed by providing the appropriate setting to deal with the family issues, separately from the business.

The worst kind of conflict is the “move along; nothing to see here” type – where family members pretend everything is fine (either to keep up appearances, or because the issues are too hard to confront). No communication is far worse than angry confrontation. In that case, resentment festers like a sore and ultimately explodes.

Consider This: How would you rate the health of relationships within your family? How does your family deal with conflict (the response “we don’t have conflict” is unacceptable)?

Further reading: https://www.campdenfb.com/article/resolving-conflict-communication-why-talking-it-out-can-save-family-business, https://www.mondaq.com/guernsey/wealth-asset-management/1256818/fractures-in-the-family-advising-wealthy-families-in-the-midst-of-conflict, https://hbr.org/2022/10/avoiding-conflict-will-only-hurt-your-family-business, https://www.mondaq.com/canada/wills-intestacy-estate-planning/1204610/family-enterprise-advising-considering-the-soft-skills-of-succession-and-inter-generational-planning, https://www.forbes.com/sites/lgt-private-banking-asia-pacific/2022/04/06/family-governance-planning-unlocks-potential-in-family-talent-and-wealth/?sh=3b484a59758e, https://www.bizjournals.com/bizjournals/how-to/growth-strategies/2020/11/10-elements-of-a-solid-family-business-contract.html, https://www.wealthbriefing.com/html/article.php?id=188869#.X45c5dIzaUk, https://www.scmp.com/presented/business/topics/china-business-knowledge/article/3043011/when-family-trusts-affect-value

Actionable Generational Wealth Succession: 

For more in-depth, thought-provoking discussion points and further commentary on family and business conflict resolution, access my Familosophy newsletter archives by signing into our newsletter https://DavidWerdiger.com. We will send you the archive links from there.

#familyoffice #wealthmanagement #conflictresolution #strategicmanagement 
#nextgensuccession #intergenerationalwealth #governance #leadershipdevelopment
#entrepreneurship

The post Family Conflict: Nothing to see here … appeared first on David Werdiger.

source https://davidwerdiger.com/2023/07/family-conflict-nothing/

In an article for The International Family Offices Journal, David writes on finding balance in wealthy
families. David observes that when one’s time does not need to be spent in the active pursuit of income,
the choice of how to spend that time becomes even more important. He discusses the spectrum of for
profit/non-profit work and how individuals find the right mix to suit them and their families.

The post Journal Article: Time-Purpose Map appeared first on David Werdiger.

source https://davidwerdiger.com/2023/06/journal-article-time-purpose-map/

(spoiler alert) Plenty has been written about the popular TV series Succession and the lessons that can be learned for real-life family business succession; my goal is to convey something others have overlooked.

With a sale of the operating business on the cards, in theory the Roy kids could have each walked away with a large pot of cash, and opened up a family office and created whatever life they wanted. But this was not explored at all in the series. Rather, they were jockeying to either keep control of the business or become the CEO once it was sold. Why?

What they really wanted wasn’t money, or even the choices that money brings. They wanted the love of their father (which they never received) and in its absence, to be acknowledged as the torch bearer of his legacy by their siblings and others. Their attachment to the business was socioemotional wealth – the non-financial aspects of the business needs such as identity, influence, and perpetuating the family dynasty.

Jay Hughes put it well: “Founders create wealth, but heirs create legacies”.

Consider This: What is the emotional attachment of family members to the family’s operating assets? How does this attachment vary between generations (e.g. founders vs G3)? What legacy do the rising generation in your family aspire to leave?

Further reading: https://news.northeastern.edu/2023/05/18/succession-hbo-family-business/, https://www.cnbc.com/2023/05/14/hbo-succession-is-it-possible-to-have-empathy-for-billionaires.html, https://www.fastcompany.com/90560967/dear-founder-dont-be-a-logan-roy-plan-your-succession, https://www.inc.com/jason-aten/the-succession-season-2-finale-was-brutal-here-are-3-real-life-lessons-about-business-from-show.html

Actionable Generational Wealth Succession: 

For more in-depth, thought-provoking discussion points and further commentary on family and business conflict resolution, access my Familosophy newsletter archives by signing into our newsletter https://DavidWerdiger.com. We will send you the archive links from there.

