As a result, my sister and I have not spoken in 20 years, and I am still haunted by the clash that caused our estrangement. My desire to become a financial planner stemmed from this life-changing event. I have spent my career honing tactics to help other families avoid deep divides such as the rift that my sister and I encountered. Combining my personal and professional experiences, I have devised a planning method that can help your clients and their families come to a better resolution.
THE FAMILY MEETING
Many of your clients may want to know how they can prevent poor communication about finances from disrupting their families. Others may be unaware of the importance of communicating about finances. Financial planners need to use approaches that will be beneficial for our clients and businesses. If employed properly, the method that I use, dubbed the "family meeting," will accomplish both of those goals.
The wealthiest of families--the Rockefellers, Kennedys and Fords--have always relied on "family offices" that employ full-time attorneys, accountants and financial advisers dedicated to proper financial planning. The family office coordinates the expertise of a client's advisers to grow, protect and preserve wealth for generations. Financial planners can help their clients' families feel like the Rockefellers by incorporating the spirit of the family office into their practices.
In a similar vein, the family meeting approach should include true collaboration between a client's team of financial advisers, accountants, attorneys, planners and other professionals. Ideally, you should meet with a client four times a year, culminating with the annual family meeting. As I outline below, the purpose of these meetings is to track progress and identify long-term objectives.
The first meeting. At the first meeting, the planner and client should come together to develop a family mission statement. This mission statement may become the client's most valuable tool in terms of managing assets through the generations. Allowing clients to talk about their personal values, wealth transfer objectives, family dynamics and goals, philanthropic concerns and leadership issues can help them develop their statements. Planners also can introduce options for achieving specific goals and maximizing family wealth.
The second meeting. Next quarter, the planner and client should meet to review the current status of goals, correct wills and change tactics as needed. At this meeting, the planner should take the time to address the many difficulties that clients with children face as they determine the distribution of their assets. Challenges may arise as the quest to be fair to each child is complicated by the different life events, choices and aptitudes of the next generation.
The third meeting. Planning for taxes, estate and trust strategies and charitable contributions early in the year creates the time necessary to maximize options for the following year. Asking clients to bring their attorneys or accountants into these discussions may be beneficial. Clients must understand the importance of choosing key advisers who are willing to participate in a "family office model" structure. To be effective, the experts should coordinate and collaborate on family issues as a team. The more communication there is between parties, the higher the chances of achieving the family's goals.
The annual family meeting. During the last meeting of the year, the client, any children or other key family members and the planner should gather to discuss the family's finances. By this point in the process, financial plans must reflect your client's personal values and how he or she wants to involve the children in realizing those goals. Although finances will be discussed in percentages instead of specific dollar amounts, the meeting will eliminate the lack of clarity the family may feel prior to the discussions. What arises from these meeting is a form of family governance--a shared responsibility between family members to reach their wealth management goals. At this meeting, the family can designate who will fill leadership roles and how--whether it's learning to manage trusts or evaluate philanthropic solicitations. Each successive yearly meeting should reinforce those roles and establish individual credibility within them.