By Kenneth B. Wheeler and Julie R. MacPherson

Families, as they navigate the inevitable circle of life, will encounter challenging times. Events such as the death or incapacity of an elder family member can be particularly stressful: upheaval and chaos often result as family members adjust to their new reality. How a family deals with these disruptive events reflects their cohesiveness and resilience as a family as well as the strength of their intra-family relationships

Most families maintain varying degrees of emphasis on the management and preservation of their wealth (that is, wealth care) usually in direct proportion to the level of the family’s wealth. Advisors in the financial and trust and estates industries have a large stake in helping families care for their material wealth, and the larger a family’s net worth, the greater the efforts of the advisors.

Unfortunately, most legal and financial advisors who help families manage, protect and transfer wealth among generations aren’t trained to deal with and often overlook, ignore or struggle with family relationship dynamics, which history has shown can pose a significant threat to the long-term preservation of family wealth.

Survey Results

A series of interviews of 3,250 affluent entrepreneurial families (with wealth ranging from $1 million to $1 billion) were conducted around the turn of the century by Roy O. Williams and Vic Preisser, who published their findings in Preparing Heirs – Five Steps to a Successful Transition of Family Wealth and Values (Robert D. Reed Publishers, San Francisco, Calif. 2003). Based on these interviews the authors concluded that only 30 percent of inter-generational transfers of family wealth were successful: 70 percent of their wealth transitions had failed – “failure” being defined as outcomes the families had sought to avoid, that is, intra-family conflict, damaged lives and relationships, loss of family wealth, failure or loss of a successful family-owned business.

The survey also revealed that 85 percent of the wealth transition plan failures were directly related to dynamics within a family: more specifically, “a lack of communication and trust between family members” and the “inadequate preparation of heirs,” dynamics that had a significant impact on “family well-being.” And while some families may derive a sense of well-being from their existing financial status, effective multigenerational preservation of a family’s wealth will depend, in no small part, on the strength of the communications and trust among family members as they prepare heirs to become good stewards of the family wealth.

The Values Link

Authors who write about multigenerational wealth preservation in families generally agree that family dynamics and the behaviors of family members are based on their values. I whole-heartedly agree with this premise, but suggest that there’s much more to be understood about our values and how they affect family dynamics and well-being.

The importance of values in our lives can’t be overstated. Often described as the equivalent of a “moral compass,” our values affect everything in our lives – our beliefs, our view of the world, the actions we take, the decisions we make, the quality of relationships we have and our communications both written and oral.  

As important as values are, research has determined that the majority (roughly 80 percent) of our values operate below the level of conscious thought.

So, if family dynamics and behavior are based on values, and 80 percent of those values are held at a less conscious level, the family is less likely to be able to identify and actively address dynamics and behavior that generate communication and trust issues. 

Therefore, if the majority of our values operate within us subconsciously, is it any wonder values conflicts arise among individuals and the groups of which they’re a part, causing communication and trust issues? As long as these intra-family value conflicts go unrecognized and unresolved, no amount of spiritual, financial, tax or estate planning can prevent the probable failure of a family’s inter-generational wealth-transition planning and the deterioration, if not the outright destruction, of relationships between family members. 

The Missing Piece

The good news—technology is now able to identify, assess and bring to conscious understanding the relative priorities of the values operating at any time in a person’s life, and it can reveal the progress of the values shift that occurs with life experience and maturity. 

The Hall-Tonna Values Framework and associated technologies, the result of over 30 years of research and development by the late Dr. Brian P, Hall and Benjamin Tonna, have been used extensively in the corporate world to evaluate the values fit between proposed merger partners, in hiring employees and transforming the culture within an organization. 

In the hands of a certified coach, the Hall-Tonna technologies can identify and assess the relative priorities of values operating in a person’s life and transform a group’s values. Using this technology, values conflicts among family members (and between the family group and its members) can be identified and brought to a level of conscious understanding. With this knowledge in hand, communications and trust among family members can be improved and family well-being significantly enhanced.

Family Vision

A family can strengthen and preserve itself (and protect its wealth) in the longest term, achieve the ultimate state of family well-being and avail itself of an antidote to the dark side of legacy, by creating a strategic family vision. In a series of family meetings, assisted by a family coach, a family can collaboratively develop a family vision statement – a grand vision for itself to guide and inspire both current and future family members. It can also establish a family council as a system of representative family governance, founded on and to be guided by the family’s shared values, to sustain and nurture the family vison and the family’s wealth into the future.

 

 Kenneth B. Wheeler JD, LL.M. is an attorney in Winter Park, Fla., and Julie R. MacPherson is an Executive Coach/Certified Values Consultant.

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