Communication and Alignment: Working Together as a High‐Functioning Team

Perhaps the biggest detriment to successful long‐term wealth management is lack of timely, consistent, and appropriate communications to family members, based on their roles in the family, their levels of sophistication, and their personal preferences and requirements. As indicated in Chapter 1, we know that 60 percent of the failures in multigenerational wealth management are due to lack of communication and trust among family members. Even with these daunting statistics in mind, few families develop an effective family communication plan that provides important information and helps to maintain family harmony and coordination.

In fact, the 2007 Mass Mutual American Family Business Survey indicated that by 2017, 40.3 percent of family business owners expected to retire, but fewer than half of those planning to do so even five years earlier had selected a successor.1 Generally, that lack of planning and communication guarantees disaster—and perhaps loss of the business followed by the subsequent loss of the family fortune.

When the assets are under the domain and management of the wealth creator, there is often little communication about the wealth, and what information is shared trickles down from the top. Over time, however, as the number of family members grows exponentially, communication can become garbled and lead to misunderstandings and discord. A well‐organized communication plan is critical if the family wants to continue managing wealth as a shared resource.

Ideally, the communication plan is not an off‐the‐shelf solution. It is customized for each family based on the family's size, extent of geographic dispersal, and preferences. The plan can include family meetings, reports, newsletters, and closed websites, among other options. It also may extend not only to family members, but also to shared employees, professional advisors, and service providers. The plan should be reviewed and modified periodically as needs change.

The communication process and its protocols allow the family members who have ownership rights to stay informed and engaged and to feel a sense of accountability. With an effective communication platform in place, both those in a position of management and those in a position of ownership have a clear understanding of what to expect—and when. Meeting these expectations reduces the possibility of miscommunication, friction, or outright conflict.

In the previous chapter, the topic was primarily how to prepare succeeding generations to inherit. However, there's much more to family communication than parent–child conversations. Open, clear, and honest adult communication is essential for individual family units and the family as a whole. Differing viewpoints inevitably arise in any group of people trying to arrive at consensus around sensitive issues, and such topics can be even more difficult to resolve in a family setting as members strive to avoid disagreements or hurt feelings, or, alternatively, erupt into angry altercations.

Who Needs to Be Heard?

As Sylvia Shepherd mentioned in “Representing Family Constituencies: The Role of the Family Council,”2 each family has a variety of constituencies within its make‐up. Gathered together, these “multiple, overlapping” constituencies can create a tangled web of interests and emphases. Shepherd mentions family branches, those who have married into the family, women, those working in the business (“insiders”), those with no ties to those who work for the business (“outsiders”), different generations, and minority shareholders as the constituencies of her family council. Each of the constituencies may have very different communication needs. For example, Shepherd noted, those who work in the business have access to information the rest of the family doesn't. They have little need for the types of communication the other family members require to stay up to date about the actions of the council.

Communication between and among family branches becomes more complex as the family grows. In the second generation, sibling communication may be informed by old rivalries, jealousies (“Mother always loved you best,” as the Smothers Brothers used to say), and unresolved—often petty—conflicts that go all the way back to childhood. By the third generation, the cousins, who may or may not know one another well, might either have absorbed a great deal of positive energy or be carrying their parents' baggage into their interactions with the family members of their own generation.

The Perils of the “Other Conversation”

Although human beings talk a lot, nonverbal communication makes up anywhere from 75 to 90 percent of our total communication efforts.3 The lift of an eyebrow, a tiny postural change, or pursed lips can be the most telling aspects of any conversation.

Nonverbals can erect a barrier to communication even within a single culture. However, today's ultra‐wealthy families often are spread out internationally, and members of a far‐flung family may marry into another culture. Even if both marital partners are fluent in the language used by the family, nonverbal cultural signals can be powerful—and misunderstood. Such issues as eye contact (optics), gestures, and touch (haptics) can be misinterpreted, and the result may be unintended slights or outright insults that can gum up the entire web of communication. In a global world, knowledge of other cultural norms is essential for business purposes; for a family, such understanding is a prerequisite for unity and harmony. If the family needs help in navigating cultural barriers, the subject is a good one to learn about and discuss at a family retreat or assembly.

In spite of the potential barriers, nowhere is transparency in conversation more important than in a family as it deals with its multigenerational legacy. Daniel's family must be able to hear and understand the viewpoints represented by his cousin Noah's family, whether the cousins live across the street or across the world from one another. It can be a tricky business that sometimes requires intervention by an expert in multicultural communication.

Methods of Communication

As we examine the communication tools already mentioned—conference calls, newsletters, and quarterly reports, for example—it appears that all the communication flows from the top. That style works well if one person, such as the wealth creator, controls all the assets and decisions. However, as the family grows and control becomes decentralized, dictates from on high don't work anymore. In a group of fifty family members, there may be as many as fifty opinions about how a financial decision should be made, so despotic declarations are doomed from the start.

Communication works best when it is timely, clear, and ongoing. Modern technology makes that possible, and today's wealthy families expect information to be available at the touch of a key or a swipe across the phone. In fact, The Futurewealth Report: Stepping into the Communication Age 2012–20134 revealed that high‐net and ultra‐high‐net‐worth individuals “have a strong appetite for digital communication and . . . expect their financial providers to follow suit.” The report also stated that it's the richest of the rich who were the “earliest adopters . . . [spending] 28 hours on digital . . . communication per week, compared with 19 hours among [wealthy individuals] as a whole.” Although texting and other forms of digital communication have become more prevalent, it was the “uber‐wealthy” who pioneered these forms, and their appetite for them appears to have remained constant or increased over time.

