Financial Planning

Families that gather to discuss estate goals increase the likelihood of a successful wealth transfer

By Leah Golob |

 

Financial advisors can help wealthy families manage a smooth wealth transfer by helping to organize family meetings.

One of the main reasons why some families encounter problems in transferring assets from generation to generation is a breakdown in trust, communication, planning or governance, says Iain Thomson, financial planner with Iain A. Thomson & Associates Inc. in Waterloo, Ont.

Families that gather to communicate a common vision are typically better equipped to have a successful wealth transfer and business succession, Thomson adds.

Not every financial advisor is skilled in facilitating a meeting. But if you have strong coaching and communication skills or have been trained in advising family enterprises — as Thomson has — you might consider taking the lead. Alternatively, you can find a professional who specializes in these meetings.

Thomson offers the following tips for facilitating a family meeting:

1. Choose a neutral location
It's best to facilitate a family gathering at a location other than a family member's house, Thomson says.

The location should foster a neutral, comfortable environment for each member in attendance. No family member should appear to be leading the meeting, a situation that is more likely to occur if a family member is hosting the event.

2. Include every family member
Depending on the size of the family, getting every family member to attend can be difficult. But you should encourage attendance by all members.

"As a facilitator, you should make certain that each family member understands that the purpose of the meeting is to provide a forum for all members to openly share ideas, opportunities and challenges, as well as to make shared decisions," Thomson says.

Family meetings are also an opportunity for senior members to mentor and educate younger generations on the family finances and traditions. This is especially important in cases that will involve a business succession.

3. Create a code of conduct
The facilitator should begin a family meeting by leading the group to establish a code of conduct. This step helps the group create guidelines on the way members can behave in the meeting, Thomson says.

For example, if the founder of a family business is a dominant figure, the group may decide that that family member should not play an authoritative role in the meeting.

4. Facilitate, don't advise
If you are facilitating the meeting as a financial advisor, you should avoid providing answers to business or family problems, Thomson says,

Your job as facilitator is to help the group define goals or solutions by asking for opinions and creating a positive discussion. "[You] are not there to present," Thomson says.

If you are brought into the meeting to answer questions posed by the group, you should do so only if someone else is acting as facilitator.

5. Suggest other facilitators when needed
If you anticipate that participants are going to discuss issues that are not related to financial planning — such as family relationships — you should consider contacting a professional who would be better able to handle these discussions, such as a coach or a family therapist.

Thomson works collaboratively with several professional advisors. In situations that require a "more sophisticated, seasoned facilitator," he recommends that the family invite another professional to take the lead.

Photo copyright: marigranula/123RF