If you advise owners of private family businesses, you know that just as death and taxes are inevitable, so too are business transitions. If you’ve studied the demographic data, you also know that private family businesses will transition ownership in unprecedented numbers over the next decade. “On the Brink,” p. 29, demonstrates that three quarters of private family business owners in the United States are 60 years or older, and “Industry Rankings in the United States,” p. 30, shows us that three industries comprise more than 50 percent of all private family business assets in the United States today (banking/investment/finance, real estate and food products). 

Many private family business owners aren’t ready for the changes that are imminent as they transition leadership and/or ownership of their business enterprise. Some are in denial, while others are oblivious. They may feel that their children aren’t prepared to be in charge, or, perhaps, they haven’t spoken to their children about handing over the reins because they love being in control. Maybe they say they can’t find a successor who takes a long-term view or cares enough about the employees. No matter the reason, when it comes down to it, many clients can’t see a logical transition path. 


Addressing the Issues  

As a trusted advisor, you’re the logical person to help your clients initiate plans for a transition. You can be instrumental in getting the conversation started. So, what can you do to better serve your clients and be an active participant in the important decisions they’ll be facing? What can you do to facilitate the necessary, but difficult, conversations and encourage the true dialogue that will lay the foundation for smooth transitions? 

These questions were addressed at the FOX Wealth Advisor Forum (WAF) in May, in a panel discussion with Maria Elena Lagomasino, CEO of WE Family Offices, and Mark Rubin, senior managing director, FTI Consulting. The panel also included data presented by David Friedman, president of Wealth-X, based on their proprietary and curated database of family controlled privately held businesses. Here’s their advice about preparing yourself to be most helpful to business owners in transition. 


1. Know yourself. Keep in mind that the role of an advisor is one of leadership. Respect your role and remember that one of the most important characteristics of leaders is self-awareness. Be honest about your own strengths and weaknesses and aware of the biases that you may bring. Be careful to keep an open mind and don’t try to “solve the problem” too hastily.

2. Know your clients. If you’re a professional advisor with long-standing client relationships, chances are good that you’ve come to know your clients and their families personally. You care about them deeply, and they trust you as much as or more than they trust their own family members. It’s this knowledge and trust that puts you in a unique position to help your clients through these challenging transitions. You can use this foundation to dig deeper and get a full understanding of the landscape. 

“Defining the client and their challenges is very important,” says Rubin. “But, it can take years to get all of this figured out.” Lagomasino suggests making two maps: one of the family and the other of the family wealth. When charting the family, look at the individual family members and where they are in their lives, she says. When you’re mapping the wealth, consider whether there’s liquidity, and if so, what options it provides. Look at the map of the wealth alongside the map of the family, and consider the implications. 

3. Know the alternatives. Discuss and explain various potential scenarios and outcomes. Be ready when an opening presents itself. “There’s a requirement for us as advisors to have the courage to take the client through the options. We don’t have all the answers, but what we can do is use all of our knowledge, experience and data to help them understand the implications of taking action or not taking action,” says Lagomasino.


An Effective Dialogue

 Here are five ways to initiate an effective dialogue:


1. Meet with the husband and wife together, then meet with the wife alone. According to global Wealth-X data, 80 percent of business owners over the age of 60 are male.1 When you bring a wife into the conversation, she’ll provide you with a different set of insights about the challenge at hand. Although it may sound like a stereotype, often the man will focus on the business, whereas the woman will give you the inside story on family dynamics. You need both perspectives to be successful. This strategy may be especially useful when you’re talking to a business owner who loves being in control.


2. Start with the easy questions. When you’re speaking with the wife, start with non-threatening inquiries about the family. Ask, “How many children do you have, and what do they do?” and see how that goes. Always pay attention to body language. If you see any red flags, back off and start again from a different angle, or wait for another time. If not, probe deeper, but do it gently. 


3. Get to the “why” before tackling the “how.” As one WAF attendee pointed out, advisors tend to be most comfortable with the “how” part of planning, and sometimes they get trapped there. The challenge for us is to start by helping clients understand the “why.” Ask about your clients’ goals for their children and their businesses before you start asking about the legal structures that own the assets.


4. Identify and discuss gaps in communication and perception between generations. Ask the current generation and the succeeding generations the same set of questions. Identify the differences and bring them to light. Examine the implications of the gaps. Talk about how to address them. Often, what are perceived as disagreements are really not. Parents and their children want the same thing, but they’re all coming at it from different perspectives. As a participant at a FOX workshop said recently, “All problems with families are either about clarity or alignment. And the problems with alignment are really about clarity.” Effective communication is essential for clarity and alignment.


5. Clarify who’s the client. By broadening your definition of who’s the client, you’ll have a better chance of having more effective conversations. This may be more natural for some advisors than others. For example, Rubin points out that as tax consultants, “By definition, we are serving multiple generations, multiple trusts and multiple beneficiaries. We make it explicit that those are our clients and that’s who we plan to meet with.” He encourages making this distinction clear early on if you can.


Being the Catalyst 

Being the catalyst for conversations about major family transitions isn’t for the faint of heart. It can’t be done without touching on difficult topics, such as family dynamics, aging and mortality. These are topics that most people—not just your private family business-owning clients—try to avoid. So, it takes courage to start the conversation. However, keep in mind that it also takes courage for your clients and their families to participate. Chances are good that they’ll respect and appreciate that you care enough to offer alternative solutions. 

It’s been said that nothing worthwhile ever comes easy. While you may need to risk losing an account to tell a client what he needs, rather than what he wants to hear, the benefits to your client and his family members, for generations to come, far outweigh the risks.    



1. Presentation of David Friedman, president of Wealth-X, at the FOX Wealth Advisor Forum in May 2013.