#familyoffice #wealthmanagement #conflictresolution #strategicmanagement #nextgensuccession #intergenerationalwealth #governance #leadershipdevelopment
#entrepreneurship

The post ‘Succession’: Love & Legacy appeared first on David Werdiger.

source https://davidwerdiger.com/2023/06/succession-love-legacy/

David will be one of the facilitators at the UHNW Institute Masterclass on Power Dynamics.

Using examples from the popular TV show, Succession, we’ll explore the often-invisible influences that shape how people interact, communicate and participate with one another.

This masterclass will help advisors:

• Understand how power works within family members and across teams of people
• Learn about the types of power and the difference between influence and power
• Develop influencer skills to help families find balance and avoid the pitfalls of power dynamics
• Improve your ability to identify and facilitate when things go off the rails
• Learn how to exercise your power as an expert advisor ethically and responsibly

The post Speaking on Power Dynamics appeared first on David Werdiger.

source https://davidwerdiger.com/2023/06/speaking-on-power-dynamics/

I’ve written several times about the challenges of advisor succession, and now want to look at this from a family risk perspective. If your advisor is suddenly unable to work, is it the advisory firm’s problem, or yours?

While the personal connection between a family of significant wealth and its advisors is important, succession arrangements on the advisor side can have a huge impact on the family. From a risk perspective, it’s important to avoid any “single points of failure”. Each advisor needs a back-up in case of emergency. This applies to wealth managers, lawyers, accountants and other family advisors.

A recent survey in Canada showed that 69% of advisors are nearing retirement or have started creating a succession plan, but only 11% said they have a formal succession plan. Advisors seem to be ageing, and this is also a concern for families who need advisors to be able to connect with rising generation family members.

Consider This: Have you included advisors as part of your family’s risk register? Does each of your advisors have a back up? Do you consider succession as a factor in your choice of advisors?

Original articles: https://www.wealthprofessional.ca/investments/wealth-technology/why-advisor-succession-isnt-just-an-exit-event/363194, https://www.investmentexecutive.com/newspaper_/building-your-business-retirement/the-advisors-retirement-making-a-smooth-transition/, https://www.wealthprofessional.ca/news/industry-news/nearly-nine-tenths-of-advisors-have-no-formal-succession-plan/356350, https://www.theglobeandmail.com/investing/globe-advisor/advisor-news/article-succession-planning-still-a-big-issue-in-financial-advice-industry/

Actionable Generational Wealth Succession 

For more in-depth, thought-provoking discussion points and further commentary on family and business conflict resolution, access my Familosophy newsletter archives by signing into our newsletter https://DavidWerdiger.com. We will send you the archive links from there.

#familyoffice #wealthmanagement #conflictresolution #strategicmanagement 
#nextgensuccession #intergenerationalwealth #governance #leadershipdevelopment

The post Advisor succession: family perspective appeared first on David Werdiger.

source https://davidwerdiger.com/2023/06/advisor-succession-2/

Change is in the winds. Women control more than 60% of personal wealth in the USA. While older generations hold a patriarchal view of wealth, only a third of their children held such views. Women family leaders, regardless of age, are challenging traditional gender roles. 

The ecosystem is adapting to these changes, recognising that within the family office, there was a need to approach women differently than men. We are seeing initiatives to help women find their voices and become more active participants in their family’s wealth.

Women want to work with advisors who will empower them to make their own decisions, and the more valued advisors were the ones who proactively worked in terms of shared understanding and decision-making for both spouses.

The advantages of having women involved in decision making are well established – a diversity of opinions and perspectives leads to better decision making. In particular, when it comes to family wealth, women often focus on the big picture and the whole family’s end goal instead of just the numbers.

