When seeking to deal with conflict in family business, it is essential to understand the impact of the family dynamic on a business. Conflict in family business happens differently, therefore must be resolved differently.

Disputes within a family don’t escalate suddenly. They are often built on years of relationship sentiment that is latent or suppressed. The triggers for those conflicts can be the smallest thing, because they are just the straw that breaks the camel’s back. The worst thing to do with family conflict is to suppress it, because it will only get worse with the passage of time.

These conflicts have a factual or financial component, as well as an emotional component, so both those aspects must be considered when seeking to resolve. Often, the emotional component is what is at the heart of the conflict.

A family is not a meritocracy. Family decisions have a very different basis than business decisions. When those two decision processes lead to different outcomes, conflict is inevitable.

Having independent voices – around the board table, or generally advising the family – can be very helpful to unpack complex, multi-layered issues. They can also assist with the establishment of more formal (but not necessarily too formal) governance and dispute resolution processes.

Consider This: Can you see latent conflict in your family that is a ticking time bomb? How does your family usually deal with such things?

Original articles: https://www.homecaremag.com/july-2019/conflict-family-owned-business, https://smallbiztrends.com/2019/08/firing-a-family-member.html, https://business.inquirer.net/277074/fixing-problematic-family-businesses, http://www.sbnonline.com/article/resolve-conflict-among-business-owners/, https://www.hindustantimes.com/columns/the-art-of-dealing-with-conflict-in-family-businesses/story-Kcte71AupdLgBIOMZiHtCO.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

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As a family enterprise matures, and often in the context of succession planning (or ageing incumbents), the decision to appoint a non-family CEO comes to the fore. Having made the decision to consider one, families ask the usual question: what do we want in a (non-family) CEO?

Perhaps they should turn it around and ask themselves: what non-family member would want to be our CEO and why? Putting themselves in the shoes of a prospective CEO makes it easier to reduce the risk in the hire and avoid setting the candidate up for failure.

For the prospective CEO, well-defined authority and autonomy is essential, as is the comfort that the role is not interim while the family works out the ‘real’ next CEO. The boundaries of the role are also essential. A family cannot expect an external CEO to also be burdened with family issues. That could be a huge distraction from their main role.

That means (a) the family governance must be in order, and (b) the family may also need the assistance of externals who have a focus on the non-business aspects of family.

Consider This: Is your family considering a non-family CEO? Do you have a clear delegation of authority as part of the position description? Have you considered how long the CEO might stay on the job and why?

Further reading: 

https://www.forbes.com/sites/forbesbusinesscouncil/2022/02/16/family-businesses-10-tips-for-hiring-your-first-nonfamily-ceo/?sh=7355d7737c38, http://www.campdenfb.com/article/rising-above-how-succeed-non-family-chief-executive, https://www.forbes.com/sites/dennisjaffe/2019/01/09/leading-a-family-business-when-its-not-your-family-opportunity-or-potential-disaster/#2aab184a1b37, https://insight.kellogg.northwestern.edu/article/family-business-decision-making

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

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The Greek philosopher Plutarch asked: “People, where are you going? Doing everything to gain wealth, but not caring about your children, who will inherit it?”

If the rising generation is supposed to take the responsibility of managing the family wealth, there should be enough time for them to learn and prepare. To avoid raising a bunch of “trust-fund kids”, the family needs to define clearly what they expect and invest time and resources to help ensure that outcome.

This is a double-edged sword: if communicated too early this may set too much expectation. Common thinking is that age 25 to 30 years is about the right age bracket for rising gens to learn about family wealth, and receive education and training about how to effectively manage and grow it.

Rising gen family members should be able to:

* Develop a clear vision of themselves and their personal goals, as well as the skills to successfully communicate them

* Spend the time to understand the family and business’s legacy and values

* Form a healthy and individuated identity alongside the family identity and long-term family relationships

Non-traditional educational resources are as necessary as they are helpful and worth the commitment they require.

There are excellent programs around that help young inheritors find purpose, meaning and joy as they navigate the complexities and opportunities of wealth. The goal is for them to gain a positive and empowered view of their role in relation to the family wealth. Rather than seeing themselves as heirs and consumers, they can become stewards and active partners.

Consider This: Does your family have/use any programs (formal or informal) for educating the rising generation? Can you answer the question “are we rich”? Have you had family discussions (formal or informal) about the what wealth means to different family members?

