Author: dss_AJD

September 1, 2020

How to Have a Productive Family Meeting

For high net worth families, holding regular family meetings is critical to their success in forging strong intergenerational relationships, and managing and growing family wealth over time.  There are several key components to a productive family meeting. The top priorities should be to include every adult family member, establish roles and responsibilities, work toward long-term goals, encourage multi-generational discussion, and set an agenda that allows for a mix of both formal meetings and informal interactions.

Everyone has a Seat at the Table

It is important that every adult family member participate in the family meeting.  This point cannot be stressed enough.  In every family, there are some family members who are eager to participate in the discussions about the family’s financial, investment, and philanthropic affairs, and other family members who find the subjects boring, uninteresting, or even anxiety-inducing.  The latter group often skips the family meeting altogether, or attends only part of the meeting and leaves early or arrives late.  This is a recipe for resentment, frustration, and disorganization.  The family members who are engaged in the planning process inevitably begin to resent those who do not participate.  Indeed, often nonparticipating family members ultimately resent that they did not have a role in the decision-making.  Eventually, everyone in the family is collectively disadvantaged if there is anything less than full participation by all family members.

Ensuring Every Family Member Has a Voice

Your family may have a constitution that sets out the rights and responsibilities of each family member, or there may be specific assignments of voting power when it comes to the finances. No matter the official structure, family meetings can be valuable in ensuring every family member has a voice and feels that their opinion is acknowledged and considered by the rest of the family. Individuals who consistently believe their voice matters and their opinion is respected are likely to identify strongly with the family and remain involved in family matters, whether financial or personal. It is particularly important for the new generation of family members, who may not be as involved as their parents and grandparents but who would ultimately need to take up the mantle of responsibility, in order to carry on the family legacy and any endeavors important to the group.

Your Family Goals: Long-Term and Short-Term

For many families, family meetings are a way for the family to come together to discuss the current state of affairs, set new goals as a family, and work towards any existing milestones. Having a long-term focus and devoting the main portion of a family meeting to discussing major goals, while also preserving some time for individual family members to broach new matters, is an approach that works well.
For example, a family may decide at their initial family meeting to set long-term goals in specific areas like family governance (i.e., how will family decisions be made and who is responsible for certain areas or activities), investment management, budgeting and financial planning, and philanthropy.  The discussion should begin with a careful assessment of the current state of affairs in each area, and should then follow with a discussion of the family’s vision for the future.
Setting a vision for the future helps to build consensus, and creates a framework for future decision-making for the family.  This helps ensure that subsequent meetings and discussions are always guided by well-defined goals.

Forging Inter-Generational Bonds

Unlike wealthy families of the past, who often stayed in the same geographic area and summered together in the same home, today’s families are often scattered not just across the United States but across the world. Family meetings provide an opportunity for members to come together not just to discuss money and property, but to get to know far-flung relatives a little better and form stronger inter-generational bonds between grandparents and grandchildren, aunts and uncles, and nieces and nephews. You may consider making the family meeting a destination event that everyone is encouraged to attend in person. It could be at the same place each year, a place that holds special meaning for your family, or you could take a vote on where it will be held annually to allow everyone a voice in the matter and create some fun and excitement.
Of course, it’s not always possible to be together in person. With the current pandemic, technology is proving itself a more necessary tool now more than ever. Family meetings may be just as productive when held on Skype and Zoom, as long as all family members are engaged in the discussion. Ask your family’s advisors how they have structured meetings under current conditions for more insight. But remember, it doesn’t have to be all or nothing. Remote meetings now may be a great forum to get the conversation going on where you will all meet together in person one day. That discussion can continue until gathering is possible, keeping you all connected until you go.

Formal Meetings and Informal Gatherings

Setting aside distinct time to discuss financial matters, philanthropic endeavors, and personal relationships, in order to give each the attention they deserve, is a useful tool in helping your family to have productive family meetings. Formal family meetings that include the family’s financial advisor, asset managers, attorneys, accountants, or any other relevant professionals are the perfect time to focus on the finances. You may want to set quarterly or bi-annual meetings with these professionals, or simply one longer annual meeting, in which to review the family’s finances, discuss the current state of assets and investments, hold votes on changes to current investments or make new ones, and discuss any transitions on the horizon for younger family members to take a more active role. Our advisors at Element Pointe are here to assist with these meetings in whatever way best suits your family.
Informal gatherings are equally important. Gatherings that include just the family can be wonderful forums for family members to discuss personal goals, and perhaps the goals and needs of individual nuclear families. Parents may want a place to share their children’s endeavors, and young adult children might benefit from using the opportunity to discuss what’s going on at their higher education institutions (especially if attending is a family tradition!) and ask other family members to consider supporting a charitable endeavor. If, as with many ultra-high net worth families, your family portfolio includes a jointly owned family home or property that has sentimental significance for different family members, the delicate topic of how to continue to care for, share, or even sell that home may be more comfortably raised first at a family-only gathering before discussing with your advisors at the next formal meeting.

