Many advisors who work with a multigenerational family know that these relationships can be very complex. Combine family wealth with different personalities and priorities, and you have a recipe for a family dynamic that can be challenging for even seasoned advisors.
At the 2019 HighTower Pinnacle conference, Bill Lyons, Senior Director for the Abbot Downing Institute for Family Culture, took the stage to share his insights on how advisors can navigate the murky waters of family wealth, helping clients communicate with one another and find common ground, while at the same time setting up wealth transfer agreements that work for the whole group.
Here are three key insights from Lyons’ speech:
When it comes to family wealth, it can be hard not to sweat the small stuff.
While advisors may be on high alert about overtly important issues like inheritance, Lyons pointed out that many times, family wealth conflicts can arise over seemingly minor things. When dividing up a piece of shared property or the estate of a deceased loved one, tensions often run high, and what an outsider may see as a nonissue can tear an entire family apart.
While it’s not easy to anticipate the proverbial straw that will break the camel’s back, it’s important to remember that these family issues – small as they may seem – likely come from a place of deep emotion.
“As I’m sure many of you have seen, the smallest things can lead to the biggest conflicts in families,” Lyons said. “Who broke the latch to grandpa’s organ top? Why did you take down grandma’s curtains? The process of ‘who gets what?’ can end up being the most emotionally triggering thing, and these feelings are rarely based in logic. They’re about who is loved, who is seen, and those kinds of dynamics.”
Money is not the most important thing you can pass down.
“In a study of more than 1,000 families of significant wealth, 9/10 young people reported ‘values’ to be the most important thing they would inherit from their families,” Lyons said.
This optimistic statistic speaks to a trend Lyons has seen among families: Whether they’re Baby Boomers, Generation X, Millennials or Generation Z, most people reach for connection with their parents or grandparents through their shared values.
To illustrate this point, Lyons told a story about a family he worked with that toed this generational divide. The grandfather was in the tire manufacturing business, and the granddaughter worked in environmental activism.
“Politically, they couldn’t have been further apart,” Lyons said. “But when we started to work with them and talk about the values that drove the family, we realized they were almost the exact same person. They were both innovators – the grandfather in the tire business, and the granddaughter in online environmental activism.”
For this family, Lyons found that the ability to dig in and connect around deeper values was a powerful tool. Using this, he helped the two spark a productive, intergenerational conversation about long-term shared wealth opportunities.
It’s not too early to begin planning for family wealth transfer.
While attending a recent talk about planning family wealth transfers for high-net-worth families, Lyons noticed a waiter at the back of the room watching. Afterwards, he asked the man what he thought of the talk.
“That man was talking about my family,” the waiter said. “That’s why I came to this country. I’m building a 100-year family.”
“That was it,” Lyons explained. “He saw himself in that story. And I thought it was such a wonderful example of just how early you can start thinking and planning for wealth and wealth transfer.”
To learn more about how HighTower can help advisors navigate family wealth issues, email firstname.lastname@example.org.
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