Studying failure is far better than studying success because it’s easier to avoid doing the wrong things than mimic the good that others are doing. Here are some of the ways things can go awry:

Families and businesses don’t grow at the same rate. From the third (and sometimes second) generation onwards, the family often grows faster than the business. What happens if many family members look to the business for employment or supplementary income?

Many owners maintain control by appointing only family members or close friends to their boards. This lead to the common problem of familiarity – where personal issues seep into the business, and where friends and family may tell the owner(s) what they want to hear instead of what they need to hear.

Policies regarding in-laws are a huge challenge and families tend to have polarizing views as to whether they are in favour or totally against. Whatever the policy, it’s important to welcome and evaluate in-law children as a spouse, not as an employee. It can be very difficult to remain business partners following a divorce – the worst-case scenario is that it the business needs to be sold to split the proceeds.

Working with relatives is a double-edged sword: it can generate much higher levels of trust and commitment, but it can also lead to tensions, festering resentments and open conflict. “It’s difficult when your dad isn’t only your dad, but your boss too.”

A recent study found that more than half of family businesses lack a succession plan. In too many family businesses, succession discussions are forced in that parents not wanting to inflame sibling rivalries leave it to the last possible moment to work through. A crisis, such as a major illness, is often the catalyst for a discussion that is by then often too late.

Consider This: Do you see any of these issues occurring within your family business? Is there a forum where you can discuss and seek to resolve or mitigate such challenges? Are there barriers to getting help in the first place?

Original articles: https://www.forbes.com/sites/dennisjaffe/2019/09/12/equal-partnerships-in-a-family-business-a-disaster-waiting-to-happen/#558f03764f6b, http://www.mondaq.com/australia/x/875598/wills+intestacy+estate+planning/A+rise+in+family+business+disputes+as+generational+succession+gets+messy, https://www.forbes.com/sites/iese/2019/12/27/five-rules-to-prevent-conflicts-in-family-businesses/#5aec82906662, https://hbr.org/2020/01/is-it-time-to-leave-the-family-business, https://www.bbc.com/worklife/article/20200204-how-to-leave-a-family-business, https://hbr.org/2020/02/should-your-family-business-have-a-no-in-laws-policy, https://www.roi-nj.com/2020/03/25/industry/breaking-up-is-hard-to-do-divorce-among-family-business-owners-can-be-complicated-and-have-far-reaching-consequences/, https://www.forbes.com/sites/francoisbotha/2020/06/30/avoid-the-common-pitfalls-of-family-business-boards/amp/, https://www.heraldgoa.in/Business/In-Business/4-bad-omens-of-the-family-business-curse/164281, https://www.forbesindia.com/article/family-business/how-to-tackle-a-split-in-the-family-business/62871/1

[reprinted with permission] full article repost

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.

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#nextgensuccession #intergenerationalwealth #governance #leadershipdevelopment

The post Top Challenges in Family Business appeared first on David Werdiger.

source https://davidwerdiger.com/2022/02/top-family-business-challenges/

In times of chaos, economic uncertainty, and the crushing burden to lead the family’s assets out of the fire, the need for governance grows even stronger. 

Too many families consider family governance as a side dish – a pesky bug that wants to take away all the attention and resources from the main priorities which are revenues and operations. There is also an emotional side to effective family governance which is often overlooked by the first generation.

The principles of governance for families are very simple: How are we going to make decisions together? How are we going to communicate? How are we going to solve problems together?

While the principles are simple, implementation can be challenging. Getting a clear mandate from the top is essential, as well as dealing with stakeholders who resist change. Having external help is essential.

Some families chooses either business first or family first. One is not better than the other, but you need to be honest about the choice and develop family governance based on your choice.

In order to stay focussed in your governance journey, remember that it’s all about relationship, communication and understanding between the family, the family businesses and the shareholders.

Consider This: Has your family’s governance (or lack of it) been a factor through COVID? (How well) does your family communicate? Is there the capacity for group decision-making?

