"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.

Q: What is the typical profile of a family that has a retreat?

A: Whether a family has $3 million, $30 million or $300 million doesn't make any difference. If the family values its $3 million, then it is likely to value sitting down at least once a year and sorting out where they are.

Q: What do you try to do for them?

A: I usually like to see something I call a success definition. If we are successful as a family by March of 2011, what will have happened? What will be different? What were the bogeys or benchmarks that we'll hit? I don't really care about how many zeroes are behind their name.

Q: Since the financial crisis, has there been a change in the tenor of these meetings?

A: The financial crisis was a wake-up call for many people and their financial advisor's phone number and e-mail address is much closer to them than perhaps it was three years ago. This is a great opportunity and one of the reasons I'm doing this interview is for independent financial advisors to offer a new approach to their clients.

Families have now gotten past the period where they stopped opening their investment statements. They're now dealing with the harsh reality of the situation. They are dealing with a lot of new challenges, and they're coming together as a family to figure out where they are and where they're going. That has really driven many retreats right now. "We want to know where we are."

I also have to say that some of the retreats are also driven around, "I'm frustrated by the service levels from my advisors." I know financial advisors that are doing a good job right now, working longer hours, spending more time with their clients, hand holding, answering questions, reassuring people. Many families are planning retreats for the summer now, and this summer there will be an abundance of family retreats. The crisis has brought families together.

It's also led to a decision to prune the stock, which is a very, very sensitive discussion. Over time, the stock over generations gets watered down, percentage-wise, to where one branch or another of the family wants to be bought out. Those are tough, difficult discussions. Another discussion that is now coming up more is selling the family enterprise. So the financial crisis has brought up all of this.

Q: So you think the crisis has affected the way families think about their financial advisors?

A: Absolutely. They are very clear about their trust or mistrust of the family advisor. I hear this every day. "Boy, Jennifer was right on top of it, she kept us informed, we understood the big picture, she took my calls, she got right back to me. The service levels were great." Or, "You know, Joe just wasn't on top of it. He didn't see it coming. His firm with all of their proclamations of competence and global reach and all this other stuff, they were clueless."

Q: Are clients angry at advisors about the poor performance of their investments?

A: Generally, clients do not leave financial advisors for just portfolio performance issues. They are much more likely to leave for service issues. If they feel no one's paying attention to them, they're gone.

Q: Are you seeing more of that?

A: Yes, I've seen more of it. They don't call it firing, they just move on. They just pull their accounts.

Q: What are the most common goals of family retreats?

A: The number one goal of a family retreat is to make a big decision. That may be to sell the family business. It may be to move the business in another direction. It may be to announce new leadership in the company. The number two issue would be education-to get everybody on the same page. By the way, apart from achieving a specific goal, there is an unexpected benefit to conducting family meetings. Down the road, a family is far less likely to end up in litigation because somebody felt they were squeezed out. Having a history of family retreats, a history of communication and a history of open meetings, a history of transparency-all of those things forestall litigation.

The third reason families get together would be for the education of the next generation. A family often wants to have the next generation understand the story behind their wealth: Where did this wealth come from? They also want to make sure that the next generation understands good stewardship. Philanthropy, incidentally, also comes up almost always at family meetings.

Q: Where do you hold a retreat?

A: I've had retreats at ranches in Montana and in a beachfront villa in the Caribbean. One was in a beautiful home in Hawaii.

Q: How do you develop the agenda? And do you show the agenda to the person that's going to pay your fee?

A: The agenda is unique to every retreat family. The family might own three businesses. They might be trying to decide whether to sell one of them, or to invest in another business. They might be trying to decide to buy a business or whether to lay off people or do something with their real estate. They might bring in a real estate advisor, or a CPA. So each retreat agenda really needs to be different. The agenda needs to be driven by collaboration between the advisor or the meeting facilitator and the family.

Q: You give homework to the attendees, to the family, before the session?

A: Yes. I give them materials in advance that I want them to read. I tell them that they'll look silly if they don't read the materials. I also say that I want them to be on time. I'm firm with them about these things. Usually, we start at 8:00 or 8:30 and have some coffee and doughnuts.

Q: Before the retreat, do you interview all of the participants?

A: Yes, almost always. My goal is to interview everybody that's going to be in the room, and I especially want to talk to the financial advisors.

Q: Who's in the room?

A: If the purpose for the retreat is social and familial, then you invite everybody-the grandchildren, the spouses and everybody in the family. If you're operating a family business and having a retreat to discuss the future strategies of ownership, then you might have a smaller number of people. For business discussions, sometimes we don't have anybody under 16 or 18 in the room. On the other hand, if we're trying to get the next generation ready, I've had 12-year-olds in the room.