Consider This: Are the women in your family involved in family wealth decision making? Do your advisors actively seek to include them? Are there cultural barriers to involving women?

Further reading: https://www.fa-mag.com/news/what-does-a-family-office-mean-for-ultra-wealthy-women–pitcairn-s-amy-hart-clyne-on-her-work-with-female-family-leaders-65535.html, https://www.thinkadvisor.com/2021/12/15/why-women-must-be-part-of-planning-meetings/, https://www.femina.in/life/careers-and-money/gender-diversity-in-estate-planning-212626.html, https://www.forbes.com/sites/forbesbooksauthors/2021/08/30/the-power-of-diverse-perspectives-why-we-need-more-women-in-finance/?sh=23293f1e6945, https://www.monaco-tribune.com/en/2020/12/what-role-do-women-play-in-high-net-worth-families-and-how-is-it-changing/

Actionable Generational Wealth Succession 

For more in-depth, thought-provoking discussion points and further commentary on family and business conflict resolution, access my Familosophy newsletter archives by signing into our newsletter https://DavidWerdiger.com. We will send you the archive links from there.

#familyoffice #wealthmanagement #conflictresolution #strategicmanagement 
#nextgensuccession #intergenerationalwealth #governance #leadershipdevelopment
#entrepreneurship

The post The New Matriarchs appeared first on David Werdiger.

source https://davidwerdiger.com/2023/06/new-matriarchs-2/

For years, we’ve been writing and talking about this trillion dollar wealth transition that is “going to happen in the next ten years”, ostensibly as baby boomers retire. But has it happened? The fact that we’re still talking about it as “happening” says plenty.

We need to ask: why were the predictions of so many people incorrect? and more importantly, what (if anything) should we be doing differently about it?

I’ve written previously about the “two speed” state of wealth – splitting by value rather than by number. Broad aggregate statistics do not tell the whole story. There are millions of relatively ‘small’ wealth transitions, and a much smaller number of very large wealth transitions. Within each ‘wealth band’, they work very differently.

My view is that one of the biggest impacts is increasing life expectancies. People (particularly those in business) don’t retire at 65; they can often continue to be productive for another 10-20 years or more. By that time, there may be two (or more) generations who are active in the family enterprise.

This can leave the rising generation as ‘waiters’ for a lot longer than they used to be. Does anyone want to be handed control of the family enterprise or inherit significant wealth in their 60s? Think of Prince Charles – born and raised to be king, and now 73 and still waiting for his turn. (Orig printing 2022)

With longer life expectancies, it’s time for a rethink on what intergenerational wealth transition actually means and how it should work. More on this theme to come in future newsletters.

Consider This: How old is the ‘rising generation’ in your family? Is your own family’s wealth transition plan on track as envisaged ten years ago?

Original articles: https://www.marketcurrentswealthmanagement.com/succession-planning-the-impact-of-skipping-a-generation/, https://www.washingtonpost.com/opinions/we-need-a-major-redesign-of-life/2019/11/29/a63daab2-1086-11ea-9cd7-a1becbc82f5e_story.html, https://www.denverpost.com/2018/07/15/improving-investor-behavior-longevity-and-the-fear-of-running-out-of-money/, https://www.heraldpalladium.com/features/generational-interdependency-has-grown-as-we-continue-to-live-longer/article_6b65e6e9-f9c2-5505-a9ac-c9f549092c9d.html

[Reprinted with Permission]

Actionable Generational Wealth Succession: 

For more in-depth, thought-provoking discussion points and further commentary on family and business conflict resolution, access my Familosophy newsletter archives by signing into our newsletter https://DavidWerdiger.com. We will send you the archive links from there.

#familyoffice #wealthmanagement #conflictresolution #strategicmanagement #nextgensuccession #intergenerationalwealth #governance #leadershipdevelopment
#entrepreneurship

The post Wealth Transition appeared first on David Werdiger.

source https://davidwerdiger.com/2023/06/wealth-transition-2/