The Human Side of Wealth Transfer

Last year a large insurance and investment company invited me to travel around the country delivering a presentation to financial consultants I call, “The Human Side of Wealth Transfer”.  After one of the seminars an attendee stopped me in the hallway and said, “You know everyone in the room was listening to you talk, but they were all churning inside because many of them are dealing with this subject in their own lives, not just in their clients’ lives.” During the next session I was much more aware of this dynamic.  I’d been talking to prior audiences from the perspective of their consultant’s brain, but really it was more delicate a matter than that since it deals with an issue that is up close and personal to them. Many of these men and women have done very well for themselves, despite the recent downturn.  Several of them spoke to me about situations with their own children.  One man who obviously had spent a lot of time thinking about it said to me that passing money to his only daughter was very difficult because of the life she was living.  From his perspective, and probably rightly so, he knew that whatever he gave his daughter was going to be money badly used, leading to an even unhappier life in her future. As my father used to say about running a business, compensation is the hardest issue.  So it often is in family wealth, bestowing unearned wealth of children or anyone not prepared for it is a heavy burden on both sides of the equation.  Here is what I advocate for...

Three Possibilities of Family Business

In a recent client meeting the business owner said he’d read a good bit of the literature of family owned business but “most of it focuses on the problems and not the possibilities.”  So, let’s focus on the possibility of working with family for a few minutes.  Why have people continued to work with family members even when it doesn’t involve all hands needed to pick cotton or run the blacksmith shop? What are the possibilities of working with family?  How can we learn to look at it in that way, rather than in light of the unhappiness and discomfort it might cause from time to time? First, from the human perspective, when a parent and child work together there is the possibility of growing the relationship.  My father and I could barely carry on a civil conversation with each other when I first went to work with him.  It was very uncomfortable.  But, he knew and I knew that there was something of value buried under the dysfunction that was worth trying to find and salvage.  Over our 15 years together we became dear friends and I got to know him as a man, not just as some childhood image left over to haunt my adult dreams. Second, from the business perspective, when there is trust among the family members who work together, there’s a sense that you’re watching each other’s backs.  Over the years many of my clients and friends who own businesses, including myself, have experienced embezzlement, theft and waste on the part of employees who felt no accountability or oversight.  A strong network of family...

Four Critical Aspects of Family Business

Recently I gave a presentation to a group of family business owners on the subject of “4 Critical Aspects of Family Business.”  The premise of the presentation is that most business owners spend most of their time driving the business and give little attention to other aspects of the business that can provide some nasty surprises if neglected.  Michael Gerber, in his book The E-Myth, discusses this fact and says in addition to working IN the business, leaders must also work ON the business. In my own business over the years we worked on the day-to-day matters of sales, supply, delivery, quality control, finance, personnel, and customer satisfaction.  It’s easy to make these the primary and sometimes only functions to which we pay attention. Over the subsequent years I’ve learned that owners also need to give consideration to 4 other aspects: governance, succession, leadership development and relationship management.  Let’s look briefly at each of these topics so you can see what you’re working ON, in addition to the necessary drivers of your business. GOVERNANCE Entry rules—what are the requirements for family members who want to come into the business? Codes of conduct—how are family members expected to behave and perform if they are accepted?  What are the penalties for those who do not perform? Board of Directors/Advisors—a key determinant of family business success can be one or two people from outside who can help give perspective and counsel. Family Council—is there a regular opportunity for family members, both employed in the business and not, to meet and express themselves?  Those who have no voice or say so are often...