LAS VEGAS -- An aging, wealthy client isn't sure who should take over the family business. Meanwhile, a feud has erupted between the client's children over who gets control, inherits what and how much.
Advisors can help clients avoid disaster by adopting the skills of an anthropologist in order to better assess the strengths and weaknesses of the family's dynamics and thereby identify solutions, says Robert Seaberg, president of Intersect Consulting at IMCA's Annual Conference.
Within every family there is tension, between individuality and togetherness, between pairs of individuals and the group, or a third party, say siblings who may not be on the same page as a parent.
To better understand your client's family, Seaberg suggests advisors look to anthropology. Immerse yourself in the family. Listen and observe their interactions and you'll learn their strengths, weaknesses, beliefs and decision-making processes.
"You need to spend time with them. I'm not saying you need to be an exchange student and live in their house. But I'll tell you where you won't see it: in the office," he says.
The key to being a cultural anthropologist is the interview process, which should lack structure, Seaberg says.
"It's far more free flowing. It starts and goes where it will. It's a dialogue and conversation," he says. "Part of the reason why anthropologists approach things in this way is because a set of questions may tell us more about us than the family we want to understand. It's loaded in other words."
ASSESSING THE FAMILY
After completing the discovery process, advisors will next need to assess what they've learned. Seaberg suggests mapping family relations.
"Ultimately that information will show you patterns and themes," he says. "I'm a devotee of genograms because they work for me. Other things may work for you."
When looking at your findings, ask: What is the family narrative? How is it told? Who tells it?
"There is a huge difference between a patriarch telling a story and a story that is told and that incorporates different perspectives. In other words, everyone buys in. That story gets integrated and shared within a family," he says.
Advisors should ask: Does this family communicate effectively and honestly? Is there cohesion and affection between family members? Do they respect one another or interrupt each other frequently?
Look at family identity, Seaberg says. What does being a family mean to your clients?
Alignment between family members is important.
"Do they generally agree on important things? Often, alignment is helped by having a family mission statement, because it acts like a kind of compass," Seaberg says.
FROM ASSESSMENT TO ADVICE
So, after finishing the assessment process, how does an advisor save a family on a collision course? Where the aging patriarch isn't sure which child should take over the family business and doesn't know who should inherit what's left?
"The first thing I would look at is, 'Are we too late to come to the table? Next, can we make the pie bigger by creating alternatives and avoid the narrow thinking. -- the binary thinking: 'Either you accept this or I do that,'" says Seaberg.
For example, creating a family foundation may provide an avenue for younger children. The point being, Seaberg says, is that flexibility in roles allows people to grow in different ways and build stronger relationships.
Seaberg also says that advisors suggest to their clients to create an independent counsel or board, if there isn't one. That independent group of outsiders can, for example, develop a set of criteria for what the next CEO should have, helping inject some objectivity into a highly subjective dynamic.
"This avoids the old 'Well, Dad always liked you better,'" he says.
Does the family business have clear policies and procedures? If not, Seaberg says, then it creates opportunities for friction between family members about how the business and the family wealth should be managed. Developing a comprehensible and decision-making process accepted by the group will ease matters.
"You have to give everyone a say in some sense," he explains.
But ultimately, someone needs to make a decision, and typically that person is the patriarch, Seaberg says. He warns that having a family vote is problematic because it allows members to form factions against one another.
Of course, sometimes the patriarch either won't make a decision or won't let go, risking division and tension among his heirs. In this difficult situation, Seaberg recommends trying to refocus the patriarch's attention.
"Take him back again to: 'What's your goal for the family?' It doesn't do us any good for, as Hamlet said, 'We all go to the undiscovered country.' So when we are not here, what do you want for your family?' So you go back, and ask, 'How is your control going to affect that [goal]?'" Seaberg asks.
He continues: "I've had varied degrees of success. Some people just won't budge -- fear being one of the biggest factors. But getting them to open up by asking them a series of questions is the only way I know."
- What Advisors Can Learn From a Poker Champion
- IMCA Launches Behavioral Finance Program
- When Teams Split, Who Gets the Clients?