Ready or not, the holiday season is approaching and many of our clients will be gathering with siblings and parents for the first time in months. These get-togethers are a good opportunity to discuss larger family financial issues, but these conversations can be fraught with parental and sibling minefields if not approached properly. Too often, in the financial services business, we see wealth, even very modest amounts, tear families apart because of misunderstanding, jealousy, feelings of unfairness, and simple greed.
This week is a good time to remind your clients that their family meetings can be an excellent way to ensure peaceful family harmony today and in the future by combating the potential negative influences money and wealth can have on family dynamics and relationships. Family meetings are also excellent tools to help convey and perpetuate family values when creating or preserving a family legacy. Unfortunately, this tool is too infrequently used or used incorrectly.
For example, a family meeting must be well structured to ensure that the right amount of seriousness and time is applied, while enjoying family get-togethers and reunions. Advisors need to explain to their clients that discussions should be segmented to be age appropriate, if that’s an issue, because clearly, minors will not have the same comprehension as adults and it’s likely that less information will be provided to younger family members.
Agendas should be created so that there is a clear understanding of what will be discussed. Everyone must have the freedom to speak freely, within reason, to ensure inclusion and comprehension. Most importantly, patriarchs and matriarchs who embrace these meetings shouldn’t expect to accomplish everything at one meeting. Rather, it is a dynamic process that is built upon and strengthened on a regular basis, whether that’s annually or more frequently. Discussion topics can vary widely depending upon the stage in the process the particular meeting is at (i.e., the first, fifth or tenth meeting).
If your clients need some guidance on how to get started, here are some topics they should consider including:
- The type of planning that mom and dad did, including the reasons why. For example, were children treated equally or fairly in the estate plan? Why is Jane getting the business but Johnny is not? Talk through that so that all involved have a clear understanding. This may avoid conflicts in the future.
- Philanthropy is usually a common topic among wealthy families. Why was a gift made or a foundation created? Why are only certain types of charities recipients of family gifts? Those discussions could involve community legacy values (e.g., the family’s strong ties to a particular cause or organization) and all of the reasons why.
- Family legacy and wealth perpetuation is also a common topic (e.g., the family’s desire to perpetuate wealth for future generations or why wealth transfer and distribution is restricted or may have strings attached).
- Meeting topics can be broad or specific, dictated by the process stage of that particular meeting and what may have been discussed previously. For example, if charitable gifts were made last year, did they have an impact on the cause; should the family make additional gifts this year; should the family rethink their philanthropic strategy; etc.? If gifts of cash or assets were made to family members, how did the family members react? Did one waste away the gift or use it productively? Should more gifts be made or not?
As their financial advisor, you should encourage your clients to include you in the “business” portion of the gathering as you generally have all of the financial details (e.g., an understanding of the estate plan; types of financial assets; knowledge of beneficiary designations; etc.). It is important for all family members to know who is helping the parents out with their financial plan so that if any questions arise in the future, they know who to contact. As a neutral party, you can also help to facilitate the more technical aspects of the family meeting and also moderate a discussion.
Victor Ngai is the Assistant Vice President, Head of Business Resource Center for Advanced Markets, The Guardian Life Insurance Company of America.
