"The wealthy really are different from you and me," F. Scott Fitzgerald reportedly told his friend, Ernest Hemingway.
"Yes," Hemingway is said to have replied. "They have more money."
No one would argue about Hemingway's plainspoken way with words, but his observation in this instance belies the complex lives of the wealthy. Wealth spawns evil and good, achievement and envy, success and failure.
Understanding the complexities of wealth is, of course, critical to running an effective wealth management firm. Having just lived through the worst financial crisis in generations, advisors should be paying attention to these complexities now more than ever.
One way of doing that is by conducting family retreats for your wealthiest clients. The retreats can open communications, help the next generation succeed and cement your relationship with your clients.
To explore the concept of the family retreat, I turned to John Messervey, an organization behavior consultant who counsels family owned businesses. Messervey, who has been advising wealthy families since 1980, is the president and founder of the National Family Business Council, a private consulting group in Lake Forest, Ill. He has counseled about 300 families on entrepreneurship, family communication, governance, succession and wealth continuity issues.
Messervey, 57, says that this is a time of great opportunity for financial advisors, but it's also fraught with risk. He says high-net-worth and ultra-high-net-worth individuals who were shell-shocked by the financial crisis are slowly emerging from their bunkers. They are surveying the damage done to their wealth and, he says, assessing how their advisors performed through the worst crisis to hit the economy in generations. Messervey says financial advisors can lead retreats when a family wants to examine its financial standing, but says advisors may want to bring in independent third-party specialists to facilitate retreats for families dealing with business issues.
Q: How did you start running family retreats? It's not something you go to school for.
A: I was a management consultant in Chicago at a very young age, in my 20s. I was working with a lot of CEOs of privately held companies. One evening in St. Louis, I was having dinner with a client and I thought we were going to be talking strictly business, and he started telling me about all kinds of issues in his family. At that moment, the light went off. I said, "This is a guy who's brilliant at making money but he just is clueless about his family."
During the first five years, there were almost no resources out there to help these people. I was one of the founders of the original Family Firm Institute, and I founded the original Family Business Study Group. So I became a pioneer and met a lot of fascinating people in academia, psychology, strategic planning, governance, and all kinds of issues around family systems.
Q: Have you worked with financial advisors much over the years?
A: All the time. They usually sit right next to me at a retreat. For instance, we just did a retreat in New York for a very wealthy family in New York City. The retreat was for a day and a half and the financial advisors came in all day Saturday. They did a very good job explaining to the parents and the next generation, of which there were five children and their spouses, how the economic challenges had affected their portfolio, why they did what they did, and what they saw ahead.