Original articles: https://www.dailyadvent.com/news/f9f84f5b7a4e8bef93a144d6864e89ff-Our-Childrens-Heritage-Power-Health-or-Family-Education, https://entrepreneurship.babson.edu/5-things-joining-family-business/, https://www.businessdailyafrica.com/lifestyle/pfinance/Three-pillars-that-hold-family-wealth/4258410-5623128-12kv2o5/index.html, http://www.campdenfb.com/article/when-should-next-gens-learn-about-family-wealth-and-responsibility, https://www.forbes.com/sites/dennisjaffe/2020/04/15/how-wealthy-families-develop-new-family-leaders-a-program-that-empowers-next-generation-stewards/#2baf14726095, https://www.thenational.ae/business/money/how-wealthy-parents-can-teach-their-children-about-money-1.972725

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

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Advisors don’t spend enough time thinking about their own succession and exit planning. Like most people, many are too involved in the day-to-day work. But like family businesses, exit planning for advisors is not just a financial transaction, but is also the chance to leave a legacy. 

The wealth management industry is ‘old’ – the average age of financial advisers today is about 55, with 20% of them 65 or older. Why? Because most of them have been servicing the incumbent generation of wealth holders. A similar profile would apply to accountants and lawyers servicing this group.

Research shows a mismatch between the ‘opportunity’ advisors see in the incoming intergenerational wealth transfer and tangible steps taken to address it. The wealth transfer poses a risk both for families and advisors., and both groups need to be aware of it and plan accordingly.

But who advises the advisors on managing this? I have been following this niche issue for a number of years, and will be launching a series of products including educational, knowledge base/community, and specialist consulting to advisors and their firms.

Consider This: Families: have you had an open discussion with your advisors about their ‘parallel’ transition? Rising gen family members: are you comfortable with your parents’ advisors becoming yours? Advisors: are you aware of the risks and opportunities to your business with the generational wealth transition? Have you formally assessed this?

Original articles: https://www.wealthprofessional.ca/news/industry-news/helping-advisors-pave-the-path-for-succession/331963, 

https://www.forbes.com/sites/forbesfinancecouncil/2020/07/27/the-psychology-of-a-retiring-advisor/?sh=53daca6f57a6,

https://www.kiplinger.com/retirement/601878/your-financial-adviser-wants-to-retire-too,

https://www.napa-net.org/news-info/daily-news/what-are-biggest-practice-issues-advisors,

https://www.ftadviser.com/your-industry/2020/11/19/advisers-slow-to-address-wealth-transfer-opportunity/,

https://www.journalofaccountancy.com/news/2020/dec/succession-issues-surge-at-accounting-firms.html

[reposted 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

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While the family business may be delivering good returns, how much is it actually worth? Often, family members are disappointed that the market value does not reflect a large enough multiple, because they are unable to look at the business as an outsider (and potential buyer) would.

The first article has some classic ‘value drivers’ expressed in terms of growth and risk reduction. What I think this is missing from this model is the most important question a family business should ask: what is the business worth with family members vs what it is worth without them? If your business is overly dependent on family talent, then it lacks intrinsic value that can be realised in the market.

On that note, the second article discusses the process of bringing in outsiders into the family business. Whether in management or on the board (or advisory board), outsiders can add significant value because of their perspective, and also their ability to mediate conflict and help ensure all family members voices are heard. In order to be effective, the family must be prepared to listen and learn.

Consider This: Have you considered the value of your family business without family members? Are the business accounts run at arms length so they can reflect the true value of the business? Are external advisers viewed with disdain or for the value their experience and diversity can bring?

Original articles: https://www.bakertilly.com/insights/thinking-about-selling-how-to-grow-the-value-of-a-family-owned-business/, https://www.forbes.com/sites/nextavenue/2019/01/29/hiring-an-outside-expert-for-your-family-business/#7b2749bc61ed

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

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[repost; still relevant today] The pandemic is not over, but after another year, we know a lot more, and there are reasons for hope. There are feelings of ambiguous loss, of knowing we can’t go back (and perhaps not wanting to), but missing who we were and what we had “before”.

As 2020 draws to a close, we may be catching up with family, in some cases after being separated for a long time. It is a time to celebrate being able to reconnect, but also to recap all the *(&^$ we’ve been through during the year.

Grief is a process, and in order to come out the other side of it, it is important to actually grieve. We can do this both individually, and as families. Rather than have COVID talk dominate our family gatherings, it might be helpful to formally acknowledge what we have lost during this year. At a family gathering, you might go around the table and have each person briefly review the impact of COVID during the year on them, and on the family at large. Once that it done, you could agree as a group to formally close the book on 2020, and take a fresh positivity into the coming new year.

Consider This: Has your grief over COVID been continuous throughout the year? Has every meeting started with a mandatory rant about COVID? Have you thought about both the positives and the negatives? Have you thought about how life might look for you and your family post-COVID?

Original article: https://rojospinks.medium.com/2020-will-never-end-unless-you-grieve-it-71910e183c3c

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

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A successful wealth transition means the family stays intact and they maintain control of the assets. Ideally, you’d like both. Some families can only achieve one, and some end up with neither.

People often setup their estate plan so that it will avoid tax and preserve wealth, but they’re really not paying attention to the impact of their plan on the next generation. The biggest risk to their assets is not the market or the business or even the competence of the people they have supporting them. It’s actually the people sitting around the dinner table. If they can’t function as a family, then it may end up losing both the family relationships and the family wealth.

