There are a myriad of tools, solutions, and experts to help families solve for financial concerns. My expertise and extensive network of professional contacts enables me to truly solve for almost any issues that families face.
Family businesses in smaller communities often seem larger than life, providing employment for many local people and support for community causes such as schools and charities. So, people outside the business just assume that the business always turns a profit and that all the family members must be enormously wealthy. Both assumptions may be wrong, but even the family members may not recognize the truth.
Take the example of six brothers who inherited a successful business in a small city and asked me to look at their estate plan.
Two generations earlier, the grandparents who started the enterprise created estate plans that assumed their six sons would run the business but that the sons’ wives would have no part of it. The grandparents repeatedly communicated their expectations, so that everyone would know their place in the family and in the business. But this plan contained common -- and major -- flaws: It only focused on reducing tax burdens and establishing long-term control of the business, a narrow outlook that left the family ill-equipped for changing circumstances, or to handle the difficult emotions that arise when some family members are left out of key decisions. That is, the plan was incomplete because it never considered the lives of the people who had to live with that plan. And it certainly didn’t envision society’s views and expectations evolving about women’s participation in business and family decisions.
The family expressed shock when I told the spouses that if something happened to their husbands, the wives would be left in a charge of running a business that they knew little to nothing about. “You want me to do what?” The very surprised wives asked. Furthermore, none of the family had realized that each of their children and grandchildren, along with their cousins, would be in line to steward their shared interest in the business whether they liked it or not. And yes, emotions and family dynamics matter: what if the children and grandchildren can’t get along with their many cousins from the other five uncles?
Not everyone reacted well to learning about the master plan that had been created years ago, a fact that didn’t surprise me – the inflexible, narrow plan had laid bare the risks of not communicating among all family members.
I had to deliver additional bad news after I did a financial analysis of the business: the enterprise faced issues with its profitability..
I then conducted a thorough assessment of the business, key employees, and the ability of each family member to participate in the enterprise. The analysis also identified themes, concerns, and desires of the entire family. After a couple of failed attempts, I helped the entire family formulate the basis of a new family governance structure.
Today, the family operates well, using the new governance plan, improved family communications, and the evolving strategy on how the family and its members can thrive within the estate plan.
A high-net-worth family had attempted to build a much-needed family council but had failed, mostly because the oldest son – who also headed the family business and its charitable foundation – never could find time for the council. His lack of focus on the council, and his indifference to the consequences, frustrated other family members who had been involved with the council. So, when the son and other family members talked about important family or estate issues, the conversations became problematic. They had become frozen, like a deer in the headlights, on what to do next and how to secure the family’s future.
Initially, I was asked to review the existing estate plan but I quickly recognized that a revamped tax efficiency and business stability program wouldn’t solve the serious, underlining family tensions. I began by conducting an assessment survey and extensive interviews with all the family members and with key executives at the business and at the foundation. These steps enabled us to identify shared concerns and frustrations, as well as people’s desires for the family and its future.
The new information helped the family moved forward with its revised estate planning, which now recognizes the shared interests of all family members in the assets. The brothers and sisters also realized the need for their own children and grandchildren to understand the plan – and it enabled them to recognize the dramatic differences among all of them.
At my recommendation, the family also created a new family committee, comprised of family members who truly champion the interests and needs of the entire family. They now have learned how to make good, join decisions together in what is formally called family governance.
Today, with this guidance, the family committee structure is more formalized and functional. It focuses the well-being of the overall family and its members. The new team educates the family members on how to work together better, to make good joint decisions on their shared interests both in the family businesses and with their shared assets. Their vision now focuses on how these assets can best be stewarded by the rising generations, so that the family’s true wealth will be preserved and grown for their children, grandchildren, and other future heirs, looking forward 150 years.
Helping the Advisors
A financial company was transitioning from serving as wealth advisors on a broker-dealer platform, to growing into a larger Registered Investment Advisory (IRA) firm. The transformation, however, was not going smoothly despite the entire team making great efforts. For one thing, they had to keep their broker-dealer licenses active even as they metamorphosed into a bigger, even more prestigious business. Most importantly, they had to communicate and care for their high-net-worth clients while they transformed their business at a very fundamental level. So yes, the advisory firm itself needed someone to advise them. That’s when they brought me into the picture.
The firm’s principals and I determined that it was easier and more cost effective to have me working inside the firm as part of the leadership team. I helped lead a handful of the outsourced partnerships as we implemented an entire new technology stack, along with new branding and a new marketing program. In addition, to help the client families and their businesses, we launched a new consulting practice with an expanded scope of work, specifically designed to focus on issues beyond just managing their investments. I also handled the firm’s key administrative tasks related to Operations, Human Resources, and Compliance.
Once we had selected the various software programs, we then faced the challenging tasks of implementing the new systems and converting the data (client information) from the old systems to the new. We chose to outsource the data reconciliation and reporting to a service vendor who has deep knowledge and experience with the software. While this kind of technology conversion is always a challenge in this case the transition went very well, thanks to our early research, careful planning, and good choice in hiring a knowledgeable vendor.
Once the technology was installed and operating properly, then we launched our planned updated brand, with new look and feel, along with a new website, a variety of promotional products, new signage, and series of new client events.
We also solved the issues surrounding the broker-dealer licenses by further expanding what services the firm can offer. We created a new, independent insurance agency that can offer key insurance services, then aligned our agency with a national insurance marketing association. Our new entity also housed the broker-dealer licenses, which the firm can use to access various variable insurance products. We further recruited an experienced insurance agent to lead the integration, to review all the clients’ insurance policies, and to assess their insurance needs as part of their annual financial review.
My engagement at this firm lasted just over 18 months but achieved tremendous success. We truly systematized the business and helped the team deliver world-class service to their clients.
I was fortunate to grow up in a family with a thriving family business that provides several financial services, including insurance, real estate, and mortgage banking. In fact, I started my career in the insurance agency, which gave me deep understanding of managing risk, as well as broad-based sales skills and knowing how to provide high-levels of customer service.
Serendipitously, my career now enables me to revisit the enormous value of life insurance and related products as key elements in financial and estate planning – even for the high-end of wealth management such as the Family Office segment. In particular, the ability of life insurance to manage risk, particularly around liquidity, is invaluable – not only to families, but for their business interests and employees.
I recently helped a multi-generational family with a significant business solve for several issues that had kept the owners up at night. They needed to provide liquidity to the business if one of them dies. They also wanted to provide for their families, especially their spouses. Further, they wanted to create additional retirement funds outside the stock in the business for themselves and their spouses. They had created several entities to help with the estate planning.
In response, I proposed using premium-financed life insurance that enabled the principals to buy a greater amount of coverage, using the bank and existing policies to finance it. The results provided coverage for all involved (over many years). What’s more, the life insurance significantly boosted their retirement nest egg, because the policies have a the tax-deferred status. The peace of mind to their spouse, children, key employees, and themselves was palpable.
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