Successfully preserving wealth across generations is not easy. Transferring values is even harder. Many wealth creators have suffered the heartbreak of seeing their money and family cohesiveness diluted after only one or two generations. Other families have created positive, enduring legacies that persist into the third, fourth, and fifth generations.
What have the successful families done so differently? They have prepared wealth for the next generations not only through thoughtful planning but also through timely communication and education. For many families, a multigenerational family meeting — ideally, with an experienced facilitator — offers a perfect opportunity to start this preparation.
Create an atmosphere of trust
In our experience, gradually sharing a wealth plan with the next generation creates an atmosphere of trust.
Family members who hear the same message welcome the transparency and reduced uncertainty. Additionally, when younger family members feel they are trusted, they are more likely to understand and respect the responsibilities that accompany an inheritance. If the wealth creator augments this trust with a solid financial education and communication of the family’s history and values, next-generation members have a better chance of adopting a stewardship mindset — a sense that the family shares something greater than financial assets.
What is a family meeting?
A family meeting offers a safe, structured environment for communication and education as well as disclosure about the wealth plan, either in part or in full. Family meetings come in all shapes and sizes. Each is unique and dependent on the family’s objective. Meetings may be in-person or virtual, span an afternoon or a weekend, and include a single generation or multiple generations. In all cases, however, great care is taken to prepare participants for the meeting. Everyone should be given the opportunity to weigh in on the agenda and know what to expect and what is expected of them.
While each family meeting is customized to meet the family’s objectives, some topics are common to meetings. Common topics of a family meeting range from financial and wealth literacy concepts to an exploration of how to communicate more effectively with one another.
When do I start?
The timing to start a family meeting depends on several factors, including participants’ ages and the meeting objectives. Ideally, family meetings start when the next-generation members are in their teens and early twenties, and they focus on providing a basic financial education.
If members of the next generation are trust beneficiaries, we recommend starting this process well before any required disclosure date, typically at 18 years old. For these meetings, we suggest crafting age-appropriate lessons on personal finance and investments that layer in the family’s values and history to the extent possible. If the family owns a business, we typically encourage them to start formalizing their decision-making process, also known as governance, before the third generation is of employment age.
However, families do not need to wait until the next-generation members are teenagers. Many families benefit from regular meetings that begin when the children are young. Family meetings for younger children may focus on the importance of developing savings plans from allowances or finding worthwhile charitable causes to support. These types of early meetings help children develop skills they will use to integrate family values with wealth stewardship plans.
Establish the ultimate objective
A successful family meeting starts with a clear objective that participants understand and to which they have consented.
While there is often an individual or event that acts as the catalyst for the meeting, we recommend interviewing all participants in advance to collect information on potential hot-button issues or additional interests. A third party — often the meeting facilitator — typically will either conduct the interviews or gather feedback through an anonymous survey. The survey input helps inform other meeting aspects including design, participants, location, and length. In fact, it is not uncommon for the interviews to help shift the objective of the meeting in a way that is more meaningful to all family members.
Refine the objective
After the family establishes the primary meeting objective, it’s time to refine it.
For example, while family members might know that they wish to use a family meeting to share all or part of a wealth plan, they might have an ancillary objective such as addressing a current family concern.
As an example of how to refine the objective, consider the case of grandparents who wanted to resolve a conflict over their adult children’s use of a vacation home. They were concerned that the family’s increased wealth and resources were causing family ties to unravel. They also thought it was time to share their wealth plan with their children and grandchildren. To address their concerns and to allow for communication of their intentions, we suggested that they hold a family meeting.
Because we knew there was existing tension in the family, we asked permission to interview the participants in advance, to better understand the crosscurrents at work. From there, we would create the most relevant agenda for the meeting.
During our interviews, we realized that there was an “elephant in the room” in addition to the familial tension about vacation home use. Members of the second generation were grappling with the larger issue of their new wealth. They were struggling to raise their own children as grounded individuals and were judging their own siblings’ spending and parenting habits harshly.
We used the results from these interviews to refine the meeting objectives apart from settling a dispute over use of a vacation home. The grandparents decided that they wanted to encourage a sense of intellectual curiosity and shared learning among family members. Second, they wanted to foster a sense of stewardship and entrepreneurship in the future generations — especially among their grandchildren. Third, they wanted the money to be used to help keep the family together.
In this case, the family meeting was successful. The carefully crafted agenda, in conjunction with the facilitator-led discussion, softened the sibling dynamics. They communicated with each other and admitted that they never wanted their own children to experience similar tensions. They also expressed their admiration and gratitude for their parents’ decision to use their family wealth to further the education and business ventures of the grandchildren. And the siblings developed a policy about how the vacation home would be used. They quickly solved the problem that sparked the need for the meeting.
Hear all voices
When the family has established a clear objective and meeting agenda, an outside facilitator or co-facilitator may be helpful.
A good facilitator will help ensure that everyone is engaged and contributes to the conversation, will keep track of timing, and will assist in handling areas of potential conflict. We often find that younger generations have important insights to share but may feel their opinions are secondary. A good facilitator will make sure that the younger generation contributes to the conversation. To establish an inclusive tone, some families start the meeting with an exercise to help identify the different communication styles in the room and review the principles behind active listening. Others develop a code of conduct to keep conversations constructive.
Sample Code of Conduct for a Family Meeting
- Be punctual and prepare.
- Don’t interrupt.
- Treat disagreements as an opportunity for learning.
- Address issues with the people involved before involving others.
- Honor the statute of limitations on all specified issues.
Experienced facilitators often introduce compelling, low-risk activities to spark fresh insights among family members and enhance communication from one generation to the next.
For example, at one family meeting, we asked each person to say something admirable about the person seated on their right. A younger brother turned to his adult sister and told her he had admired her courage as she worked her way through a painful divorce. The brother’s important vote of confidence was surprising and touching — and might not have been shared unless prompted. As a family member said during a break, “These meetings are so important … because we change, and we forget to tell each other.”
Difficult conversations
Revealing a sensitive part of a wealth transfer plan, introducing a new family policy, deciding whether prenuptial agreements will be required for family members planning to marry — these topics and many others can be extremely difficult for families to discuss.
But advance preparation can help. Consider what you want to say and map out the points as clearly as you can — a facilitator can help structure the conversation.
In addition, role playing the delicate topic with another presenting family member or a facilitator can help you anticipate how to handle differing points of view. Facilitators can also be crucial intermediaries at the meeting itself.
In certain situations, bringing in an expert to discuss an issue — say, for example, prenuptial agreements or trusts — can help minimize potential friction between family members and keep a conversation productive and on track.
Regular family meetings
For business-owning families, having regular family meetings is often vital to the healthy functioning of the business and family. Even if the first few meetings feel a bit awkward, over time, the process becomes more ingrained and valuable. Family members typically develop new talents to work with one another. These new skills may include better communication techniques, a deeper appreciation for healthy conflict, and a greater sense of engagement and contribution to the family as a whole.
We often suggest families establish a feedback loop at the first meeting. After the first family meeting we facilitated for one client, we sent an anonymous survey to the participants seeking feedback.
Comments such as “More bonding time!” and “The financial discussion was way over my head” helped the family design the next meeting.
Soliciting feedback helps galvanize the family meeting process by prompting improvements and eliciting fresh ideas and suggestions. Eventually, the family meeting becomes an anticipated ritual. As a client who had been attending family meetings for over two decades said, “They aren’t always easy, but there would be a mutiny if we ever considered canceling the family meeting.”