Best Governance Practices for Family Offices — Susan Schoenfeld
Susan R. Schoenfeld, CEO and Founder of Wealth Legacy Advisors LLC, serves as a ‘thought partner’ to families of wealth through personal attention and human spirit. Susan is an award-winning Thought Leader; she provides guidance on legacy, next-generation, stewardship, governance, leadership succession, and philanthropy. She recently spoke on Family Governance and The Family Office: Planning for the Next Generation at Opal Group’s Family Office Forum in Newport, RI.
We can all learn from best practices for families and family offices.
The very best practice for a family is to plan ahead for leadership succession, starting on Day 1. Those families and family offices who think about and plan for their leadership succession from the very beginning are setting themselves up for success.
My second suggested best practice for families of wealth and family offices is a culture of open communication. The family should discuss and identify who they are as a family, what they stand for, not just their value statement, but actually their family story. I often help families craft their family story in such a way that it can be told and retold, not haphazardly, but intentionally and thoughtfully after consideration.
Kids love hearing bedtime stories and they all want to understand their place in the world. Establishing the narrative of how your family’s wealth was created, and telling it in a way that is repeatable and consistent, so that both the rising generations and incoming members of the family by marriage understand where they fit into the ecosystem, is assuredly a best practice.
The worst practice in a family is the fear of sharing information with the next generations. The end result is often the alienation of future members of the family, which might produce any number of undesirable outcomes. One is Inheritors Guilt: “I didn’t do anything to deserve this money, I’m just going to give it away.” One can only imagine the wealth creator rolling over in his grave, because he worked so hard and sacrificed so much to create the family wealth, and the last thing he likely would have wanted was to have it given away by a descendant who didn’t identify with the family’s culture, values and story.
The other extreme is the inheritor who basically says, “I’m just going to spend it on mansions and Maserati’s and other extravagances,” and isn’t thoughtful about stewardship for the benefit of future generations.
At the end of the day, my worst practice is the failure to communicate sensitive family information in an age-appropriate way. No one would suggest telling a six-year-old the details of your family balance sheet, because they don’t have the maturity or the perspective to understand that information.
Nevertheless, there are many age-appropriate ways to start investing in your next generation and engaging them. You might consider establishing a Junior Advisory Council where they are invited to the family board meetings; maybe they don’t have a vote, but they have a voice, and they get to listen and learn and become part of the family’s governance practices.
My suggested best practices for families and family offices include a culture of open communication and a focus on leadership succession planning.
Susan Schoenfeld, a public speaker & thought partner to families of wealth and their advisors, is an award-winning thought leader. Susan’s switch from successful estate planning attorney and CPA to a trusted family advisor and thought partner was inspired by families of wealth asking her searching questions beyond estate tax planning. As a conflict-free advisor who provides no investment, tax, or legal advice and sells no product, Susan shares her insights directly with wealthy families and with financial services experts. She is active as a keynote speaker and a leader of break-out sessions and workshops at conferences throughout the US.
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