Wealthy families have tremendous potential to veer off course, diminishing family fortune and causing severe intra-family conflicts. Many wealthy families are taking action to mitigate the possibility of family members distancing themselves and lessening the family’s financial position. One approach that has shown to be quite effective is family meetings.
According to Angelo Robles, founder and CEO of Family Office Masterclass, “Among wealthy multi-generational families, family meetings can help avoid the thorny problems that arise from inheritors receiving substantial monies without the proper preparation to manage the assets. While prevalent among the super-rich with their single-family offices, family meetings are becoming more normative, even for families with considerably less wealth.”
Productive, solid family relationships are needed if the goal is to keep the family wealth together and effectively manage it across geographies and generations. It is not only liquid assets but also all other forms of wealth, from the family business to hard assets such as artwork.
The underlying objective is to ensure family cohesiveness with superior management of the family's future across the generations. The intent is for the family wealth to be maintained, if not enhanced, for subsequent generations.
According to Vince Annable, CEO and founder of VFO Advisory Group and co-author of Your High-Performing Virtual Family Office: Maximizing Your Financial and Personal Lives, “Family meetings also are times when many wealthy multi-generational families commemorate family milestones. They usually discuss the values and mission of the family. Governance structures are often addressed and refined. In many cases, the family meeting provides an excellent setting to delineate the steps that are going to be taken to prepare the next generation for family leadership roles. All in all, high-caliber family meetings are designed to create an atmosphere of trust and support. They help instill and strengthen the family value system.”
Family meetings vary in length and involvement depending on the covered topics and the number of people involved. Also, major determining factors are the decisions that must be made and their criticality to the family. The more critical the decision, the more likely the family meeting will be extended. This is even more true if several family members are involved and consensus is essential.
“It's important to note that family cohesiveness is not the same as family unity and harmony,” says Anthony Glomski, principal and founder of AG Asset Advisory Family Office and author of Liquidity and You: A Personal Guide for Tech and Business Entrepreneurs Approaching an Exit, “Just about all families have a degree of discord. Family meetings can get the family members on the same page and agree on what they can achieve by cooperating. It is about coming together for a common purpose.”
It is helpful to think about a family meeting per se as a four-step process instead of a discrete event. The four steps begin with planning the meeting, then having the discussion lead to follow-up actions, and lastly, there is an assessment of outcomes. Let us take a closer look at each step.
Step #1: Planning The Family Meeting: The starting point is specifying the goals for the family meeting. The more specific and refined the goals, the better. An agenda based on goals is delineated. It describes what is to be discussed and what decisions can be made. Many wealthy multi-generational families also include fun activities in their family meetings.
Step #2: Conducting The Family Meeting: The focus of the family meeting should be on the goals and agenda. Therefore, it is usually wise to mitigate day-to-day distractions. This leads to holding the family meeting offsite at a resort or a tucked-away family property.
Step #3: Follow-Up Actions: What happens is that a set of to-do activities come out of the family meeting. These actions must be turned into projects with milestones and designating who is accountable for what.
Step #4: Outcomes Assessment: Having started with goals and determining what actions need to be taken to achieve those goals, the final step entails determining the degree of success attained. Based on the outcomes assessment, new measures to help reach the stated goals are identified.
“All families are unique, translating into family meetings of different wealthy multi-generation families tend to have their own character. Thus, there is no right or wrong way to have a family meeting. This process described here can readily be modified depending on the aims of the wealthy family,” says Robles.
Russ Alan Prince is the executive director of Private Wealth magazine and chief content officer for High-Net-Worth Genius. He is a strategist for family offices and the ultra-wealthy.