Family dynamics and the discomfort of raising difficult issues can get in the way of talking about family finance and wealth transfer. To ensure meaningful conversations about money don’t get derailed, consider these ideas.
Address the elephant in the room
It can be challenging to make meaningful progress if underlying issues are avoided. Ease into the process — think of it as going on a hike, not climbing Mt. Everest, on your first attempt.
Consider this example: We currently work with the second and third generation (G2 and G3, respectively) of a successful family operating a business in the Midwest. The G3 sons would like to be more engaged in the business but feel frustrated — they believe that their father is struggling to give them more responsibility and let go of some control. The father wants to involve his sons more directly but feels like they’re not stepping up as much as he would like.
We advise the family on its overall wealth management needs and have been recently engaged to support the family business succession process. But before any real progress could be made, both the father and sons had to address how they were feeling and why. We helped facilitate this dialogue and, while the family knew it wouldn’t be easy, everyone agreed it was essential.
We started with a discussion around the family’s intention to remain a family business. The patriarch shared his professional journey growing up in the business and his desire for his sons to have the same experience. Our wealth transfer team stepped in to create an open and accepting environment where an honest conversation about the son’s perspectives could be shared in a safe space. While the sons shared a similar desire to maintain the family business, they confessed a fear of failure trying to follow in the father’s and grandfather’s footsteps. That was why they hadn’t engaged in the business to date as their father hoped. Each son acknowledged the need to be more committed and invested in the business, rather than simply being shareholders. They asked specifically what they needed to do and challenged their father to provide a clear set of expectations and greater transparency into the business. It’s still early, but they’re making progress.
Allow for silence
Too often, we want to fill silence with words — especially when they’re uncomfortable. This can be particularly challenging if you’re a talker, if you’re a parent, if you brought the conversation up, or if you have more knowledge than others on the subject being discussed. Still, avoid the inclination to keep talking. Silence creates space and time during discussions for your family to process what you’ve said. Being quiet and listening are also important forms of participation in a conversation. Take it slow, and remember to pause when the moment calls for it.
Being quiet and listening are also important forms of participation in a conversation.
Acknowledge your differences
The collective attributes and talents of a family can only truly be honored when differences are acknowledged and appreciated. We routinely call on one of Plante Moran’s consulting psychologists from the Talent and Organizational Development team when working with families on their succession plans, for both operating and nonoperating businesses (family partnerships and LLCs). We do this to create greater understanding of each family member’s individual preferences, values, and approach to managing stress. You may be thinking: “Don’t family members already know this about one other? After all, they’re family.” The short answer is, no, often not. We tend to forget that life experiences have a way of shaping our views and opinions. Many of these critical life experiences happen when children are no longer living under the roof of their parents or caregivers.
The collective attributes and talents of a family can only truly be honored when differences are acknowledged and appreciated.
The goal of this process is twofold: to identify similar core values and beliefs and to recognize individual strengths and differing viewpoints. The process and the discussions that follow often reveal new information about an individual’s values, approach, and communication style.
Be open to different approaches
This concept is often the most difficult to embrace because it requires moving outside the proverbial comfort zone. This might be as simple as changing the venue, and therefore the vibe, when holding important family discussions.
We work with a family who has historically held their meetings at an attorney’s office. Last year, we changed course and held a meeting at the family beach home. Although this was done partly to accommodate schedules, everyone agreed the outcome was immensely more beneficial. The adult children in G2 were far more engaged and comfortable discussing the parents’ legacy and their involvement with the family foundation in this setting. Since the pandemic, we’ve pivoted to virtual meetings in the late evening, after children have gone to bed. This has created an entirely new level of comfort, since each family is in its own home — often in sweatpants or PJs!
We’re not suggesting this for every family or for every meeting. Some discussions require a more formal atmosphere. But in this instance, the level engagement has skyrocketed.
Reframe what progress looks like
A common misconception is that discussing differences leads to more conflict. When done effectively, however, discussing differences usually leads to greater understanding and respect. That’s why it’s so important for families to keep communicating, even when conversations get uncomfortable and disagreements (inevitably) arise. Stress and angst in family conversations don’t always equate to setbacks or a regression in the relationship. When tensions rise, they’re often a result of suppressing or avoiding certain topics for too long. With an understanding of these dynamics, it becomes easier to continue difficult conversations with a mutual understanding that things may feel worse before they get better.
Discussing differences usually leads to greater understanding and respect.
Difficult discussions don’t always lead to agreement, but they do give participants insight into others’ perspectives and, hopefully, lead to acceptance. It’s all about resiliency and commitment to enhancing family communication and relationships over time.
Successful families understand the value of starting difficult conversations, and they invest the time and resources to nurture strong communication, even when uncomfortable. They focus on long-term goals and objectives, and they stay the course when conversations are challenging. Successful families appreciate the long-term, multigenerational effect of having these discussions, knowing they’re setting a precedent for future generations to continue the practice, which far outweighs any short-term discomfort. At the end of the day, you want to feel confident you’ve prepared members of the next generation to tackle the ups and downs of life, exercising their individual and collective strengths to continue your family legacy — and that starts with communication.
Successful families understand the value of starting difficult conversations, and they invest the time and resources to nurture strong communication, even when uncomfortable.