At Element Pointe, we know that for many families the hardest part is getting the ball rolling.  With that in mind, we are always available to serve as an outside facilitator to help the families with whom we work to communicate, schedule and organize meetings, establish customized agendas, and to help your family to establish shared goals and a shared vision for the future. In fact, we’ve even prepared a sample agenda that you can use as a starting point in planning your new family meeting…you can access the sample agenda here.

 

Element Pointe Advisors, LLC (“Element Pointe”) does not provide legal or tax advice. The information provided in this article is general in nature and strictly for educational purposes. No portion of this article should be construed as legal, or tax advice. Always consult an attorney or tax professional regarding your specific legal or tax situation.

Element Pointe is an SEC-registered investment adviser located in Miami, Florida. Any references to the terms “registered investment adviser” or “registered,” do not imply that Element Pointe or any person associated with Element Pointe has achieved a certain level of skill or training. For information pertaining to the registration status of Element Pointe, please contact the United States Securities and Exchange Commission on their web site at www.adviserinfo.sec.gov. Element Pointe limits the dissemination of this general information regarding its investment advisory services to consumers located in the United States.

September 1, 2020

Hosting a Productive Family Meeting: Sample Agenda

• Breakfast Buffet (everyone is in a better mood after a good meal!)
• Welcome Remarks and Introduction (this can be done by the matriarch or patriarch of the family, or by a trusted advisor who is there to help organize the meeting and facilitate the discussion).
  • Welcome everyone to the meeting.
  • Provide an overview of the purpose of the meeting:
    • To help formulate collective goals.
    • To review the financial picture of the family.
    • To review and discuss family priorities, including financial and personal.
    • To discuss proposed changes to goals, investment plans, business plans, philanthropic plans, and family governance.
• Purpose, Values, and History
  • What do I value? What does the family value?
  • What do we each want from life, family, and our individual careers?
• The Family Business (for those families who have a family-owned business)
  • Financial Overview of the Family Business.
  • Major changes or updates to the operations or structure of the business.
  • Anticipated changes, if any, the the family business.
  • Review of current corporate governance, and any proposed changes.
• Investment Plans and Progress
  • Overview of current asset allocation and asset location (i.e., in which legal entities are assets held).
  • Review of portfolio performance.
  • Discussion of changes to goals or investment strategy.
• Philanthropic Plans, Family Foundation and Charitable Trusts
  • Review of current philanthropic initiatives.
  • Review of finances of foundation, donor-advised funds, and charitable trusts.
  • Discussion of plans for philanthropic giving, including:
    • Defining the causes that the family aims to support.
    • Determining the total budget for philanthropic giving for the upcoming year.
• Open Forum
  • Creates an opportunity for any family member to voice questions or concerns.
• Plan Next Family Meeting
  • Where will it take place?
  • When will it be held?
  • Who will be responsible for organizing and planning the meeting?

 

Element Pointe Advisors, LLC (“Element Pointe”) does not provide legal or tax advice. The information provided in this article is general in nature and strictly for educational purposes. No portion of this article should be construed as legal, or tax advice. Always consult an attorney or tax professional regarding your specific legal or tax situation.

Element Pointe is an SEC-registered investment adviser located in Miami, Florida. Any references to the terms “registered investment adviser” or “registered,” do not imply that Element Pointe or any person associated with Element Pointe has achieved a certain level of skill or training. For information pertaining to the registration status of Element Pointe, please contact the United States Securities and Exchange Commission on their web site at www.adviserinfo.sec.gov. Element Pointe limits the dissemination of this general information regarding its investment advisory services to consumers located in the United States.

July 22, 2020

Communication Across Generations in High Net Worth Families

It seems logical that people born into high net worth families would be taught about money from an early age. However, the way that families actually handle the subject varies tremendously. Some families share everything with their adult children – the good, the bad, and the ugly – but have difficulty conceptualizing their adult children as humans independent of the family tree. Others pretend the wealth just exists, and share very little information with the next generation about how it was created or how to appropriately and responsibly manage it. Ultimately, a successful approach within a high net worth, multigenerational family involves educating the next generation about their wealth, explaining what it means, and imparting financial knowledge and responsibility while also encouraging them to develop their own identities apart from the larger family unit. This helps enable future generations to form their own personal relationships and have their own families, while nonetheless remaining closely connected to the broader family unit, and working together to manage the family’s multigenerational wealth.  Communication is key to ensuring that the next generation understands the magnitude of what they have been born into and the kind of responsibility that this may bring, whether to a family business, a philanthropic endeavor, society as a whole, or simply to their own siblings and cousins.