Original articles: https://hubbis.com/article/revisiting-family-governance, http://www.mondaq.com/jersey/x/873496/wealth+management/Avoiding+rags+to+riches+in+three+generations+family+governance+in+the+Middle+East, https://www.forbes.com/sites/forbesbusinesscouncil/2020/06/16/use-good-governance-to-steer-a-rudderless-ship/#4abdd14a1ffd, https://www.forbes.com/sites/forbesbusinesscouncil/2020/08/04/eight-concepts-to-help-plan-and-manage-your-family-business/#5fcaf80440ce, https://www.panaynews.net/family-business-governance-important-then-and-now/ https://business.inquirer.net/308365/time-for-that-governance-talk

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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.

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The post Developing Family Business Governance appeared first on David Werdiger.

source https://davidwerdiger.com/2022/02/governance-family-business/

There are very different generational attitudes to philanthropy in families. While previous generations saw philanthropy as “giving money to non-profits”, the rising generation of wealthy individuals has broadened and redefined the term, considering it to be “the action of transforming others’ social well-being through generosity”.

The rising generation is more engaged and involved in philanthropic endeavors, and do so at earlier ages than their predecessors. They’re also motivated by the value propositions behind sustainable and impact investments, and often drive such initiatives with their own or family businesses. Those of inherited wealth can experience a sense of unease or outright guilt fueled by societal judgment over their wealth, which may drive giving priorities.

A family office can take a holistic approach to the family’s financial and personal life. This can mean more time to spend with family or commit to philanthropic interests, which can also bring the family closer.

Generational families that endure for 100+ years share a number of factors. Near the top of that list is a shared commitment to community, service and philanthropy.

Consider This: Which generations in your family are involved in philanthropy decisions? Do you have a philanthropy strategy that sets priorities and the process for allocation? Do key family stakeholders across multiple generations know the answer to the question “why our family gives”?

Original articles:https://www.denverpost.com/2019/10/13/on-philanthropy-bruce-deboskey-the-secret-sauce-of-thriving-100-year-families/, https://www.forbes.com/sites/francoisbotha/2020/01/23/why-do-families-give-the-5-spheres-and-motivations-around-philanthropy/#5b02a5b07dc0, https://www.forbes.com/sites/whittiertrust/2020/04/01/a-family-office-can-give-you-back-your-personal-time/#1b1726ea20ee, https://www.marketcurrentswealthnet.com/interviews/family-philanthropy-a-new-book-qa-with-mitzi-perdue/, https://www.forbes.com/sites/francoisbotha/2020/07/29/how-the-worlds-next-generation-of-ultra-wealthy-are-redefining-what-it-means-to-give-back/#5eab0d8d5aad

[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 
#successionplanning #workfromhome #governance #leadershipdevelopment

The post Rising Gen Philanthropy & Social Wellbeing appeared first on David Werdiger.

source https://davidwerdiger.com/2022/01/social-wellbeing/

Abraham Lincoln famously said: “Don’t swap horses in the middle of the stream”. Is a global pandemic the best time to change leaders? Or is it better to avoid dramatic changes during uncertain times?

While we’d like to be well prepared, and knowing that succession planning is a process rather than an event, families may find themselves needing to accelerate the process at these times. Unplanned transitions don’t have to inevitably end in disaster, but when they happen, they do rely on a concerted effort by other family members and stakeholders.

The current business conditions necessitates that family businesses take stock, review and stress-test existing structures. While it is never easy to have discussions around death and succession, it is essential to avoid conflict in the unfortunate event of a loss within a family no matter what the external situation. The lockdown has been a catalyst to prompt families to reflect on succession planning in a wider sense.

A true succession plan is about fostering open communications and getting your family on the same page about its values and goals of both the incumbent and rising generation. A good succession plan leaves a positive legacy and unites the family around common goals and values.

Consider This: Has the pandemic brought forward discussions about succession in your family? Has it uncovered existing stresses in the succession process (or lack of)? Have you set realistic goals about the timeframe for an effective succession?