Give with a warm heart or a cold hand? It’s a parent’s prerogative on how they plan to spend and gift their wealth. However, with people living longer and a lack of planning around proper wealth transfer, many people are receiving their inheritance at the wrong time in their life. One benefit to beginning the gifting process early is being alive to see how your children benefit. You can watch and support/advise (you may want to ‘advise’, but your children may want and need your ‘support’) them on taking risks, making key purchases and enriching their lives 

Poor communication is the cause of most failed succession plans. Despite death being one of the few certainties in life, it’s amazing how difficult some people find it to talk about it. Being transparent and open about money with your family and the responsibilities it conveys can be a valuable education piece for your children.

Families don’t just inherit wealth, they inherit the same patterns. It’s also important to be aware of the patterns (positive and negative), and whether they are helping or hindering family members.

Consider This: Is your wealth transition plan ‘just’ an estate plan? What is more important (if you could only have one): being a family or a group of co-owners? How much do you ‘invest’ (with a long term outlook) in each of those?

Original articles: https://www.fool.com/investing/2020/08/21/how-you-can-ensure-next-gen-is-ready-for-wealth-tr/, https://www.wealthprofessional.ca/news/industry-news/what-do-the-wealthy-worry-about/333641, https://www.bloombergquint.com/gadfly/parents-shouldn-t-wait-to-pass-down-wealth-to-children, https://cyprus-mail.com/2020/10/04/perils-of-wealth-transfer-to-children/, https://www.forbes.com/sites/forbesfinancecouncil/2020/10/30/dont-overlook-these-two-pieces-of-your-wealth-transfer-strategy/?sh=4d49333c397f, https://www.moneymarketing.co.uk/opinion/we-must-get-comfortable-talking-about-death/, https://www.financialexpress.com/money/succession-planning-for-family-business-patriarchs-must-transform-from-leaders-to-mentors/2114781/

[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 
#nextgensuccession #intergenerationalwealth #governance #leadershipdevelopment

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Different places around the world continue to deal with the challenges of COVID in different ways. Whether they are experiencing a second wave, or varying degrees of opening up, many of the challenges and opportunities are still present.

The issues that have arisen through the pandemic are primal, and place the fragility of life in sharp relief. Our instinctive responses also also primal: fight/flight/freeze, and we can remain locked in such states for a prolonged period.

One way to help move forward is for business owners to share their dilemmas with other business owners in similar situations. To do so (and obtain genuine benefit) requires a sense of communal trust and being prepared to share vulnerability (consider that most business owners will be experiencing similar to you).

Families in business together can move into action more quickly than most corporate entities because they’re more flexible, aren’t focused on the next quarter’s results, and understand the values that have made them successful over generations.

Leaders of family businesses that are effectively managing the crisis are prioritizing governance as an ‘essential service’ – adapting oversight of the enterprise under conditions of extreme uncertainty to ensure that family owners, board members, and executives remain aligned.

It is not surprising that many multigenerational family businesses are experiencing the pandemic differently from non-family businesses. Surprisingly few had deeper concerns about their survival and well-being as a family business. This is because multigenerational family businesses tend to define success in ways that go beyond short-term profits

In addition, the pandemic is accentuating the need for UHNW families to have a holistic, fully-integrated family office solution in place. This becomes even more critical when a family owns more complex assets and as the value and complexity of the balance sheet grows 

Prolonged self-isolation is also leading families to fast track their succession and estate planning.

Consider This: After several months of COVID, has your family done a review of your response, and your learnings? How have things changed/adapted? Where have you fallen short? What opportunities still remain?

Original articles: http://www.campdenfb.com/article/coronavirus-effect-mental-health-family-business-millennials-and-succession, https://www.forbes.com/sites/dennisjaffe/2020/03/24/how-family-businesses-can-respond-to-the-pandemic–collaboration-openness-and-sharing-the-burden/#27d3c8ed4e34, https://thriveglobal.com/stories/pandemic-creates-spectrum-of-opportunities-for-enterprising-families/, https://hbr.org/2020/05/what-family-businesses-need-to-adapt-to-a-crisis, https://nation.com.pk/24-Jun-2020/family-firms-and-covid-19, https://www.forbes.com/sites/nextavenue/2020/06/28/5-ways-family-businesses-can-adapt-to-covid-19/, https://hbr.org/2020/07/when-to-return-to-leading-your-family-business-during-a-crisis, https://insight.kellogg.northwestern.edu/article/family-businesses-experiencing-covid-19-crisis, http://www.campdenfb.com/article/why-succession-planning-pandemic-once-generation-opportunity-transfer-wealth

[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 
#nextgensuccession #intergenerationalwealth #governance #leadershipdevelopment

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