Building Family Harmony
Most advisors agree that the somewhat evasive world of “family harmony” can be reached when everyone is informed, and expectations are laid out for all involved.
Easier said than done.
“People are hesitant to expose day-to-day finances with family members or over-revealing how much money they actually have,” says Steve Zuschin, executive vice president at LifeYield in Boston.
Zuschin suggests a technique to get the family dialogue rolling. “Try an ice breaker where parents talk about previous generations and the family values they passed onto them. Then start with the basics: Hey, we have a will… we have a trust… Ms. Jones is our financial advisor; she and her team can help you… Here’s is what a POA is all about... Here are the primary charities that our family supports….That’s just a start, but over time, you reduce the anxiety of having a money conversation and hopefully expectations will be in line with reality,” says Zuschin.
Is It Really All About The Money?
Often, younger generation family members say they appreciate the opportunity just to be heard by other family members. “It’s not really about the money, it’s about feeling respected. They recognize that they may not have a vote in all aspects of family financial management, but if at least they have a voice, that goes a long way to building and maintaining family harmony,” says Liersch.
Wells Fargo advisors are trained to get clients beyond the initial family bonding conversations and focus on the “decisioning stage.”
“At this stage, we have built some family harmony and alignment necessary to get everyone to understand who will determine path forward. It’s important to underscore that when it comes to family money matters, fair is not always equal. It’s a tough concept for some family members to process this,” adds Liersch.
But is the concept of fairness ever possible?
Liersch explains, “In our experience, we see that some people put more equity, time and effort into the family than others. That’s life. Family dynamics are highly complicated in most families. When it comes to HNW families, the core psychological challenges are universal and the financial planning principles of accountability and ownership still must be applied to serve the families current financial needs and to help build wealth for the next generations.”
Building Trust
In many families, the patriarch and matriarch spend most of their time and efforts preparing the wealth for the family. “Unfortunately, this approach does not often end well. They need a team to support them,” says Myles J. McHale, Jr., senior vice president of Cannon Financial Institute, a firm that trains advisors in technical knowledge, practice management and client conversational skills.
According to McHale, one tool that helps advisors conduct successful family meetings is the “ETHICAL” framework (see graphic). “This can help advisors conduct a needs analysis to identify the family’s current and future situation, feelings and family dynamics. In addition, this approach helps you demonstrate your commitment to the highest fiduciary standards and build trust with multi-generational client families,” says McHale.