Original articles: https://hbr.org/2020/04/should-a-crisis-change-your-ceo-succession-plan, https://www.finews.asia/services/advertorials/31663-butterfield-singapore-brian-balleine-covid-19-corona-wealth-planning-succession-family-study, https://hbr.org/2020/05/steer-your-family-businesses-through-an-unplanned-transition, https://www.thenational.ae/business/money/why-now-is-the-time-for-gcc-family-businesses-to-review-succession-planning-1.1027184, https://www.bloombergquint.com/business/world-s-wealthy-are-spending-the-pandemic-weighing-succession, https://www.kiplinger.com/personal-finance/how-to-save-money/family-savings/601068/wealthy-families-need-more-than-a, https://cnaluxury.channelnewsasia.com/experiences/succession-estate-planning-asia-wealthy-families-12929668

[reprinted with permission] full article repost

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 
#successionplanning #workfromhome #governance #leadershipdevelopment

The post Pandemic Affect on Succession Planning appeared first on David Werdiger.

source https://davidwerdiger.com/2022/01/pandemic-succession-planning-2/

A family office is usually structured around the individual needs and preferences of the family involved, and an increase in private wealth is fostering the creation of more and more single family offices (SFOs).

The space is shifting rapidly, and with it comes the changing face of the family office and new definitions of what this means. One pervasive mistake is not developing a deep understanding of the goals, objectives and agendas of the wealthy family. Some multi family offices (MFOs) and even SFOs are using a cookie-cutter approach, which works against the whole idea of a family office.

Rather, family office purpose, mission and vision statements should be crafted according to the family’s service needs. These can act as the foundation for strategic decision making, and link to measurable results.

Virtual FOs are rapidly proving to be a superior alternative to traditional MFOs as they offer a greater level of flexibility. In addition, private MFOs are forming, which enable groups of families to pool their resources and leverage co-investment opportunities.

Consider This: Have you considered whether/how a family office could be beneficial to your family? If you already have one, how do you review its performance and whether it is meeting the needs of the family? How often do you review the arrangement, with consideration of how the family’s needs evolve over time?

Original articles: 

https://www.forbes.com/sites/francoisbotha/2020/01/28/could-now-be-the-right-time-for-the-virtual-family-office-how-banks-can-support/#7ee89aa65438, https://www.fa-mag.com/news/family-office-2020-going-strong-53779.html, https://www.forbes.com/sites/francoisbotha/2020/02/12/emerging-forms-of-the-family-office/#1b28b6ba2fc4, https://www.spearswms.com/rise-of-the-virtual-family-office/, https://www.fa-mag.com/news/russ-prince–a-critical-mistake-to-avoid-when-setting-up-a-single-family-office-54630.html, https://www.bmmagazine.co.uk/business/bobby-gill-on-family-offices-how-to-protect-wealth-for-successive-generations/, https://www.forbes.com/sites/francoisbotha/2020/03/09/considering-a-family-office-how-to-choose-a-fitting-form/#4ca91a5215a5, https://www.forbes.com/sites/francoisbotha/2020/07/03/6-best-practices-for-single-family-offices/#65d94e26336f

[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 
#successionplanning #workfromhome #governance #leadershipdevelopment

The post The Virtual Family Office appeared first on David Werdiger.

source https://davidwerdiger.com/2022/01/the-virtual-family-office/

Q: How do we tell the kids about our family wealth?

A: First and possibly most important point: they already know. By the lifestyle you lead and the people you mix with, your children have already made assumptions about the family wealth. They will also have garnished information on this topic from friends and from public sources. That means in terms of controlling the conversation, you are already well behind, so be aware of what you can and can’t control when it comes to talking about wealth. That also means it’s never too early to be aware of the messages you are sending to kids – both implicit and explicit.

