Broker Check

The Value of Multigenerational Family Meetings

January 08, 2024

KEY TAKEAWAYS:

  • Family meetings can help avoid the thorny problems that can
    arise when inheritors who receive substantial assets lack the
    ability to manage the money prudently.
  • Entrepreneurs who wish to keep their businesses under family
    control can especially benefit from family meetings.
  •  The most effective meetings tend to have an outside
    professional—a neutral third party—involved as a facilitator

If you’ve amassed sizable wealth, or are on the right path and getting there, it may be time
to consider how to pass on some of that money to children and grandchildren—without
creating big problems that could harm their futures and destroy family harmony.
The fact is, family wealth—how it’s managed, transferred and used—can generate major
battles and drama among family members. As wealth grows, so does the potential for that
money to foment conflicts and bad financial decisions that can reduce a family’s financial
position and even ruin intra-family relationships forever. That’s especially true if the asset
you’re looking to someday transfer is a business you’ve built up over many years.
The good news: As is so often the case, we can look to the strategies used by today’s
ultrawealthy families to avoid or mitigate such negative outcomes—and find ways to adopt similar
strategies in our own families.
One of the most effective tools used by the ultra-affluent is the family meeting—which is
used to educate heirs and potential heirs about sound financial decision-making, to identify
shared family financial values and to maintain (and grow) family wealth in a unified manner.
Here’s how family meetings benefit the wealthy—and how to make them work for you and
yours.

Family meeting benefits and advantages

For multigenerational affluent families, family meetings can help avoid the thorny problems
that can arise when inheritors who receive substantial assets lack the proper preparation
and education to manage the money prudently. Families who are in business together also
often find family meetings valuable in helping them keep the business in the family and
performing well, generation after generation.

Regular family meetings can also help families keep their wealth together and intertwined,
which can have major advantages such as:

• Making running a single-family office increasingly cost-effective

• Being able to access certain types of high-minimum investments

• Leveraging a larger fortune to lower the cost of financial advice and services

However, strong and productive family relationships are needed to keep the family wealth
together and effectively manage it across geographies (as family members are often in
different locations) and generations. Family wealth consists of not only liquid assets but also
all other forms of wealth—from the family business to hard assets such as artwork.

The underlying objectives are family cohesiveness, superior management of the family’s
future across the generations, and the preservation and growth of the family wealth.

The family meeting principally provides a venue for multiple generations to discuss business
and financial matters. Common topics covered at well-run family meetings include:

• Succession plans within the family business

• Promoting financial literacy in future inheritors

• The family investment philosophy

• Family philanthropic values and activities, and how they are financially supported

• New business ventures and how to fund them

Family meetings are where a family’s values and mission are discussed, debated and honed.
Governance structures are often addressed and refined. In many cases, family meetings
are great settings to plan the action steps needed to prepare the next generation for family
leadership roles. Often, the end result is greater feelings of cohesiveness, trust and support
among family members of various generations.

Important: Family cohesiveness is not the same as family unity. Most families have some
degree of discord. What family meetings can help accomplish is getting the family members
on the same page and in agreement over what they can achieve by cooperating. Family
meetings are about coming together for a common purpose.

Four steps to a successful family meeting

A well-structured family meeting is a forum where the family members work through issues
and come up with solutions and actions plans that benefit the family.

Effective communication is an essential part of productive family meetings. Without
it, these meetings can quickly turn into nothing more than gripe sessions fueled by
heated arguments.

Warning: Family meetings should not be “one and done” affairs. The lives of family
members change over time—sometimes suddenly. That’s why we recommend family
meetings be held regularly. (Ultra-wealthy families tend to run their family meetings
annually, and some twice a year.)

Pro tip: There can be lots of logistical issues in getting family members all in one place.
If so, consider using technology such asvideoconferencing.

As Exhibit 7 shows, there are four key steps to arranging and executing a highly impactful
family meeting.

Step #1: Planning the meeting

The starting point is specifying the goals for the family meeting. The more specific and
refined the goals, the better. An agenda based on those goals should be created, delineating
what is to be discussed and what decisions can hopefully be made. Based on the nature of
the topics on the agenda, supporting material might be required (such as the financials of
the family business or the performance of the family’s investment portfolio).

Often, the planning part will be shared and rotated among various members from meeting
to meeting. When it’s your turn, be sure to get input from all family members who will be
involved. By taking suggestions from everyone into account, the family is more likely to
achieve the desired group results.

Add some fun: Many families also include fun activities as part of their family meetings—
such as golfing, a family softball game or a wine-tasting event. These bonding moments are
nice on their own, and also help promote a better meeting.

Step #2: Conducting the meeting

The focus of the family meeting should be the goals and agenda. Therefore, it is usually wise
to mitigate day-to-day distractions—for example, by holding the family meeting at a resort
or a tucked-away family property.

The most effective meetings we’ve seen tend to have an outside professional—a neutral
third party—involved as a facilitator. This individual will help address the more complicated
and difficult issues, and keep the discussions on track and focused on the end goals and
action steps. They also help ensure that all family members are involved and contributing,
and they can help mitigate conflicts that may arise.

The types of third-party professionals commonly serving in this role include:

• Attorneys and accountants

• Wealth managers and multifamily office senior executives

• Family business consultants and life coaches

Note: Family meetings range in length and involvement, depending on the topics that are
being covered as well as the number of people involved. Also, the more important the
decision that has to be made, the more likely the family meeting will be a longer affair.

Step #3: Follow-up actions

Typically, a set of action-based to-do steps results from a family meeting. These actions
often need to be turned into formal projects, with milestones and clear expectations about
who will be accountable for specific steps. The third-party facilitator or family members can
be responsible for mapping out how to follow up after the family meeting. It is also worthwhile
to specify how the subsequent actions will be tracked and reported back to the family.

Step #4: Assessment of outcomes

After starting with particular goals, then identifying what actions need to be taken to achieve
those goals, the final step entails determining the degree of success attained.

Based on the assessment of the outcomes, new actions to help reach the stated goals are
habitually identified. These can be a refinement of current actions or a different approach
entirely. Moreover, the results achieved always factor into the goals and agenda for the next
family meeting.

Keep in mind: Every family has its own special dynamics and traits. Thus, the process
described here can be modified depending on the aims of the family.


Next steps

Family meetings can potentially benefit anyone who may pass along assets to heirs
down the road—they aren’t simply a tool exclusively for the wealthiest families. Patriarchs
and matriarchs can use the meetings to help instill important values about money and
responsibility in heirs. Meanwhile, younger generations can use the meetings to learn smart
money management and investment skills, and start to discuss their own ideas about family
wealth and values.

If you think you and your family could potentially benefit from family meetings about wealth,
contact your legal or financial professional to explore the topic further.