This is undeniably a time of great stress and uncertainty. Financial advisers are making every effort to keep their clients updated about the markets during this volatile time. Financial advisers speak to what they know best—the behavior of financial markets. We are not financial advisers, but we've heard from our clients and their advisers about some of the challenges they are facing, and we thought some of our observations about human behaviors in uncertain times might be helpful.
Our experience in working with families who share assets has taught us that trying to be purely rational in addressing economic uncertainty is not completely satisfactory. We encourage our clients to acknowledge the emotional stresses they are facing, and we suggest ways in which families who share assets can deal with the stresses that they are experiencing.
At times like these, an opportunity presents itself for the family to reaffirm their reasons for staying together. We find that it may help to focus on a few guidelines for decreasing the tension and restoring a greater sense of calm and safety.
Here are some guidelines for families:
• Understand that people react with fear, doubt and distrust in the face of economic uncertainty, but families must resist temptations to make impulsive decisions that can only make things worse.
• Strive to restore a sense of calm and security among family members and follow established processes for effective analysis and decision -making.
• Identify opportunities—such as family meetings—to open communications, acknowledge that all members are in this together, and gain a common understanding of the situation.
• Avoid tendencies to blame your financial advisers. Instead, work with them to assess both short-term and long-term risks to the family and to thoughtfully consider options
• Acknowledge that the family's human capital—the value of each individual and the power of positive relationships—is equal in importance to its financial capital.
We believe that families can benefit from affirmations of emotional support in times of uncertainty such as the one we are currently experiencing. Our experience in working with families through both financial and non-financial transitions leads us to be optimistic about the power of families to emerge from times of crisis like this with stronger relationships and more effective communications and decision-making processes.
Fredda Herz Brown, Sam Davis, Dennis Jaffe and Fran Lotery are partners in Relative Solutions LLC, a consulting firm to family enterprises (www.relative-solutions.com).