The Journey of Complete Family Wealth

Understanding family wealth is a journey. In this post, we have condensed the three main stages in the composition of our most recent book, Complete Family Wealth (Bloomberg, 2018), capturing its main themes and those of its predecessor volumes (all written with our dear colleague, Jay Hughes). We close with nine lessons that we have learned from consulting with many families over many years. Our hope is that the insights we’ve gained can make others’ journeys all the more fulfilling.

We began on the path of writing together by reflecting on the power that giving plays within families with significant wealth. Whether annual exclusion gifts or larger gifts, we saw that often these gifts left recipients feeling unsure about the “strings attached” or the giver’s expectations, and that often givers themselves felt anxious and even remorseful about their giving.

We also knew that giving can be done well and as a result can strengthen family relationships. We captured some of the ways of giving well in our first book, Cycle of the Gift, and then again in Complete Family Wealth. The key considerations in giving wisely are

  • Who is doing the giving? What do you seek to achieve with this gift? Does it fit your values? Does making this gift give you joy?
  • Who are the recipients? Where are they in their lives’ development? What are their characters? Are they ready to receive well?
  • How will you communicate the gift? No gift speaks for itself. Communicate more rather than less, earlier rather than later.
  • Can you let go? None of us can control the future. So many gifts are marred by giver’s desire to control. If you follow the steps above, then you will more likely feel you have done what you can do and can let go.

We wrote Cycle of the Gift from the perspective of the giver. After it was published, many readers told us that, in reading it, they felt that for the first time they also got to look at giving through the eyes of recipients. That insight led us to write our second book, Voice of the Rising Generation, the main lessons from which also appear in Complete Family Wealth. They include

  • How important it is to think of every generation as having a capacity to rise, to grow, to find its own path, and to flourish. That is why we use the term “rising” rather than “next,” which has the potential to make later generations feel inferior to the “founders.”
  • For rising generation family members, “Pray that the road be long, full of adventures, full of knowledge.” We underscore the importance of finding your way, your work, and your relationships. Very often these discoveries come through spending some time away from the family enterprise.
  • For parents of rising generation family members, we believe that staying centered and affirming them contributes deeply to their flourishing. Remember your younger self and what you needed to rise. Tell rising generation members stories about your journey.

By focusing on giving and receiving, it did not escape our notice that for many families these activities take place through the intermediation of trusts. By the third generation, most of the families we have worked with hold over 90% of their financial assets in trust. And yet, because trusts are usually opaque, and most family members shy away from talking about them, many beneficiaries find their trusts to be a troublesome complication in their lives. This is not a good combination. To address this challenge we wrote Family Trusts (with co-author Hartley Goldstone), the core lessons of which appear in the chapter on Trustees and Beneficiaries in Complete Family Wealth:

  • The primary work is to make a trust a human rather than merely legal relationship. Or in other language we often use, to turn the trust from a transfer (a legal transaction) into a gift with spirit.
  • For grantors, you can communicate your intent by writing a Letter of Wishes for each trust. Or add these two lines to the beginning of each trust: “This trust is a gift of love. Its purpose is to enhance the lives of the beneficiary.”
  • For beneficiaries and trustees, read your trusts. Make plans to meet at least annually. Seek to understand each other: the trustee should understand the beneficiary’s life, dreams, and needs, while the beneficiary should understand the trustee’s duties.

Based on speaking with many families about these practices, it is our firm belief that if families pay attention to giving wisely, receiving well, and making trusts gifts with spirit, many of the negative consequences that attend significant wealth can be avoided and great benefits, to individuals and families, can be gained.

As we mentioned, we include these practices from our prior books in Complete Family Wealth. We want to close with nine more lessons that also found their way into this book and that go beyond the points we have made thus far.

  1. The work of living well with wealth is every day and lifelong. It is about character. Character shapes how we treat others and how we treat ourselves. To this point, we quote a proverb in Complete Family Wealth: “If you’re planning for the year, plant rice. If you’re planning for the decade, plant trees. If you’re planning for the century, grow men and women.”
  2. Families are made up of individuals, and our first task is to know ourselves. Only if you know who you are can you begin to contribute effectively to the happiness of those around you. To this end the book includes various reflective exercises.
  3. Many people we meet are focused on preserving financial wealth. They have heard the proverb “Shirtsleeves to shirtsleeves in three generations.” But this proverb isn’t exactly accurate. If structured well, money can linger in families for a long time. But those families do not necessarily flourish. To achieve that end requires focusing on, preserving, and growing the family’s non-financial resources, its human, intellectual, social, and spiritual capitals. That is why we developed the Family Balance SheetTM.
  4. No community lasts unless the greater part of its members want it to last. Families who last have members who affirm each other and enjoy spending time together. Whatever their financial wealth or estate plans, such families have the motivation to succeed within themselves. That is why we spend a great deal of time, in print and in practice, focused on the design of true family meetings, where family members can come together to get work done but also to learn about and enjoy each other.
  5. What makes a family? At the end of the day, it is not just law nor biology. It is the presence of shared stories. Stories give a family a home—and furnish it. To this end, we encourage families to use their family meetings to share stories—about their ancestors, about their successes and failures, about their individual lives’ journeys—and to adopt rituals (such as welcoming new family members or remembering those who have passed) that give shape to their shared journey.
  6. If stories are a family’s lifeblood, then communication is its circulatory system. The greatest obstacle to communication is assuming that it has taken place. This assumption happens all the time in families, especially around difficult topics. Most of our time with families is spent helping communication happen. To that end, to hold effective family meetings, we encourage families to establish ground rules, so that everyone feels he or she has a chance to speak. We also help couples and other family members go through the “Three-Step Process” to make sure that they have 1) clarified their own views, 2) truly listen to each other, and 3) look for common ground. And in family meetings we often facilitate what we call the “Intergenerational Dialogue,” in which each generation has a chance to tell the other 1) what they would most like to share and 2) what they would most like to learn. Just think of how healthy that circulation would be if you could communicate like this on a daily basis!
  7. Conflict is natural to families, and the potential for conflict grows with the presence of significant financial assets or an operating business. We have found that a great resource in resolving conflict is the famous “Three-Circle Model,” by which family members can clarify when they are acting as managers of the enterprise, or owners of shared assets, or members of the family. While these three areas inevitably overlap, each comes with its own skills and responsibilities.
  8. The number one question family members ask us is, “How do we begin?” Oftentimes the beginning is the hardest step. That’s because this work involves parents and children speaking with each other about difficult topics: money, death, control, conflict, hopes and disappointments. And that is why we developed the Family Executive SummaryTM process. In it we interview each family member to understand his or her goals, strengths, and areas of concern. We then share a thematic summary of what we’ve learned back with the family along with recommendations on how to proceed, often towards a family meeting. This process helps the family feel they have the important topics “on the table” and that they have made a practical step forward. They have begun.
  9. We have seen families do magnificent things with money—in business, philanthropy, and public policy. We have also seen the work of managing family money take over people’s lives, leaving them poorer, in a spiritual sense, than they would have been without it. This is perhaps the greatest tragedy of this field: that some could have so much and yet so little. That is why for the families we work with we focus on the true keys to living well that go far beyond money.

(c) Susan Massenzio and Keith Whitaker