Individuals Within a Family

Ensuring that members of the next generation develop individual identities while also feeling part of the family network is critical. They need to be able to form their own identities in order to lead focused and productive lives. If they develop little sense of self, it may be difficult for them to succeed in forming close personal relationships outside of their nuclear family. Thus, there is a balance to be struck. In the ideal scenario, the first generation is able to establish strong and supportive emotional connections with their adult children, while being available for support but also encouraging them to be independent. There is a delicate balance to be maintained – parents should help their adult children to independently achieve goals, but should not go so far as to do the work for them. This can become a slippery slope, as the first generation often feels that they are “just trying to make it easier.” While this may make the task at hand easier, it makes the next generation’s overall personal development more difficult, as it deprives the next generation of the sense of agency and independence that accompanies genuine personal achievement. Setting the tone at the top is important. Future generations are more likely to be able to develop their own identities, while simultaneously maintaining strong family ties established by their parents and by older generations, if this is the family pattern.

A Family Constitution

Some high net worth families, particularly those whose wealth is connected to a family business or enterprise, choose to create a family mission statement or constitution that outlines their values as well as goals for preserving cohesiveness through the generations. The first generation may find it helpful to formally document the core values of the family, and to outline the rights and responsibilities of family members who may inherit wealth as a result of the family enterprise, even if they do not want to create a permanent document. Merely sitting down to sketch it out can help the older generation determine what values, principles, and goals are most important to pass down, and what might not matter to them so much in the long run.

Discussions and Decisions

Including the next generations in family discussions and decisions, on an age appropriate basis, may also be valuable. Feeling like you have a voice and that your opinion matters is critical to being part of a family. Everyone has a role to play. Even if the roles are not equal due to generation, age, or desire to be involved in certain matters, each role is still important. And an individual’s role can and should change over time. Including younger children in a discussion as benign as where to take a family trip starts to involve them in the process of decision-making, even though the consequences of their choices are limited.

Adult family members of the next generation should begin to have more of a role in family decisions regarding investments, financial goals, the family business, and other fiscal matters. It is important to keep in mind that each individual family member is different – some may have no interest in participating in the financial and investment decision-making. This is certainly acceptable and understandable, however the family should nonetheless encourage this family member to participate in the discussions on some level, so that this family member can remain informed, and so they can gain the knowledge that is needed to prepare for eventually inheriting significant wealth.

Family Philanthropy

Perhaps the best way to involve the next generation in family discussions and decision-making is through philanthropy. Many high net worth families have some type of family foundation, donor-advised fund, or other independent philanthropic endeavor. This type of family project ties together several goals: it strengthens bonds between family members who are not direct siblings or parent-child pairs, it involves multiple generations working together simultaneously, and it communicates from one generation to the next the key family values and priorities. In the case of private foundations, it helps to educate the next generation on matters of investing, record-keeping, and accounting, as well as the process of holding and leading meetings, documenting meeting minutes, creating a business plan for the foundation, and other financial matters. Depending on the size and scale of the foundation, it can also provide an opportunity to teach the next generation about organizational governance, managing budgets, and employing staff. Regardless of the size, scale, or structure of a family’s philanthropic initiatives, the act of collective family giving can be a priceless tool for fostering family togetherness, communicating values, and educating the next generation.

Ongoing Communication

No matter the size of your family, keeping the lines of communication open across generations is key to ensuring family unity and successful relationships between older and younger members. Communication is key to developing an understanding and appreciation of family wealth among members of the next generation, preparing them for their future roles while also encouraging their own independence. Starting the right conversations early, and continuing to have those conversations as children grow into adults, can put you on the right track. But even if the youngest family members are already well into adulthood, keep in mind that it is never too late to bring them into the conversation.

Element Pointe Advisors, LLC (“Element Pointe Advisors”) does not provide legal or tax advice.  The information provided in this article is general in nature, strictly for educational purposes, and has been obtained from sources believed to be reliable. No portion of this article should be construed as legal, or tax advice.  Always consult an attorney or tax professional regarding your specific legal or tax situation.

This article is provided for general information purposes only and should not be construed as investment advice.  Element Pointe Advisors does not make any representations as to the accuracy, timeliness, suitability, completeness, or relevance of any of the information provided. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly.

Element Pointe Advisors is an SEC-registered investment adviser located in Miami, Florida. Any references to the terms “registered investment adviser” or “registered,” do not imply that Element Pointe Advisors or any person associated with Element Pointe Advisors has achieved a certain level of skill or training. For information pertaining to the registration status of Element Pointe Advisors, please contact the United States Securities and Exchange Commission on their web site at www.adviserinfo.sec.gov. Element Pointe Advisors limits the dissemination of this general information regarding its investment advisory services to consumers located in the United States.