Navigating Crucial Conversations Within Your Family
Wealth and Legacy Series: Part 1
Welcome to our series on navigating conversations around wealth and legacy, a topic that is ever-present as we work with clients. Regardless of any towering success they might have achieved in business, philanthropy, or wealth creation, many grapple with how to create meaningful dialogue with those closest to them and knowing what to broach, when.
This series will explore the more human side of wealth and legacy within families. Our sincere hope is to help clients reach new levels of alignment, authenticity, trust, and transparency with loved ones, and to support you as both your wealth and your unique definition of “legacy” evolve. While we cannot claim to remove the age-old complexities that come with family wealth, we can provide practical tools to help you increase resiliency, avoid getting lost in a desert of riches, and approach these conversations with a renewed spirit of hopefulness and intentionality.
Set a Foundation of Alignment and Empathy
Conversations regarding wealth, wealth transfer, and legacy can be among the most difficult a family will ever face. Feelings can be hurt, decisions can be questioned, rifts can be formed, and wealth built over years can be fractured or squandered. In fact, roughly two-thirds of wealth transfers fail because of poor communication. Publications worldwide, from Barron’s to The New York Times to the Chicago Tribune and even the Harvard Business Review, have taken on the topic of how to talk about money within the family unit. While daunting, conversations about these topics present opportunities for wealth creators and their families to reach new levels of mutual understanding and achieve even greater success together.
Above all, know you’re not alone in the struggle.
In a 2017 New York Times’ article, columnist Paul Sullivan described family conversations about wealth as a “famously difficult task.” If you scan the wealth management body of literature, it’s not uncommon to hear upward of 80% of wealth creators find it difficult to have personal conversations about wealth and to be transparent with their heirs. We see this over and over in our own practice and work closely with clients to overcome their reluctance to discuss these topics early, often, and openly. In fact, we recently conducted a survey that reinforced just how much guidance families crave in order to manage these conversations successfully.
View these dialogues as a journey over time, not a one-and-done conversation.
A recent CNBC article reiterates this is not a single conversation, but one that needs to be repeated and refined at various ages and stages as a family evolves. It can and often should be a slow process, especially when children are involved. In fact, it’s a conversation you may wish to intentionally throttle depending upon factors such as age or a family member’s readiness to delve into certain topics. That said, we strongly urge a bias for action and transparency rather than waiting until a major life event or other catalyst forces a discussion.
Focus first on alignment between the heads of your household.
While no two people hold the same views on wealth and legacy, it is essential these two parties find common ground before talking with children and other heirs. We can’t overstate the importance of this alignment at the head of the family. How does this manifest? One of the most obvious is for both parties to be informed and engaged. This means not only attending annual estate plan reviews (“the big meetings”), but being willing to tune into details about asset allocation, quarterly performance, charitable planning, and other aspects of the family’s wealth.
We have worked for many years with a couple whose views are polar opposite when it comes to discussing wealth with their children. One parent (the primary wealth creator) believes, “My children are going to have to learn like I did, by trial and error. Nobody taught me, but I figured it out.” In contrast, the other parent believes in more active education and support of their children. We’ve been working to bridge the gap between them, and it’s incredibly gratifying to see the two become more in sync and present a more genuinely unified front to their children. Their efforts to understand each other will have immeasurable long-term value, and they are now much more prepared to bring children and other family members into conversations about wealth transfer and legacy.
Cast aside assumptions and seek deeper empathy for others in your family.
It’s human nature to assume we know certain things about the people closest to us. In raising our own families, we’ve certainly been guilty of making assumptions. But very often, people closest to us may have certain beliefs, fears, or dreams that are very different from what we might believe. For instance, that seemingly disengaged teenage son who never asks questions about your business may harbor a deep desire to learn more about your philosophies. Or you may believe your two daughters who are so close would never fight over money, property, or jewelry. As in any aspect of life, it’s important to recognize and question our assumptions about others so we can have more productive relationships and meaningful conversations.
If you aren’t doing so already, make intentional efforts to see the world through others’ eyes, whether your spouse, your children, in-laws, or others. This comes from spending time together, observing, asking questions, listening intently without judging, and thinking more spherically about those around us. Taking time to truly understand what makes a person tick will foster trust, reveal new veins of conversation, and make wealth—and even other topics—easier to discuss. In short, if we leave ourselves room to be enlightened and surprised by those around us, magic can happen. We can name and dispel misconceptions, allay fears, and find even more common ground.
Lastly, think about the context in which each family member grew, or is growing, up—the “economic culture” which created their formative experiences. Some helpful questions to consider:
- What was/is happening nationally and globally during their youth? Did one survive the Great Depression? Another enjoy the heydays of 80s excess? Did another witness financial and/or emotional devastation during the 2008 Financial Crisis? Is another growing up during an era in which widespread news of environmental concerns will greatly influence which charities they choose to support in their adulthood?
- Are they new “immigrants” to the land of wealth or are they “natives”? Dr. James Grubman, an expert in the psychology of wealth, friend to our firm, and author of Strangers in Paradise: How Families Adapt to Wealth Across Generations, developed this powerful metaphor to describe how individuals come into significant wealth. “Immigrants” were raised in another culture (i.e., not wealthy) and have journeyed to a new culture of prosperity. They have firsthand experience with enormous transitions and generally possess high emotional tolerance for risk. “Natives” may feel envied but not valued and may have scars or resentments from being seen as a “trust fund kid.”
- What about family dynamics such as birth order or blended families? Is a child intimidated by a highly accomplished parent, or afraid to speak up about unique ambitions or career choices they fear might be met with disapproval? What is the dynamic with in-laws, and how does the world appear through their eyes?
Show and encourage transparency and vulnerability.
The topics of wealth and legacy can be tough to discuss in even the most communicative families. For one, they force us to confront mortality and who we are beyond our money and property. They also get to the heart of how your family measures success and the legacy you wish to leave behind. They lead to those seemingly dreadful conversations of “who gets what, when, and why” at the time of your passing. But they also present opportunities for you to embrace what we think of as a “radical transparency” and to be more vulnerable.
Not sure how to start? We’ve found a few simple conversational prompts can help facilitate rich conversations between parents, siblings, and others in the family:
- What are your desires and life ambitions relative to money? Beyond money?
- What hopes and fears do you have about the future?
- What would make the conversation more meaningful to you?
- How do you define “wealthy”? What differences do you see between wealth and legacy?
- What are you grateful for relative to our family’s abundance? What does it enable in your life and the lives of others?
- What questions do you have which you may be afraid to ask?
- What causes are important to you? What would you like to improve in the world beyond the home and family?
Above all, don’t be afraid to share your own fears and aspirations or to admit you don’t have all the answers. Starting a dialogue sooner than later, while being as transparent as you feasibly can, is what matters most.
While we don’t believe it’s possible, or even advisable, for every member of a family to think exactly alike, we do believe wholeheartedly in approaching these conversations with a bold honesty and deep empathy. By being intentional and willing to perhaps step out of your comfort zone, you can create an environment of trust, enable future conversations, and create an emotional legacy that transcends generations in your most precious estate: your family.
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