And I almost always really want the spouses there. I want the spouses there for three reasons. One, because like me, they come from a different family of origin, so they hear things differently. Secondly, spouses are able to translate messages by family members differently so they can say to their husband, "I don't think that was an antagonistic comment that your brother Jake said. I think he was just trying to clarify this." So they have a wonderful way of lowering the tension level. Third, spouses are going to hear all about it anyhow, filtered by their husband or wife when they get home. So they might as well sit there in the first place and be there the first time and hear it firsthand.

Q: What kind of things can go wrong?

A: What you don't want to have, which has happened to me, is for a bomb to go off in the middle of your family retreat, where somebody stands up and creates a situation that is unworkable. I've seen these retreat killers from time to time. That's why I always make sure I interview everybody ahead of time, to know where the issues are.

Q: What have been some retreat killers that you have seen?

A: Hypothetically, "My sibling doesn't work as I do and I don't understand why he or she is paid the same." Another might be, "Dad, you say you want me to run this business, but you'll never retire, so you're never going to turn it over to me." Another might be somebody wants to leave the family business, but they can't really tell their parents that they don't want to inherit their life's work. That's a very sensitive discussion and that can really be a retreat killer. A retreat killer is probably a poor word for describing what I mean.

Q: Actually, it sounds like some very positive things could come out of this.

A: Well, the trouble is that all retreats are time-limited. We know by 4:00 or 5:00 tomorrow afternoon we're all getting on a plane and going back home. So often these things tend to come up toward the latter part of the retreat. People get into a retreat and they kind of see how things are going and they kind of see which way the wind is blowing. Then, in the latter part of the retreat, these issues tend to pop up. I'm not suggesting that you not talk about these issues, but it's the way that families talk about them and the environment in which we do that makes a difference.

Q: Can financial advisors do this?

A: The problem for a financial advisor is that you can't be the family therapist. That confuses your role. As a matter of fact, if you try to play that role, people may resent you later. They don't want their financial advisor to know all of the skeletons in the family closet.
Q: But the financial advisor might argue that he wants to be that person who is the trusted advisor.

A: There's no limit on trust, so everybody can be the trusted advisor. You hope that everybody is trusted. One intriguing observation I've made over the years is that these families either have all great advisors, and every person I work with is a joy to work with-they're smart, committed, caring, have been there a long time, every person that you're working with is terrific, they all have the family goals in mind, the estate plan is linked, everyone from the insurance agent to the CPA to the board members and the financial advisor is on the same page-or they're a collection of the most self-serving, limited, uncaring people you can find. It's unbelievable.

Q: Why? What's causing that?

A: Part of it starts with the client. The client isn't aware he's picked up a bunch of buddies on the golf course or from the local rotary, and he thinks they're all working for him. But you get in there and it's a delicate conversation when you have to tell the business owner, "Your estate plan isn't going to accomplish what you thought it was going to accomplish. For instance, you have way too much insurance." Or, "The documents your lawyer has put together are way out of date, given where your family is right now." Or, "Your financial situation with your financial advisor isn't being communicated properly in concert with your CPA." Or whatever. All of those things, I've seen happen.

Q: So then can the financial advisor be the one leading this retreat?

A: If the purpose of the retreat is to have a discussion of the assets, tax-efficient strategies, investments and future outlook on the economy, then financial advisors can do a terrific job. If they want to start moving into the land of family conflict or unresolved or what I call facilitating difficult discussions, then they're going to be in a challenged position.

Most advisors-and I know hundreds of them-don't want to go there because it's too risky. Why risk the goodwill that you've created on the financial side by stepping into the landmines of the family, the unresolved family issues?

Q: When families get into issues of ownership of the business and roles in the business, are you saying that's just not an area where financial advisors want to go?

A: That's an area where financial advisors may not be comfortable leading the discussion. They certainly should be participants in the financial side of those discussions. But leading that discussion could cost them a client. I've seen it happen many times.
Q: What can go bad?

A: For instance, take a case where the younger generation thinks that Dad and Mom ought to retire and let them run the business. Well, the financial advisor is conflicted immediately. When the father turns to the advisors and says, "What do you think?" what's he going to say? Is he going to risk disagreeing with the father, who is probably paying for the retreat and for his financial advice? Or is he going to risk losing future business from the younger generation? That's the kind of trap you can get stuck in.

Q: How do you deal with those no-win situations?

A: When I take on a case, I tell everybody in the family that I have four rules. One of them is that I'm neutral in this process. I'm not on anybody's side. Every once in a while, a father who is paying my fees will say to me before the retreat, "John, now remember here who's writing the checks." And I'll stop right at that moment and I'll say, "Bill, what did I tell you the first day we met? I'm going to pretend you didn't even say that. I'm neutral in this process. If you want my advice, I'm going to give it to you. But don't ever say that again to me." If someone is going to try to buy themselves a solution, I have no interest in doing that.