Be honest: Every time you see another headline about Paris Hilton, a part of you sighs with relief. Thank goodness, you think, none of your clients have attention-grabbing scions whose names get splashed all over the press.
Well, don’t be so sure.
Sure, most members of wealthy families are unlikely to be named, like Paris was, in a presidential television campaign ad as an example of air-headed celebrity. But, just about any high-net-worth clan, by dint of having considerable means, runs the risk of attracting unwanted media scrutiny. And that’s particularly true these days for a variety of reasons, ranging from society’s hyped-up focus on celebrities to the reach of the Internet.
Such attention can do immeasurable damage to the family’s standing. A young Turk with a drug problem crashes his car; no one is hurt, but, because of the family’s prominence, the incident makes the nightly news and local papers. The patriarch wants to build a large house on the beach. The local authorities have no problem with it, but the neighbors think his design is hideous. Suddenly his taste is the laughing stock of local reporters. While such situations might not cause the family fortune to plummet, they can cause plenty of other pain.
“Most wealthy families care desperately about their reputation,” says Fraser Seitel, president of Emerald Partners, a Fort Lee, N.J.-based communications firm. “In fact, they care more about it than just about anything else.”
The upshot: a growing number of advisors are looking at their clients’ reputations as something that needs to be protected actively and continually, not just when there’s a crisis or, heaven forbid, litigation.
“You have to manage your reputation the same way you’d manage any other asset. It’s something you monitor, protect and invest in for the long-term,” says Michelle Jordan, principal and founder of Jordan LLC, a Newport Beach, Calif., strategic communications firm.
Reputation management can include any number of measures, from having on hand an informal group of advisors adept in media management or talking to young family members about the importance of watching their online disclosures. Most importantly, it means having a plan and a designated hitter.
Now’s the Time
Why is reputation management particularly important now? For one thing, America is even more obsessed with the famous than ever. And its definition of who’s famous keeps expanding. Like it or not, wealthy families have always been seen as celebrities and, as a result, fodder for a small army of media focusing on the family's doings. But it’s not just club hopping that can be perilous and the younger members who can be targets.
With stepped-up scrutiny of corporate conduct, wealthy clients who sit on boards risk getting tarred by any misdeeds in which their organizations might engage. Even philanthropy, the traditional purview of wealthy matrons, has greater reputation dangers these days, as Congress and the public increasingly examine not only public charities, but also private foundations.
Perhaps most dangerous, however, is the Internet. Now, it’s easy for anyone looking for information, says Jordan, “to find out almost anything about anybody. We’re living in a much more transparent society.” What’s more, with the popularity of Facebook, MySpace, YouTube, and a host of other sites, personal information can easily get out to the public—and stay there.
“You used to worry that something about a family would be talked about for a day or two,” says Patricia Soldano, president of Cymric Family Office Services, a multi-family office in Costa Mesa, Calif. “Now it’s for a lifetime.”
So what can you do? The answer, according to a variety of communications and family office experts, is, “a lot."
What To Do
Step one is to put together a formal risk assessment process that you conduct every year, the same way you would with a family’s financial holdings.
That means meeting with family leaders to evaluate what may have changed and what could change that might affect their reputation — anything from impending divorces and recent births to new financial ventures and philanthropic undertakings, as well as emerging patterns of risky behavior by family members (for example, Junior’s increasing appreciation for tequila).
“The earlier you deal with issues, the less likely they can become a crisis,” says Jordan.
Step two is to put an action plan in place that you can follow at any time of the year. Be sure to include a brief update of this plan in regular family governance meeting agendas to remind people about how it works.
Of course, that requires making sure the family understands just what it wants its reputation to be. For what do you want to be known, if anything? What are your goals?
Appoint a specific individual — a family member, family office executive, wealth advisor or (better yet) a public relations professional — to serve as the point person should the media ever come calling. Few people can get away with doing as Warren Buffett, the richest man in America does. Call his office to ask for a comment and his secretary will say Buffett doesn’t have a press officer and doesn’t speak to the media (although, of course, sometimes he does).
If you are going to stay within the family when selecting a media spokesperson, you might consider rotating the assignment. According to Seitel, who, when he was senior vice president of Chase Manhattan Bank worked closely with David Rockefeller, the Rockefeller brothers (David, Nelson et. al. ) used to appoint one individual to be leader of the family group for a certain time period, rotating the duty among siblings.
Perhaps not every willing family member is suited to the task? You may need to be honest about everyone’s strengths and weaknesses: Who thinks best on his or her feet? Who tends to overreact?
Just make sure that if you do keep the task within the family or even the family office, the designated hitter receives training in dealing with the press: how to handle an interview; get across the points that need to be made; etc.
You also should put together a group of trusted advisors who can be called on short notice. That can include senior family members, lawyers and family office heads. Important: make sure to include a media expert.
“You need a team of people, just as you have an accountant, financial advisor and so on,” says Soldano. “You don’t want to wait until you have an accident before you get car insurance.”
The point is not to call your media maven only after there’s a problem. You need to touch base regularly, to discuss not just issues of concern, but also other matters: a sibling who, say, has a particularly strong interest in supporting the arts might talk about how best to publicize those efforts. Or, a family member might simply want to cultivate a positive image in the press, to help bolster his professional persona. Think Ivanka Trump, whose appearances in fashion magazines tend to reinforce her reputation as a hip, powerful young businesswoman.
This plan of course begs the question: How do you find a media expert sensitive to the issues you may face? Start by getting references from friends and trusted associates, the same way you would for any professional services provider. Then meet with each candidate, explaining what your goals are, asking them to write up their ideas for how they’d go about working with family.
According to Chris Phillips, managing director, marketing and communications for the Threshold Group, a multi-family office based in Gig Harbor, Wash., it’s probably best to seek smaller, boutique media firms that have worked with family businesses.
You also may want to consider having the family’s lawyers hire the public relations professionals — and potentially extend their attorney-client privilege to communications with the PR people, something that could be particularly helpful in the case of litigation. Specifically, the attorney officially hires and pays the press expert and all correspondence remains between those two, according to Seitel. In addition, ask all PR professionals to sign a confidentiality agreement, in the event they decide to write a tell-all book sometime down the line.
The toughest challenge may be to address the potential for young family members themselves making embarrassing revelations on the Internet. For one thing, no matter how much the kids may hate you for it, have someone—a family member, lawyer, family office head or other advisor—search Facebook, MySpace, YouTube and other sites, looking for just what’s out there about family members. Better yet: forbid the family members, young and old alike, from signing onto MySpace and other networks. Such a ban may be impossible to enforce, but it’s worth a try.
At a minimum, make sure everyone understands just why they need to be careful about the personal intelligence they divulge. “Otherwise, someone will innocently post something pretty private about a weekend picnic,” says Soldano. “And, suddenly, they’re revealing information anyone can read.”
In other words, it’s probably not a good idea to tell the world that Uncle John, venerable head of the clan, got so sloshed he fell in the pool. Better to keep that one in the family