Discussing matters such as philanthropy, legacy planning, or estate planning can be challenging for families. These can be emotional subjects but more often, issues arise when discussing family wealth planning because family members rarely view wealth the same way—yet families may assume that they all feel the same.
So how can you ease the discussion and make sure you’re all on the same page? Rikesh Thakrar, Senior Wealth Planning Strategist, and Craig Fairey, Wealth Advisor—both with The Private Bank—discuss how to create more opportunities for inclusion and collaboration among your family and your financial professionals.
Be candid about motivations and needs
To truly understand your goals, values, and objectives and those of your spouse or partner as well as your extended family, Thakrar and Fairey say you need to go beyond the rational side of wealth and uncover the emotional drivers, including motivation and communication and learning styles.
Candid planning conversations can bring clarity to everyone’s needs and showcase how personalities play a significant role in how people view and assimilate information, as well as the amount of detail they require. “The more analytical, data-driven type might appreciate more detail in a report—such as modeling for things like cash flow, sustainability, and overall asset allocation, even capital market assumptions,” Fairey says, “whereas others may simply prefer high-level bullet points on investment performance.”
Understand individual goals and interests
To help clients see the emotional motivations behind their financial decisions, Thakrar and Fairey hold a core planning review that uses discovery cards. Each of these cards is labeled with an important planning topic, such as philanthropic pursuits, legacy planning, or protecting against taxes and inflation.
To start the planning conversation, each family member receives a set of the cards and independently selects his or her top-five goals. They then discuss their selections with their relationship team and their family members. Thakrar and Fairey have found that these discussions are especially productive for two important reasons—which all families can use to have similar discussions, even without the cards.
First, because the topics focus on goals and not money, the exercise gives equal voice to the person who may not have as much financial knowledge or interest. When all parties are engaged in the process, the choices the family makes become more balanced.
Second, the selected topics can open up a conversation that may not have happened otherwise, as participants dig deeper to understand what each person means when they have goals like “manage debt” or “define estate and legacy plans.”
Acknowledge concerns—and be open to solutions
While it can be a little uncomfortable at first, uncovering what matters most can lead to some astonishing breakthroughs. For example, Thakrar has a client with significant wealth in an existing business; the client’s second wife is heavily involved in the business, but his children are not. His initial plan was to leave the business to his children from both the first and second marriage, but his wife would prefer not to work with, or for, her children and stepchildren. She doesn’t want them to be disinherited but also didn’t want to inherit a minority interest in a family business where she might be outvoted.
The surprising piece? “The husband had no idea this dynamic existed because they’d never talked about it,” Thakrar says. Through a family financial planning conversation, they were able to work through it together. “The result will be a structure where the business entities will be separated between the second wife and four children so that things might be less complicated for them going forward.”
Successful planning starts with building trust and understanding before taking action, Thakrar and Fairey say. Being candid about your goals and concerns is one key to creating a holistic plan that helps prevent problems down the road. Keeping that plan up to date as your needs and situation change rounds out the process.