Parents typically love it when their children follow in their footsteps and take over a family business.

It's a phenomenon that may be rare in most professions, but it frequently happens in the independent retail financial advice space. That's because career spans can be unusually long, with younger generations often having time to build expertise. At the same time, older industry veterans are afforded the opportunity to retire gracefully and on their own terms.

When family-owned independent adviser practices can successfully leverage this dynamic, it not only engenders enormous pride among parents but it often produces a culture that drives more growth, better efficiencies and a happier workplace.

But when the synergies don’t line up well, the fallout can be painful, both on a personal and professional level.

LACK OF COMMUNICATION LEADS TO PROBLEMS
Usually, problems in family-owned independent practices come about due to a lack of communication between the two generations. This can manifest in any number of ways. There may be a professional disagreement between parent and child over the practice's client service model or growth strategy.

Or the conflict can have more personal roots, such as a child feeling he or she was forced to join the business despite a lack of interest, or believing that the adviser-owner has been harder on the child than on ordinary employees.

Whatever the cause, these sorts of disagreements can spiral out of control quickly, creating the potential to eventually cause irreparable harm to both familial and client relationships.

At a special break-out session at the annual National Conference for Triad Advisors, held in Austin, Texas, in early September, a panel of senior broker-dealer executives, practice management experts and successful advisers discussed the following key steps that can help prevent family conflicts from getting out of hand in family-owned independent FA practices:

LET THE YOUNGER GENERATION LEAVE THE NEST FIRST
Perhaps the best way to prevent family squabbles in the workplace is to avoid having children join the firm at all — at least initially.

Indeed, gaining a vast array of professional experience can be healthy for newly minted college graduates. Young people should consider working for one or two companies where no family member will be, before joining the family business. The children will gain a healthy respect for the dog-eat-dog nature of doing business in the real world, while gaining credible work experience that will enhance their performance and signal to non-family employees that this is not a nepotism play once they decide to join the family practice.

Alternatively, initial professional experience away from the family practice may encourage them to gravitate to a different field altogether, in which case your practice will be stronger by not having reluctant employees who lack true passion or interest for the business.

CREATE A GUIDING DOCUMENT
As children begin to enter the family business, the older generation of leaders should consider creating a guiding document to clarify expectations.

Such a document should outline what each professional will bring to the business; what their day-to-day responsibilities will be; the boundaries that exist between work and family, as well as those that exist between work and personal life; and the overarching goals the business is working to achieve. Ideally, this guiding document should reflect the input of all relevant family and firm members. From there, it can be used as a reference to patch up differences if and when they come to the forefront.

GET A MEDIATOR
Even the best guiding documents won’t prevent all intra-firm clashes. Over time, personal and professional goals tend to shift, personalities evolve and viewpoints can change. All these changes alter the landscape in some way, which could lead to complications, misunderstandings and, ultimately, more inextricable problems.

Before this is allowed to happen, get a mediator. Of course, all mediators should be impartial and neutral, but given the circumstances they should also be personally or professionally close enough to the family to command its trust and respect, while being able to deliver a clear view of the firm’s business. In many instances, family practices in need of a mediator have turned to trusted referral partners, such as estate attorneys or CPAs with whom the practice has done extensive work in the past. In extreme cases, however, a professional mediator may be required.

SEGMENT THE PRACTICE
Family members need to understand that a complete fissure in the practice - where the break up is publicly visible and legally formal — is the worst case scenario.

If a practice splits, the senior members will have to draw up an entirely new succession plan, which could harm clients and take years to implement. More junior members, meanwhile, may have neither the experience nor the resources to make it on their own. Moreover, the optics would be terrible, introducing the risk that the practice's clients will wonder how family dynamics could become so dysfunctional, and questioning whether they believe a family that cannot get along in business should be entirely trusted with their most confidential financial needs.

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When all else fails, and nobody will capitulate, segmentation is an excellent way to minimize further conflicts. Establish a formal carve-out business for the younger members of the family that is owned by the existing practice, but potentially has its own brand, key areas of expertise and targeted client base.

The segmentation can be discussed with clients and friends of the practice as a rational expansion of the business. It’s the not the best solution, but at least the business will survive without fueling any negative speculation by clients and friends of the firm.

Being in business with a loved one can be rewarding, especially if it’s a child. But it can also be nearly intolerable, not to mention heartbreaking, if things turn south. Remember, unity in disagreement is far better than a practice fracturing entirely.

That means there will be many instances where the best move for everyone is to demonstrate a little humility: Swallow your pride, find a middle ground and keep everyone at the table for Thanksgiving.