Most successful advisors recognize the importance of connecting intergenerationally with their clients’ families. What happens when the advisor discovers the complexity of the family dynamics exceeds his or her skill set? Further imagine how exacerbated such a situation might be if it were a family with substantial wealth. It’s no wonder that statistics show that financial legacies are lost more often than not when wealth is passed on from generation to generation.
For advisors whose focus is working with high-net-worth individuals and families, ensuring that the family does not become another data point in the grim statistics is essential. But it takes more than skill as a financial advisor to make that happen.
According to Barbara A. Culver, CFP, CLU, ChFC, AEP, co-founder of Purposeful Planning (www.purposeful-planning.com), a training and development company that provides specialized coursework and coaching on how to work with wealthy families, most advisors lack the training, teammates and/or resources to help their clients use the family’s wealth wisely and create lasting family harmony. An advisor herself to wealthy families, Culver has over many years developed a process for advisors to use with these clients. The Purposeful Planning system helps them get past any issues they may personally have about the money and assorted family dynamics. The goal is to build family bonds and help the family wealth founder become “the entrepreneur of the family legacy.”
The Purposeful Planning program addresses several needs. First of all, it provides advisors with a deep understanding of the perspective, emotions and mindset of the client. According to Courtney Pullen, MA, LPC, a faculty member on the Purposeful Planning team, wealthy people tend to be suspicious of outsiders and consultants who claim to be able to help them; their experience has been that people become vultures or try to take advantage of them. Pullen suggests that advisors must look at “how they are” with these clients — and ask themselves where it is that they get tripped up. Once the advisor is conscious of his or her own barriers, Pullen and other faculty members teach them how to move through those limitations.
Research has shown that clients’ perspective on their relationship with an advisor is quite different from the advisor’s perspective. “To close the gap,” says Pullen, “the advisor must become more skillful in the discovery process and in developing the relationship with the client.” Only then can the advisor be successful with the technical aspects of the planning process.
In addition to the need for advisors to gain clarity about their own issues, it’s essential that they begin to understand the subtle — and not so subtle — issues that the client family is facing. The advisor must identify what is going on for the family to cause them to reach out for help. The program’s process helps advisors understand family systems and family dynamics, so that they can effectively connect intergenerationally with the family. This is necessary if the advisor is to be successful at helping the family come together around their wealth, rather than be torn apart by it.
“Every successful family does two things,” says therapist and Purposeful Planning faculty member Terry Hunt, EdD. “They ‘hold hands’ and ‘make plans.’” Sounds simple, but for many wealthy families, coming together in harmony is an enormous challenge. There is often a lot of competition among family members and the typical family structure is a pyramid, with the founder at the top. Inheritors often deal with the stigma of “poor little rich kid” and feel shame about their good fortune. In many cases, they have more of a sense of entitlement than ambition, and have never been challenged or encouraged to find their own passion or sense of purpose.
A third-generation inheritor himself, Hunt has devoted his life to helping wealthy families and the advisors who work with them understand and move through these problems.
To add to this, some sociologists and psychologists have identified a new phase of human development — emerging adulthood — between late adolescence and early adulthood. The experience of family members in this stage of life is so different from what their parents or their grandparents went through at that same age, that “many times the parents and the advisors can’t identify with what the emerging adult is thinking or doing,” Hunt says. “This can lead to frustration, alienation and even hostility between the young beneficiary and a trust system that was not prepared for the types of challenges that they may be facing.”
The goal for the family is to create a family circle to replace the pyramid. This gives all of the family members a sense of belonging and affiliation, and helps them to gain a sense for their place in the family and in the world. From here, the family can develop the cooperation necessary to make constructive decisions about the family legacy.
Once the family dynamics have been addressed, an advisory team — which typically includes a financial planner, an estate planning attorney, a family systems expert and a therapist — can focus on igniting the imagination of the client and family members in a process of discovering what their values are, creating family mission and vision statements and fostering conversations. But according to Denver estate attorney and Purposeful Planning faculty member John A. Warnick, the industry lacks a framework — from the standpoint of the legal documentation — to support the ongoing process of ensuring that heirs and future generations carry on in the best tradition of the family.
“The planning process has entered the 21st century,” says Warnick, “but the creation of legal trust documents is decades behind. The needs of beneficiaries today are different than they were years ago, and the formal documents must reflect that. By their form, traditional trusts may be creating entitlement and dependency, and blocking the development of the very resilience and self-awareness that is necessary for the individual — and ultimately the family — to go forward successfully in life.”
To address this, Warnick has developed the “purposeful trust” that brings the voice of the grantor into the document, replacing the sterile, boilerplate approach that is so often used. The grantor is asked to reflect on the importance of the non-tax purposes of the trust, with the goal of bringing his or her vision and dreams into the document. “While most clients are used to dealing with financial currency, few are aware that the more important denomination is emotional currency. Without that,” observes Warnick, “we lose the opportunity to have the trust become not just a sustaining influence, but an empowering influence on the lives of the beneficiaries.”
Warnick challenges planners, attorneys and clients to use the trust as an opportunity for three-way dialogue, so that the grantor is not only speaking to the trustee, but to the beneficiary as well.
Finding the Way
Altogether, the program seeks to help advisors engage clients physically, emotionally, psychologically, spiritually and intellectually — because the more holistically a person is engaged, the more likely he or she is to take action.
“Wealth creators know that money isn’t the endpoint of their life purpose,” says Culver, who offers both a three-part Purposeful Planning program and a four-day Masters Level Intensive for financial and legal advisors, development officers and psychologists who work with these types of families. “The client and the families need leadership to define the questions and seek out the answers.”
Many advisors say their clients won’t go there. Culver and the Purposeful Planning team suggest that no one has shown them the way.
Marie Swift is the president of Impact Communications, a marketing and communications firm for independent advisors; see www.impactcommunications.org.