Families who use family offices do so for many reasons, among them: to perpetuate family wealth for generations, to leave a legacy, to keep family together, to pursue philanthropy and to take advantage of pooled family capital for different opportunities.

These families are able to access tremendous resources, either internally from family members or externally because they can hire the best managers.

But the experts they nurture or hire often come from financial and legal backgrounds. They aren’t psychologists. That means they’re novices at something very important: understanding family dynamics.

I define the latter as repetitive and often predictable patterns of interaction among family members—and their interactions with those outside.

Such patterns are affected by family history and current events, communication styles, behavioral patterns and biological inheritance. For a variety of reasons, the family office is a perfect stage for these things to be acted out.

While some families may not experience any of these dynamics, most will recognize at least some of the patterns affecting their operations and decision making.

Multigenerational Transmission Process
In most families, communication patterns and emotional styles tend to be passed from one generation to the next—what psychiatrist Murray Bowen calls a “multigenerational transmission process.” For example, families will have certain degrees of comfort or discomfort with open communication and conflict resolution among their members, and these dynamics are handed down. Those working in family offices will likely encounter “family baggage,” that repeats or amplifies these idiosyncrasies.

Destructive Entitlement
One of the most powerful influences passed on by family members is a sense of injustice. Family members tend to resist agreements or consensus with those guilty of perceived wrongs (For example: “Your father fired my father. Why should I respect or appreciate your views of our family enterprise?”) Whether the targets of anger are directly responsible for the original betrayal is irrelevant. So long as they are related to guilty parties, they are held responsible, and legacies of unfair treatment are passed on to new generations.

The feelings of injustice may be expressed by tension, poor communication, disengagement and lack of effective collaboration in the family office.

Imposed Mutuality
Families are often defined or affected by shared experiences. Some are blended following divorces. Some have confronted alcoholism. Some have recently emigrated.

And some participants in multigenerational family offices have been put together without a choice in the matter. I call this “imposed mutuality,” and it can create tension (or intensify it). Family members in this situation might push back and spend time thinking about how to remove whatever constraints they believe are being imposed on them. For example, when they have no choice about how their assets will be invested, they may react with anger or resistance.

Imposed mutuality can have a significant impact on the success of transitions in the family office. Next generation family members often find themselves inheritors of a dream as well as assets—the dream of keeping a business in the family, for instance, or of shared philanthropy. But it was left to them whether they wanted it or not. And they might well ask: “Do I really want to be tied to my siblings or cousins for the next 50 years?”

Not only must they adopt the dream, too, but they must then adapt it to current family circumstances. This takes lots of communication and interaction.

A Closed System
Some families with their own offices are very private about their inner workings, relationships and dynamics. When a family is a closed system, its members are insulated from potentially corrective information or experiences that might be had through exposure to or discussion with external players. Accordingly, when their dynamics or communication styles affect family collaboration or operations in an office, change or resolution will be all the more difficult

And finally, because great wealth affords people more choices and opportunities, it has a tendency to intensify all these other emotions.

Managing Family Dynamics
Families who best manage family dynamics in the family office do so by developing processes that allow them to be self-aware, self-correcting and continuously evolving.

While each family is unique and would benefit from a strategy tailored to its specific situation, there are a number of elements to consider in every family’s approach.

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