Meet the family

By working with clients to ensure they have their estates in order, financial advisors play an important role in helping this transfer go smoothly.

The transfer of wealth is not the end of the story. Your job also includes helping the next generation prepare for their inheritance. And because there’s no guarantee that any of those assets are going to stay with one particular advisor, your challenge is not only to effect a smooth transfer of wealth within the family, but also to retain as many of those assets as possible.

Says Deans: “You can spend all this time attracting, landing and serving a client, only to lose [him or her] because you haven’t taken that one extra step.”

That extra step is organizing family meetings to bring family members up to speed on the estate plan and the family’s finances, and to help the next generation plan for life after the wealth transfer.

Professionally facilitated family meetings, once the purview of ultra-wealthy families only, are becoming more commonplace for even moderately wealthy families.

Over the past few years, Deans says, many advisors have been offering intergenerational planning and family meetings as a way to distinguish their services further from those of robo-advisors.

“The human advisor is moving up the food chain and adding more value in the form of having these family meetings,” he says. “You can’t write an algorithm for family meetings, but you can develop facilitation skills and communication skills to help families talk about and plan for the most inevitable thing in life.”

Al Jones, president of A. Jones Wealth & Estate Planning Inc. in Barrie, Ont., agrees that offering to organize family meetings can set you apart from your competitors.

“[A family meeting] is about really being attuned to the client and not the numbers,” he says. “It’s not about the money; it’s about how the client perceives the money.”

Jones, who has led family meetings for about 25% of his clients, says he’s very up front with clients, asking them what they think their children will think about the parents’ financial plans, and whether sharing the financial plans with the kids would make sense. Jones points out that keeping financial matters secret only increases the chance there will be issues after the client’s death.

Léony deGraaf Hastings, president and elder planning counsellor (EPC) with deGraaf Financial Strategies in Burlington, Ont., says that because she is an EPC, many of her clients typically come to her in their 70s or 80s. These older clients rarely resist her suggestion that they bring their adult children into the estate planning process.

When deGraaf Hastings presents her recommendations to her clients with their children present, she says, she not only allays the younger generation’s fears regarding an advisor unknown to them, but this exercise also provides some protection against possible future impropriety conducted by a beneficiary.

“[When the family knows details of the estate plan], that helps build a fence around your client,” deGraaf Hastings says. “Oftentimes, the next generation will hold power of attorney. And if they come in five or 10 years down the road and want to make changes [to the financial plan], you can refer to [the original family meeting to discuss] why the client wanted it this way in the first place.”

In many cases, deGraaf Hastings adds, the children appreciate how she has treated their parents, which can create a sense of loyalty. So, when the assets do change hands, deGraaf Hastings often is kept on as the children’s advisor. And many of her referrals now come from the children of clients.

Not every client is immediately prepared to sign up for a family meeting, says Paul Tyers, managing director and advisor with Wealth Stewards Inc. in Toronto. Tyers began incorporating family meetings into his business five years ago; after reading Deans’ book, Tyers was compelled to sit down with his own family to have “the talk.”

Tyers suggests you begin by encouraging your clients to explore their own story: What brought them to where they are; what challenges did they face? Once clients begin sharing their personal journeys, asking them if they think their children should hear those stories becomes easier.

There are no hard rules about running a family meeting, and each meeting should be customized to the needs of each client. And, as Tyers points out, one of the main gifts advisors bring to a family meeting is neutrality.

“You have to be a bit of a referee, and it takes the client off the hook,” he says.

Here are some tips to help you run a successful family meeting:

– SET AN AGENDA

Lay out expectations for the meeting ahead of time so that participants know what to expect, Tyers says.

Deans suggests having a “pre-meeting” with your client at least two months beforehand to develop the meeting’s agenda, then circulate the agenda a month prior to the meeting.

Jones, meanwhile, often uses a pre-meeting to have clients draw up a “genogram,” a family chart that outlines the often complicated trail of relationships – through marriage, adoption and so on – within the family. This step can encourage more discussion about family dynamics.

– STAY FLEXIBLE

With family members often spread far and wide, you may have to decide whether to stick to face-to-face meetings, which may involve travel, or use technology to bring families together. Barry Dennis, an EPC with Dennis Financial Inc. in Fredericton, which operates under the Investment Planning Counsel Inc. banner, says that at the very least, the initial few meetings must be in person. “You can’t build a relationship on Skype,” he says.

– ENSURE CONFIDENTIALITY

The first family meeting should begin with a family mission statement, outlining what the family hopes to achieve, Deans says. There should be an oath of confidentiality that each family member agrees to before proceeding, he says, and each subsequent meeting should begin with a reminder of the family’s privacy policy.

Tyers, meanwhile, likes to use the beginning of a meeting to remind participants that it is not a forum for airing past resentments. He’s had to play peacekeeper more than a few times during family meetings as conflicts among adult children have boiled over and, on one occasion, even became physical.

– LIMIT CROWD SIZE

Inviting every family member to the first meeting makes little sense. Jones, for example, might encourage so-called “sandwich generation” clients to have a separate meeting with each generational slice – the kids and then the grandparents – in order to determine everyone’s point of view before trying to organize a larger, more inclusive meeting.

Meanwhile, deGraaf Hastings asks her clients, outright during the pre-meeting if they have any concerns with beneficiaries regarding issues such as mental health, addiction or debt. In some cases, the first meeting might exclude the spouses of the client’s children so that the client is comfortable expressing him- or herself, especially if worried about a family member.

– WELCOME MINORS

Although most advisors think family meetings are exclusively for adults, Deans says, wealthy families often include children as young as five years old at family meetings. The young ones may get bored, he says, but they’re also absorbing a healthy connection to what the family has created, which can make for a more responsible attitude toward family wealth as they get older.

– CONSIDER OUTSIDE RESOURCES

Complicated family dynamics can require expertise beyond your training. Having a roster of other professionals at your fingertips can help your clients’ families and cement your role as a family’s financial quarterback. Besides the usual lawyer and accountant recommendations, advisors interviewed for this article have provided contact information for marriage counsellors, family therapists, addiction specialists and even nutritionists.

– TAKE NOTES

Minutes should be taken at every family meeting to record decisions made and points raised and to remind family members of matters that must be addressed before the next meeting.

Minutes can come into play if someone decides to contest the will years later, Deans says. Those minutes can serve as evidence that the will was developed through a deliberate, considered process unencumbered by incapacity or undue influence.

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