Family meetings may seem like an unnecessary luxury – not a priority with family member’s complicated schedules. But family meetings are an effective way to get in front of controversial topics and create a needed discipline for the family to make important multi-generational decisions involving real estate, inheritances and family businesses.
A very high-net-worth family had a clear need to transfer assets to the next generation. The wife wanted to make gifts to their children who are of young, married and of child raising age. They would benefit greatly from the gifts. The husband was very “old school” and believed that gifts could spoil the children.
The solution? To establish a program of annual family meetings and to open effective communication with the children to ensure that they were receiving the gifts along with the proper counsel and advice about how to handle them. As a result, the family now has an effective gifting program, which is having a significant positive effect on the children and their families.
Family meetings or retreats have helped many successful families preserve and perpetuate a healthy legacy, and groom and educate future generations to be proper stewards of the family’s genuine wealth. While this concept sounds like the province of fabulously wealthy, sprawling old clans like the Rockefellers or the Kennedys, we have found that it’s also a powerful tool for families with far smaller fortunes.
Family ties as well as finances tend to weaken over time, and annual family meetings can shore up both. Indeed, highly successful multi-generational families who have adopted these annual sessions believe they are a necessity to help the family continue to thrive financially.
These gatherings can be an effective way to bring the family together to confirm and strengthen your mission and values, and to share news, concerns, opportunities and challenges openly and candidly. Family leaders can discuss and execute the financial decisions to support the family mission in a truly collaborative way. The meetings foster a sense of teamwork and togetherness when financial decisions are considered, and head off the resentment that comes when family members have no input. They also offer golden opportunities to groom future generations to become mature members of the family and effective stewards of the family’s wealth and success.
Family meetings or retreats should take place annually, and more often if needed. It can be an intricate and expensive week long retreat at a far-flung destination with a team of outside advisors, or a simple gathering once a year at a restaurant or park.
Here are some guidelines for a successful family meeting:
1. Timing: Ideally, meetings would be held once a year for most families. Given busy schedules, it may be unrealistic to expect to gather more frequently. Many families hold a meeting in connection with a family event such as a reunion, anniversary, holiday or family vacation. Having a predictable date each year increases attendance.
Meeting length can be flexible - a few hours over an afternoon to a full weekend or a retreat over several days, depending on your agenda.
Family meetings may be particularly useful during periods of challenge or transition, such as the death of a family member, the sale of a business or some other significant financial or family event. Families who are accustomed to a regular program of meetings may find it easier to manage these moments because they have a framework for sharing thoughts and make important decisions.
2. Location: To help families view the family meeting as a special tradition, consider having it at a special place. Your home and office are poor choices since they are too familiar and distracting. Consider investing in the meeting and making it enjoyable by hosting the meeting at a restaurant, rental house, country club or resort. Another good strategy is to allow time and space for recreation and shared meals. By making these meetings about both business and playtime, family members will look forward to attending each year and the meetings will become a memorable tradition. Recreation and playtime also build togetherness and teamwork and are a valuable stress relief from the meeting agenda, especially after tense discussions about important family issues.
3. Who should attend? Most family meetings include at least two generations. Senior family members provide wisdom and perspective, and help younger attendees appreciate the family's heritage, values and legacy. Depending on the family dynamics, spouses are typically invited to attend along with direct family descendants. Finally, teenagers may be welcomed into the process at a certain age to teach them about philanthropy and the family's values. This is especially true in families with multigenerational wealth that expect their trends to take a leadership role in the family stewardship at a young age. Young children under age 13 may find the meetings too long and boring so it will be important to arrange for their care and entertainment.
Depending upon your intentions and agenda, consider inviting your family's advisors to the meeting as well. For any technical planning discussions or detailed financial decisions, it may be wise to invite your lawyer, accountant, investment advisor or wealth manager. Their perspectives may be valuable when you discuss family wealth.
4. Things to Discuss: The most important element of a successful family meeting is preparation. A clear agenda ensures that the meeting covers important topics. Often meetings focus on a particular current challenge or event - the proposed sale of a business or the death of a family member - that requires family input on a course of action. Other meetings might inform the family about an important development or share valuable skills.
Important activities before the meeting might include:
- Asking family leaders about what they see as the current hot topics
- Identifying challenges to discussing these issues in a family meeting
- Gathering materials needed to support the agenda, such as financial statements, investment reports and recommended readings.
5. Ground rules: Family meetings can be fraught with land mines and the right ground rules set the proper tone. One guiding principle: respect for one another and the process. When emotions run high it is critical to remind everyone to keep the process respectful and constructive. Some ground rules might include:
- Be present and eliminate distractions. You may wish to ban cell phones or iPads at your meeting
- Be respectful in your words, body language and actions. Speak respectfully, pay attention when someone else is talking and avoid interrupting others while they are speaking
- Listen. Be open minded and respectful to all other's views.
- Avoid cliques where some family members ally against other members. Openly discuss all topics and areas of conflict.
Family meeting programs can vary in expense and complexity, but cost and details need not become obstacles, and any family can benefit from the communication opportunities.
Erik Strid is a financial advisor and founder of Philadelphia-based independent advisory firm, Concentus Wealth Advisors. He is also the author of the book, "Empowered Values."