Transferring wealth to the next generation event recap

Photo of Mike McGrann speaking to crowd

Establishing lines of communication between generations within wealthy families has never been more important, especially as it relates to succession plans for a family business or inheritance structures. So we organized a town hall event focused on making these discussions less daunting and more effective. 

April 28, 2016, Hotel Monaco, Pittsburgh, PA

Waldron hosted Pittsburgh’s next generation of business owners, inheritors and professionals at a town hall meeting moderated by Mike McGrann and Jonathan Habbershon of The Telos Group, a consulting firm specializing in developing the mindsets and capabilities of families to create wealth across many generations. Guests mingled with their peers during a pre-event cocktail hour, then participated in the town hall. The focus of the interactive discussion was educating our under 40 audience about the multiple perspectives in play when discussing potentially uncomfortable topics with parents and other family members, like business succession planning and inheritance structures. Guests were encouraged to share their concerns and challenges with the moderators, who applied their 40 years of collective knowledge to attendees’ particular concerns while educating the group about some of the counter intuitive complexities involved, and providing tools and knowledge to employ within their own specific family situations.

Family Expectations

To kick off the event, the presenters discussed the implicit and explicit expectations both children and parents have about their particular roles within their family, or within the family business. If a child moves his or her family back to the region where the family business operates, and commits years of service to that business, do they have a right to expect that one day they will take it over? Can the parent reasonably expect that the child will follow an appropriate development path, including the education and training which they consider necessary to run the business, before they cede control? Many of the obstacles that family members face when broaching these sensitive topics were examined to provide understanding from both perspectives, including the identity issues which can arise when a business owner steps away from a business that has defined him or herself for so many years, and mortality.

Improving Communication

The second major topic was how can one change the structure of the relationship from that of parent and child to one of peership?  Mike and Jonathan discussed a variety of methods that might be employed to establish a more level playing field, and to update the dynamics between generations, while maintaining respectful boundaries. When broaching the topic of inheritance or succession planning with a parent, a child can establish a level of trust by intentionally establishing boundaries at the outset, by expressing that while they would like to have a voice in the conversation, they understand a voice is not the same as a vote. This can diffuse some of the apprehension both parties might feel by clearly indicating that they are not suggesting putting the cart in front of the horse. Another suggestion for opening the lines of communication could be simply asking a parent what they want their legacy to be. By acknowledging the hard work they have put in, and the success they have achieved, the conversation is framed in a positive way, and may open some doors which had previously remained uncomfortably shut. Children may also considering asking a parent what are some issues that they, as parents themselves, should be aware of when raising their children? A key element of the conversation is understanding that a legacy can live on long after a parent has passed, and that by discussing and defining specific goals, both parent and child may find themselves working together as peers to achieve them.

Goal Setting for a family or a Family Business

The final portion of the session focused on the critical importance of setting goals for a family or a family business. The example discussed was that of a family who ran a successful business, with all six children working in one capacity or another within it. One child worked exceptionally hard, and sought out the appropriate education and training to assume a senior management position, while another, taking an equal paycheck as the first, focused his energy almost exclusively on playing golf. When the parents had passed on, the children learned that no succession plan had been put in place. Predictably, the children disagreed about what the new structure of the company should be, who should be the new CEO and who should be fired. Lawyers were gainfully employed for years as the children fought and the company crumbled around them. The lesson here was quite simple – while discussing the topics of mortality, or the restructuring of a business after a parent has stepped down may seem daunting, the alternative will almost certainly be worse.

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About the Author

Matt Helfrich, CFP® is a partner and the president of the firm. He leads Waldron’s strategic vision, brand and value proposition, and overall culture.

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