How advisors can bring families together and ease conflicts over wealth.

For years, financial advisors to the wealthy have focused-quite successfully-on creating technically complex structures that help families grow, manage and transfer wealth. Now their clients' affluence is breeding problems of its own.

Conflict over control of the family business, sibling resentment over inheritances, branches of the tree that won't speak because of money squabbles-these symptoms of dysfunctional behavior have become commonplace, particularly when a client's plan is a surprise to those affected. Psychologically, high-net-worth individuals struggle with how to prevent the wealth from spoiling heirs' motivation, and hence their development in life. Socially, parents are conditioned to talk about their kids, not with them, and certainly not about money, which stands as perhaps the final taboo topic.

Faced with such dilemmas, wealth advisors are increasingly turning to the family meeting, a communication/educational tool that when managed correctly (take that as a warning), helps moneyed clients define and achieve their vision while staying healthy and whole. These meetings are structured as clan dialogues about wealth: How does the money relate to our lives' purposes? How are we using our money, and what does that say about us?

"It's difficult for families to put their values in perspective and use their money (accordingly). Family meetings are a process for the family to discover what's right for them," says David Lansky, a consultant with a background in clinical psychology who facilitates family meetings. Typical meeting topics include business succession, philanthropy and the estate plan.

Such confabs necessarily bring out issues of fairness and may touch deep-seated emotions. Conflict is likely. "The goal is to teach the family skills for communicating

with each other," says Lansky, founder of Family Business Innovations in Deerfield, Ill.

A process as much as an event, the family meeting never ends. Periodic roundtables tackle wealth issues as they arise, marshaling the intellectual and social capital of all members. As a practical matter, the tete-a-tetes preclude surprises and maximize buy-in of the parents' plan, improving the likelihood that the family unit won't unglue when they pass. Advisors who employ this process-consulting tool believe that family should remain connected and that their values should drive the details of their plans (e,g., when heirs inherit, whether to use incentive trusts). The process also aids in the socialization of younger generations about wealth's responsibility.

Whether planners can, or should, conduct family meetings on their own is debatable. You weren't trained to be Dr. Phil, after all. Sans schooling in counseling methodology-such as how to broach a sensitive topic, or handle a burst into tears (produce a box of tissues kept conveniently at hand for this purpose, nothing said)-odds are that something you say will be ill-timed or misconstrued. "You can mess up a 15-year (client) relationship quickly. I have," says veteran advisor David Diesslin of Fort Worth, Texas. "Good intentions don't necessarily count when it comes to family politics, and you never know, in dealing with family and money, what the real relationship is until you actually walk through the process."

Diesslin and other advisors who hold family meetings often bring in an experienced consulting facilitator, especially for the first few get-togethers. Lansky recommends that financial professionals visualize three categories: cases they can clearly handle alone, those they clearly can't (such as a high-conflict family in crisis), and those in between.

Family meetings may be the latest fashion in advising, but they're not for every house, says John Jeffrey Scroggin, a business and estate-planning attorney in Roswell, Ga. Those prone to fisticuffs or screaming or families whose members despise each other too much to convene are not good candidates. Even when appropriate, clients may be initially cool to the idea, since the meetings can be costly and threatening. To overcome the objection to expense, sometimes you have to ask the client, "How much do you spend on strategic consultants for the business? For family?" explains Andrew Keyt, executive director of the Family Business Center at Chicago's Loyola University.

Logistics

Many large, geographically dispersed clans gather annually at a resort for a weekend of meetings-meetings for the men, the women, in-laws, the third-generation, you name it. There's often a dinner or social event the night before. Such an event isn't necessary; you can meet for as little as two hours, realistically. But you do need a venue offering freedom from interruption. So don't assemble at the business. Experts also advise against convening at the parents' home. "Dad's house creates a situation of imbalance," Keyt says. The tab for the assembly (and sometimes travel) is typically picked up by the family office or business, he says.

If a relation threatens to boycott the meeting, so be it. Don't get held hostage, says Dennis T. Jaffe, a family-business consultant and professor of organizational systems at Saybrook Graduate School in San Francisco. Often these types show up at the last minute, or by the second meeting, if you keep the invitation open.

For family meetings to succeed, it's vital that the advisor-cum-facilitator gain the trust and confidence of everyone. To this end, experienced consultants generally insist on meeting with every relative individually (or speaking by phone, if out-of-town) before convening the entire family tree. According to panelists at a recent conference on family meetings presented by The Capital Trust Company of Delaware, such pre-meetings can reveal potential problem areas; allow family members to suggest items for the agenda (which the advisor will subsequently prepare); allow family to project their visions for success (ask, "How will we know if the family-meeting process is successful?"); and help the advisor transition from representing a few members to the whole family. These one-on-ones also establish the rapport you'll need later to ask someone to quiet down.

Some advisors recommend sub-meetings as a pre-cursor to the full monty. Consider it spoon-feeding. Bringing together a few folks with a common problem moves the client away from thinking that family meetings are big, daunting, expensive ventures, says Elizabeth Mathieu, an attorney with Capital IV Partners, a multi-client family office in New York City. In one case, certain family members had issues with an investment portfolio. "We got them together," Mathieu says, "they dealt with it, and now the family has 10 advocates for the idea of a family meeting, having experienced the benefits of working together."

Prior to the full meeting, the advisor/facilitator must also: determine whether participants need to bring any information to the meeting; distribute a one-page summary of the estate plan to those affected, so they can reflect upon it (for estate-planning meetings); and prepare the agenda. Coaching may be advisable if the initial interviews suggest trouble. Once, when working with a hot-headed father and son prone to tangling, Lansky pulled each aside beforehand. "I said to the son, 'I need you to really focus on listening to your dad. You don't have to agree, but you do need to listen and understand his point of view.' Then I said the same thing to his father."

