Wealthy families have tremendous potential to veer off course, resulting in diminishing the family fortune and severe intra-family conflicts. Many ultra-wealthy families are taking action to mitigate the possibility of family members distancing themselves and lessening the family’s financial position. One approach that has shown to be quite effective is family meetings.
Among wealthy multi-generational families, family meetings can help avoid the thorny problems that arise from inheritors receiving substantial monies without the proper preparation to manage the assets. While prevalent among the super-rich with their single-family offices, family meetings are becoming much more normative, even for families with considerably less wealth.
Productive solid family relationships are needed if the goal is to keep the family wealth together and effectively manage it across geographies and generations. It is not only liquid assets but also all other forms of wealth, from the family business to hard assets such as artwork.
The underlying objective is to ensure family cohesiveness with superior management of the family’s future across the generations. The intent is for the family wealth to be maintained, if not enhanced, for subsequent generations.
The family meeting provides a venue for multiple generations to discuss business and financial matters. Common topics include:
- Succession plans within the family business
- Promoting financial literacy in future inheritors
- The family investment philosophy
- Family philanthropic activities and how they are financially supported
- New business ventures and how to fund them
Family meetings also are times when many wealthy multi-generational families commemorate family milestones. They usually discuss the values and mission of the family. Governance structures are often addressed and refined. In many cases, the family meeting provides an excellent setting to delineate the steps that are going to be taken to prepare the next generation for family leadership roles. All in all, high-caliber family meetings are designed to create an atmosphere of trust and support. They help instill and strengthen the family value system.
Family meetings range in length and involvement depending on the topics being covered and the number of people involved. Also, major determining factors are the decisions that must be made and their criticality to the family. The more critical the decision, the more likely the family meeting will be extended. This is even more true if several family members are involved and consensus is essential.
It is important to note that family cohesiveness is not the same as family unity and harmony. Just about all families have a degree of discord. Family meetings can get the family members on the same page and agree on what they can achieve by cooperating. It is about coming together for a common purpose.
It is helpful to think about a family meeting as a 4-step process instead of a discrete event. The four steps begin with planning the meeting, then having the discussion lead to follow-up actions, and lastly, there is an assessment of outcomes. Let us take a closer look at each step.
Step #1: Planning the Family Meeting: The starting point is specifying the goals for the family meeting. The more specific and refined the goals, the better. An agenda based on the goals is clearly delineated. It describes what is to be discussed and what decisions can be made. Many ultra-wealthy multi-generational families also include fun activities in their family meetings.
Commonly different family members will take the lead in planning different family meetings. What is very important is to get input from family members. Professionals are often brought in to help plan and run the family meeting.
Step #2: Conducting the Family Meeting: The focus of the family meeting should be on the goals and agenda. Therefore, it is usually wise to mitigate day-to-day distractions. This leads to holding the family meeting offsite at a resort or a tucked-away family property.
These families often have an outside professional involved to act as a facilitator. The backgrounds of these professionals are diverse, including wealth managers, attorneys, accountants, and family business consultants.
Step #3: Follow-up Actions: What happens is that a set of to-do activities come out of the family meeting. These actions must be turned into projects with milestones and designating who is accountable for what.
Step #4: Outcomes Assessment: Having started with particular goals and determining what actions need to be taken to achieve those goals, the final step entails determining the degree of success attained. Based on the outcomes assessment, new actions to help reach the stated goals are identified.
All families are unique, translating into family meetings of different wealthy multi-generation families tending to have their own character. Thus, there is no right or wrong way to have a family meeting. This process described here can readily be modified depending on the aims of the wealthy family.
Russ Alan Prince is the executive director of Private Wealth and a strategist for family offices and the ultra-wealthy. He has co-authored 70 books in the field, including Making Smart Decisions: How Ultra-Wealthy Families Get Superior Wealth Planning Results.