The way to approach talking to kids is to lay a strong foundation. Wealth, in and of itself, is not a foundation. It’s not a goal; it’s the means to a goal. The foundation is around the values and beliefs about wealth: what does it mean to be wealthy? what can money buy and what can’t it buy? what responsibilities come with wealth? what are the family values that transcend wealth?

These are deep and difficult questions. Before attempting to talk about them with kids, ensure you have some answers to them for yourself. That can be a process in and of itself. It might be helpful to have some of these discussions facilitated by an external advisor to ensure that you are well prepared, and that they stay on track.

When to actually sit down and talk about it? Milestones are useful: when kids complete school, get married, or themselves have kids. Always be prepared to answer the question “why are we talking about this now?”

Consider This: In what ways does your family talk (or not talk) about wealth? How did you find out about your family’s wealth (I found out when I was teased in school)? With that in mind, how would you like your kids to find out?

Original articles: https://www.wealthprofessional.ca/news/opinion/top-concerns-of-family-office-clients-wealth-disclosure-to-children/362291, https://economictimes.indiatimes.com/wealth/plan/how-to-involve-the-full-family-in-money-decisions-10-things-you-should-do/articleshow/87390847.cms, https://www.globalbankingandfinance.com/its-time-to-talk-intergenerational-wealth-planning/, https://www.barrons.com/articles/how-to-talk-to-your-adult-children-about-your-finances-and-why-its-important-51631912873, https://www.forbes.com/sites/dennisjaffe/2019/05/29/what-do-we-tell-the-children-intergenerational-talks-about-the-family-business-and-wealth/#2ee4136f78e0

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 
#successionplanning #workfromhome #governance #leadershipdevelopment

The post Q&A: Can we talk? appeared first on David Werdiger.

source https://davidwerdiger.com/2022/01/can-we-talk/

As we enter the third year of this pandemic, it’s worth reflecting on the theme of resilience.

By retaining their long-term view, family businesses have been able to not just weather the storm but also grow and thrive. Their resilience comes from other factors as well: the entrepreneurial spirit of innovating in times of crisis, and the emotional and social bonds that exist both within the family and within the wider family business group and its stakeholders.

These strengths of family enterprises are built on a foundation of shared values and good governance. As it becomes clear that we are not yet ‘over’ COVID, it’s important for families to remain vigilant and keep these foundations strong.

While they differ significantly in terms of scale and scope, it’s interesting to contrast the response of family enterprises with that of countries. For every new COVID variant, existing policies are quickly overturned and new policy is developed on the fly. Many countries have also seen an increase in social unrest and polarisation in response to government decisions. In the absence of strong shared national vision, this is inevitable in times of such stress.

Consider This: Has your family formally reflected on the impacts of COVID? In what ways has COVID shown up resilience (or lack of) within your family?

Further reading: https://www.vaughantoday.ca/a-report-reveals-that-family-businesses-have-weathered-the-epidemic-better/, http://www.campdenfb.com/article/family-business-valuable-model-resilience-extraordinary-times, https://www.worth.com/family-owned-businesses-thrive-crisis-covid-deloitte-private/, https://www.scotsman.com/business/how-family-businesses-can-deal-effect-coronavirus-2896231, https://www.forbes.com/sites/robertglazer/2020/04/01/covid-19-will-permanently-change-the-way-every-generation-lives-heres-how/#1844e046493b

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 
#successionplanning #workfromhome #governance #leadershipdevelopment

The post COVID & Resilience appeared first on David Werdiger.

source https://davidwerdiger.com/2022/01/covid-resilience/

Financial advisors are an ‘old’ bunch – with an average age in their mid-50s and a big bulge of advisors now in their 60s and 70s. If that didn’t already pose a risk to their clients, the COVID-induced recession means that many of them will leave sooner than expected – either by choice or otherwise – and may choose to retire completely in the current economic environment.

Merrill Lynch, perhaps in response to both issues, is seeking to shift the age balance of its advisor ranks. Certainly larger wealth advisory firms are in a better position to develop succession strategies for their advisors than smaller firms and sole practitioners. But that doesn’t mean they are doing so, or that they are doing so well.