In the Meeting

The first family meeting is critical. Early success spawns subsequent success, experts report. So incorporate something positive, such as a discussion of family culture, and address small issues to score quick victories.

After distributing the agenda and emphasizing the importance of beginning and ending on time, create rules of order, says Thayer Willis, a Lake Oswego, Ore., psychotherapist who counsels inheritors and author of Navigating the Dark Side of Wealth: A Life Guide for Inheritors (New Concord Press).

The advisor writes, on a white board or flip chart, rules the family suggests. Turn cell phones off. Speak respectfully. No yelling. A family of interrupters may opt for a talking stick, where only the person with the stick may speak. "The goal of the code of conduct is to create an environment (where) people know what's expected," Willis says. E-mail the rules to everyone after the first meeting for possible tweaking at the second.

In the meetings, the advisor's job includes agenda control, parliamentary enforcement, facilitating brainstorming, documenting goings-on, and generally controlling the environment (don't let the overnight cleaning crew erase the board or throw out work papers). You may need to draw out quiet family members-"Jimmy, I haven't heard from you this meeting"-and put the lid on others. "Say, 'Right now it's important for us to listen. Dad, you'll have a chance to speak. Son, what's on your mind right now?'" says Lansky.

A primary task of the advisor/facilitator is to contain emotion when tempers flare. Don't feed the drama. "If you're calm, that will help the family stay calm," Lansky says. And don't ask why someone is so angry at someone else. "'Why' questions are often interpreted as a challenge of someone's motive or competence," Lansky says. Should things go helplessly awry, with people teetering on storming out, offer, "Let's find a way to continue this conversation, whether with me or someone else."

Bonding

Family meetings are useful for helping kin communicate in several areas, starting with an acknowledgement that the family does, in fact, have wealth. When parents don't inform kids about their prospects as inheritors-and many parents don't-the children are hurt when they discover the money, smarting from not being trusted, says John Levy, a wealth and inheritance consultant in Mill Valley, Calif. "Being secretive also communicates that there's something wrong with the money. [Child:] 'Otherwise they would have told me about it.'"

At what age to tell? "Let them set the agenda," Levy advises. "Don't push (the topic). If they have questions, answer them. If the child wants to know numbers-and usually they don't-you may say, 'You're a little too young for that yet. We'll talk the actual numbers when you grow up a little bit.' That way, there's no secret," Levy says.

Another fruitful topic is the parents' estate plan. Progeny being what they are, they may have a sense of entitlement. Therefore, members of the older generation should discuss plans during their lifetimes, particularly if a charitable vehicle is being considered, Levy says. In an estate-planning meeting, "the parents make clear it's their plan, but that they are going to listen to the children's feelings about the inheritance-what they would like, and how they think it should be set up," Levy says.

If parents are contemplating unequal inheritances, "the next generation better understand very clearly why if you want harmony in that generation," says clinical psychologist Lee Hausner, a partner in IFF Advisors LLC, a family enterprise and foundations consulting firm in Irvine, Calif. "The estate plan either helps the family retain a sense of unity or causes enormous divisions and hard, bitter feelings. Before each decision in an estate plan, consider, 'What will this do to the relationships in the family when I'm no longer here? What will be the effect on my heirs?' Clients should use that test," Hausner says.

Hausner views family meetings as an opportunity to instill philanthropy in youngsters. "By eight years old, they can be trained on junior boards and learn that their wealth carries a responsibility to make the world a better place. That's part of the social capital of the family," Hausner says. "It's very empowering to say to a child, 'Go find a cause, find out why they need the money, write a report, and we will give you some money to give to that charity. Then at the end of the year, go find out what they did with the money.' In a functional family, that makes the child feel really responsible and part of the family," Hausner says.

Levy, who is an inheritor himself, says that philanthropic heirs are much happier than those who aren't. "Using money philanthropically can help overcome some of the guilt that is almost inevitable for those who grow up with a lot of money," Levy says.

During the family meeting process, you may conclude that someone could benefit from professional help. Don't blurt "shrink" or "mental health." Jaffe advises saying to the client, "You seem to be struggling with some issues, and perhaps working with a counselor can help you resolve them." Focus on decision-making and moving ahead, rather than personality and emotional problems, Jaffe says. If wealth issues seem the root cause-inheritors routinely suffer shame and/or low self-esteem-seek a practitioner versed in the psychology of wealth, a specialized sub-field of money psychology, says Dennis Pearne, a wealth counselor in Natick, Mass.

After the meeting, the advisor provides a wrap-up report. Create and distribute a summary (meeting minutes) that highlights decisions reached and actions to be taken. Include a schedule of accountability showing responsible parties and deadlines.

In contrast with the quantifiable benefits of hard-core technical advice, the results of soft-side tools such as the family meeting qualify as touchy-feely. Diesslin, the planner in Fort Worth, says, "You (advisor) can get a lot of comfort from knowing that you have set something up with buy-in from the recipients and that everybody was heard. I feel at peace that we've done what needs to be done."

For the family, there's togetherness (hopefully). Clients also accrue other intangibles, deriving specifically from the minutes you write up. "The summary helps the family see the progress that they have made. It's a marker that gives the family a sense of accomplishment, and that's a very big deal," Willis says, especially for inheritors. "Many inheritors are not that good at focusing on accomplishments-achieving them, reflecting on them, and acknowledging them. That's a skill which a lot of inheritors haven't learned, but it's an important skill, and it's something that you can give to the client."