I wrote recently about leading a discussion with a group of YPO (Young Professionals Organisation) family member heads. We spoke of their family dynamics – how some generations try to stay informed and engaged, others seek to maintain control, and how the lack of communication is often at the root of any acrimony that arises.
The issue is emotions. Even the most business savvy executives will delve into the numbers, the investments, profits and taxes. Yet, they will creatively sidestep any conversation about the emotional elements surrounding family businesses and family dynamics.
As we dove deeper into their issues, it was clear – at least to me – that their pent-up feelings about where emotion met money were stymying any deeper discussion of tomorrow. Each member mentioned how they’d worked with their financial managers and family office CFOs on asset allocation, trusts and estate planning, and other strategies to protect the family wealth. Emotions? That was something they didn’t feel they were fully equipped or trained to deal with.
Finances are about more than just planning and strategies; they can have a dire impact on the family’s long-term wealth. The truth is disharmony has a greater likelihood of eroding assets and wealth than financial plans or strategic decisions.
In another blog, we explored how a family saw individual members left with an inheritance demanding to pull their share and invest alone. The eldest of the cousins said this would hurt their chances of growing their investments; after all, the greater the investment pool, the more powerful it is in the market.
They become so emotionally charged about their share that they could not – or refused to – see the possibilities.
What’s worse, if the acrimony escalates, matters end up in court, which only enriches attorneys whilst fighting for some Pyrrhic victory.
I was invited to meet with a Gulf Coast family who said they had been holding “successful” family meetings. They wanted an outsider’s input. As I reviewed the dynamic, I saw issues between how one member who had been bestowed “authority” over the family office failed to read the dynamics at play. He determined the agenda for meetings and asked for no input from other family members, and as I watched this unfold, it was clear there was an uneasy feeling in the room.
As with the YPO meeting, I pointed out the obvious emotions at play. Open and honest communication can help foster stronger relationships, create unity and reduce the risks of discontent and dysfunction. In short, talking is venting and this reduces the festering of unhealthy emotions.
Some have claimed that their families have no issues and nothing needs addressing. Hogwash. There is no kumbaya in the family dynamics. There are always issues that stoke emotions and need addressing. Someone feels shorted, or they’re not being heard, or it’s a case of sibling rivalry, with one doing all the work whilst the others reap the spoils. Maybe one’s mental health related issues are putting the family’s affairs at risk.
In most cases, family members don’t speak up or raise the issue to the patriarch or matriarch for fear of upsetting the dynamic or inviting the elder’s wrath. I’ve been brought in by a family member to review a situation, only to not be hired by another because they couldn’t entertain the notion that there are issues that require attention.
Emotional issues are always at play whether they are out in the open or lurking beneath the surface. To pretend that none exists is to deny reality. Only with open conversations, focused not only on investments or inheritance, but on people’s emotions, held in a non-confrontational setting where family members are encouraged to speak openly and honestly, will emotions come out, the family find unity, and the investments and relationships be truly protected for the future.
If you believe your family or family office is in need of trusted, unbiased counsel regarding that confluence of finances and emotions, and where neutrality will calm frayed nerves, let’s talk. You may protect more than your future. You may save your sanity.