Some 37% of financial advisors in the US are expected to leave this decade, and they represent about 39% of wealth managed by US advisors servicing the retail market.

For families, this is a mix of key person and supply chain risk, and needs to be on the agenda.

Consider This: What are the key advisor relationships for your family? What is the plan if one of them leaves, retires, or falls ill with COVID? Has your family considered these risks for all categories of advisors?

Original articles: https://www.investmentnews.com/merrill-lynch-next-generation-advisers-succession-planning-193904, https://www.wealthprofessional.ca/news/industry-news/coronavirus-crisis-puts-advisor-succession-planning-in-focus/329694, https://www.cnbc.com/2019/10/29/financial-advisors-need-succession-plan-to-benefit-clients-and-firm.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 
#successionplanning #workfromhome #governance #leadershipdevelopment

The post Advisor Succession to Family Office appeared first on David Werdiger.

source https://davidwerdiger.com/2022/01/family-advisor/

During a crisis, having a family business can be a double-edged sword. On one hand, there are often family elders with experience in overcoming previous recessions, support from the family unit, and the fact that family businesses tend to be more risk averse and therefore in a better position to weather the storm.

But some of those very attributes can also manifest as weaknesses. For example, family businesses have a concern for a wide range of stakeholders, including employees and customers, rather than a single-minded focus on shareholder value. Also, family tensions brought to the surface under pressure can often expose underlying stress fractures and exacerbate conflict in relationships, which may lead to more divisiveness.

How to capitalise on the strengths and avoid the weaknesses?

• Be in regular communication with all stakeholders and be extremely open – this builds trust
• Draw on family leadership, shared values, and governance
• Be open to learning from others, e.g. military approaches to VUCA (volatile, uncertain, complex and ambiguous) environments

Consider This: How has your family business responded to the COVID crisis? Has it shown resilience or weakness (or some of both)? Have you considered what family members can be doing to help (aside from specific operational matters)?

Original articles: https://www.forbes.com/sites/francoisbotha/2020/03/31/family-business-challenges-the-3-issues-families-cant-ignore/#664087f23cf4, https://insight.kellogg.northwestern.edu/article/family-business-coronavirus-crisis, https://hbr.org/2020/05/what-family-businesses-can-learn-from-the-military, https://hbr.org/2020/05/4-tensions-in-family-businesses-and-how-to-work-through-them

Actionable Generational Wealth Succession 

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 
#successionplanning #workfromhome #governance #leadershipdevelopment

The post Family business response to crisis appeared first on David Werdiger.

source https://davidwerdiger.com/2022/01/family-business-covid-2/

According to a Merrill Edge report, one third of “mass affluent” (mid-range wealth) Americans say their financial stability depends on their inheritance. But interestingly, this is more a result of prevailing economic conditions (markets, unemployment, weak wage growth) than the generation being brought up with a silver spoon sense of entitlement.

Economic conditions for creation of wealth have been challenging for the rising generation. There are even signals of a decline in social mobility. The fact that they are looking for family assistance both for key life and investment decisions is an interesting social trend, perhaps reflecting a more sombre and realistic approach, and a decline in appetite for risk.

Consider This: As a “rich parent”, how does this make you feel? While this view has come through in research, is it something that has been discussed in your family? Is it a topic that can easily be discussed?
Is it a good thing or a bad thing? Or is it simply a product of the economic environment, in which case should families acknowledge it and make changes to the way they intend to transition wealth?

Original articles: https://www.businessinsider.in/its-official-rich-people-are-relying-on-their-rich-parents/articleshow/64497260.cms, https://www.merrilledge.com/report/infographic

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
#successionplanning #workfromhome #governance #leadershipdevelopment

The post Rising Gen depend on inheritance appeared first on David Werdiger.

source https://davidwerdiger.com/2022/01/rising-gen-inheritance/