How to Help UHNW Clients Pass On Their Fortunes

As managing director and head of governance and education, what specifically do you focus on?

Our clients have more money than they will spend in their lifetime.

The five [services] I provide are:

1. Helping clients plan what they want to do with their money, for their family and for those in the community.
2. Facilitating conversations about money with couples, families, family offices, foundations, beneficiaries and trustees.
3. Educating individuals on how to manage day-to-day finances, investing, estate planning and trusts, as well as the social and emotional implications of inheriting wealth and growing up in the shadow of someone else’s success and having more [money] than others, which you didn’t earn.
4. Governance: How to make effective and fair decisions about a business, investments, philanthropy, property [such as real estate].
5. Philanthropy: Helping clients focus on their mission and how they can [accomplish] that in a strategic way either by themselves or with their family.

You say that your job is “rare.” But family governance for the wealthy is so important. Why aren’t more firms doing what you’re doing?

It’s a growing [part of the] industry, where there are more folks that have my background being hired into financial firms, family offices and multi-family offices.

However, there’s still a focus at the firms on the technical, the financial and the legal.

But when you ask our clients what they really care about, most say it’s the impact of the money on themselves, their family and the community.

What can we learn from the highly popular TV series, “Succession,” which ended this past spring?

It’s a sensationalized drama of what not to do: the secrecy, the control, the strings [attached] to every one of [patriarch] Logan’s children. There were no boundaries between family and business.

There were no clear agreements, no proactive plan.

So these are the lessons you should take away: Communicate. Do not parent with your wallet. Avoid the strings. Put boundaries in place and manage them. Have clear, proactive governance.

If you own a business, a succession plan is essential, then?

Yes. But it can’t only be about passing the baton. If there’s a health crisis, for instance, you need to have a plan that’s proactively communicated, so the business can continue and there are no hurt feelings and disappointments.

You’re just setting yourself up for family infighting when you haven’t defined and communicated your plan.

Why else is a succession plan beneficial?

Ideally, it includes mentorship, with both the leader and the successor holding the baton. That takes time.

Why should super-rich families — or any family with a business — have a “just-in-case” plan, as you call it?

That’s, say, if the leader suddenly becomes incapacitated or starts to decline mentally or simply wants to take a month off.

Every business should have such a contingency plan in place. That way, you have a spelled-out, agreed-upon plan on how to deal with [various potentialities] so relationships and the business aren’t destroyed.

Many wealthy parents don’t want to talk to their kids about how much money the family has. Why is it important, though, to get that out in the open?

Because how do the [inheritors] prepare if they don’t know? Actually, these children already know they have more than most. Yet there are parents that think they’re doing them a favor by not having an authentic conversation and being transparent.

But they aren’t preparing them for the life that they’re likely to need to be prepared for.

Another reason is there’s so much heartbreak when parents have passed away and haven’t talked to their kids about why they structured their estate plan the way they did.

There can be a lot of resentment and [eroded] self-esteem. The inheritors may think: “Why did you give my sister $X and me $Y? Did you love her more?

“Wasn’t I good enough to be told the truth about our family’s financial situation?”

[Parents need to] open the [books] over time and give young adults an opportunity to practice. I’d much rather that they give them an opportunity to learn and stumble with $50,000 versus $50 million [eventual full inheritance].

Without establishing proactive governance, what’s the incidence of inheritors who are left less than a sibling and sue them for, at least, the difference?

The siblings can take action, but I haven’t seen one situation where a lawsuit has been won. People litigate. It doesn’t work.

It’s not just the legal battle and how much money is wasted; it’s more the heartache, the sadness, the anger.

Why should ultra-high-net-worth families have a conflict-management policy?

They need to have a plan for how they’re committed to communicate in order to navigate misunderstandings and disagreements.

The benefit of a governance structure like a conflict management policy is that you talk about it when you’re not in conflict.

You put it in writing. It’s not a legal document. You can’t create — in my experience — a legal document that manages for family dynamics.

This document isn’t designed to help you in a lawsuit. It’s to help you avoid a lawsuit.

How can ultra-wealthy families have a positive impact on society?

Every investment that we make has an impact, whether we call it impact investing or not. Every decision our clients are making — spending decisions, investment decisions, philanthropic decisions, how they use their time to volunteer, to serve on boards, how they think about careers — have impact.

All those are related to the impact they have on society.

When you’re an inheritor of wealth, you have choices. There are so many ways to have a positive impact that go beyond philanthropy and investments.

At what point in your career did you step into a role related to family governance?

At the very beginning of my life, I saw the damage that money could cause to relationships. It was around me.

I knew there had to be a better way. I wanted to try to help families. I knew that this was going to be my career from a very early age.

Pictured: Jill Shipley