In response, many wealth‐management firms or groups of professionals have created dedicated, secure family portals for basic communications: net worth today, asset allocation changes, or dates of the next family meeting.

The portal also can house newsletters or other communiques about shifts in the macroeconomic environment, international investing, changes to the tax code, updates to legislation, philanthropic opportunities, and a host of other topics of interest to the family. Family members can check in anytime from anywhere. Perhaps most important, a sophisticated portal can serve as a communication hub in which family members can ask questions about what they've read or heard and receive answers either from their professional advisors, members of the communications team, or other family experts.

If immediate action is needed, families are becoming more and more comfortable with text messages. Today, busy people may check their email only every day or so, but texts create a sense of immediacy, and those receiving them tend to respond much more quickly than they would to an email. Digital natives are particularly at home with this kind of communication. Many texts can be sent at once, making them more efficient even than telephone calls. In a crisis, texts are invaluable, even if all they do is direct respondents to the family portal for immediate information, action plans, and permissions.

Messages, however they are transmitted, should reflect the family's information needs and communication preferences. Some family members don't want to spend every waking minute staring at a screen, especially if they do so all day working in the family enterprise. They prefer ink‐and‐paper news they can read at leisure. They like to take their time digesting the data and writing marginal notes and questions. These communiques don't have to be glossy, four‐color newsletters. A simple black‐and‐white presentation is usually enough. Some prefer their updates to arrive on a regular schedule, whether that's daily, monthly, quarterly, semiannually, or even annually, while others like the up‐to‐the‐minute advantages of electronic information.

Clients may want face‐to‐face communication, but if family members are scattered throughout the country or the world, interactive programs such as Skype or FaceTime may have to suffice, providing time zone issues can be worked out.

If electronic communication is the preferred method, today's families demand firewalls that are resistant to hacking and data breaches. A portal that isn't secure can expose family information and personal communication to the world.

For working on basal issues, such as the mission and values statements or such decisions as changing the investment strategy, choosing philanthropic directions, or preparing the next generation to assume new roles, nothing beats a high‐touch, all‐hands‐on‐deck assembly facilitated by experts who assist the family in dealing with the concerns that are the subjects of the meeting. It is a time to examine—or reexamine—the family's goals or figure out how to realign family dynamics so the mission is accomplished with a minimum of friction or stress. And when the business is done, bonding is enhanced by a variety of family activities, history sessions, and whatever the group feels is comfortable and enjoyable to do together as family units or an extended clan. It's ideal when the family leaves such gatherings or retreats with a sense of camaraderie and renewed purpose.

Who Talks?

Ideally, in a family, everyone has a chance to have the floor. Some will try to dominate all conversations. Some don't have much interest in communicating at all. As with any bell curve, though, the vast majority are in the middle. These are the constituents who want to have some sort of say in the family decision‐making process, whether that's a lot of input or simply an occasional check‐in.

However, it's probably members of the family council or its communication subcommittee—possibly informed by its professional advisors or family office—who will handle the majority of outgoing communication. They are, after all, the ones closest to the action, and they may have special expertise in investments, banking, or other financial disciplines.

Nonetheless, those charged with outgoing communication may not be the ones best equipped to deal with incoming messages. Communication is a balanced equation: talking and listening. Data‐gatherers and tacticians may be articulate spokespersons, but they may not have the listening skills necessary to ensure clear communication.

Listening is an important but often underappreciated talent. In fact, research tells us that most people remember only about 50 percent of what they hear, and after a period of forty‐eight hours, memory drops to approximately 25 percent. Good listeners up that ante:

  • They pay attention to content. They listen to the speaker's words and focus on what's being said rather than on the speaker's style of presentation, what he or she is wearing, or counting the “ers” or “ums” the speaker drops into the conversation. Not everyone is a polished orator, but he or she may have very sound opinions and ideas.
  • They concentrate on the speaker. No, they don't stare at them unblinkingly, which is likely to create uneasiness, but they also don't check their messages or play games on their phones, either. Nothing makes a person feel more important than been fully seen and heard.
  • They avoid rehearsal. Good listeners don't formulate their responses while the other person is still talking. Rehearsing is the antithesis of paying attention and concentrating—and when the listener butts into the other person's narrative with a well‐rehearsed answer (often a defense or rebuttal), it's a dead giveaway that he or she hasn't been listening to a word the conversational partner was saying.5

Listening keeps discussion moving because good listeners ask the important questions, make an attempt to involve every stakeholder in the conversation, attend to every viewpoint, and assist in finding areas of agreement, especially if those involved seem to be at opposite ends of the communication spectrum.

Excellent listeners also keep the end game in mind. Rather than be bogged down in the minutiae of a difference of opinion about how money should be disbursed or invested, an exceptional listener can develop rapport with a variety of family members and guide the conversation in a positive direction by leading them to consider what impact their personal desires may have on the family mission and values. Keeping those values at the forefront often can result in a workable compromise even if family members seem to be at an impasse.

In short, then, a communication subcommittee or handpicked members of the family council should include both great talkers and superior listeners. If listening skills are not resident in family members, more and more wealth management teams include psychologists and other professionals trained in listening and conflict resolution. As Jim Grubman, author of Strangers in Paradise: How Families Adapt to Wealth Across Generations, says, both family members who wish to take on an important communications role and their advisors should possess “great communication skills, the ability to listen [and] show empathy, skill in interviewing and responding to multiple family members, and even skills in speaking clearly without jargon to all types of clients.”6

Clear, precise upstream and downstream communications are critical to family wealth management. If communication is neglected, even the most carefully planned strategies and tactics may founder—and family unity may suffer irreparable harm.


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