High-net-worth families can bridge the emotional disconnect between the generations with help from advisors and specialists in the field, says Francesco Lombardo, managing director of Veritage International, a global coaching firm based in Bermuda.
Lombardo created a coaching process and program focused on “emotional governance,” the ability of individuals to acknowledge and regulate emotions, and started Veritage in Vancouver in 2008, relocating to Bermuda in 2021.
The company surveyed and virtually interviewed 35 founder-owners and 42 next-gen members of wealthy families to get their perspectives and recently published a report called The Missing Link in Family Business Transitions, especially focusing on the transition of leadership. (See Canadian Family Offices’ article about the survey here.)
Emotional governance is having your emotions and feelings in such tight regulation that they’re an asset and not a liability.
Now, Lombardo speaks about why the research is important, what the emotional disconnection between the generations could mean for Canadian business families, and how they can prepare emotionally for succession challenges in the coming years.
Why is the lack of emotional connection a problem in wealthy families?
We don’t feel emotionally safe enough with each other to have the level of depth in conversations that we need to have, and that’s a human thing. But in family businesses, it’s exaggerated because of what’s at stake. You have a lot of money, you’ve got a lot of responsibility, a lot of business challenges and a lot of emotional stuff that founders and the next gen aren’t equipped to talk about.
What could happen to family enterprises who aren’t comfortable talking about these things?
If you play the movie to the end, as they say, statistically families break up and businesses break up. From a Canadian perspective, a company could get bought out by a foreign entity, so we lose precious Canadian assets to foreigners because the family members didn’t feel comfortable talking to each other.
This isn’t the first time we are hearing about succession issues. Is there now a better understanding of the problem? And expertise to address it?
Since I started Veritage, which is almost 20 years ago now, there indeed is a greater awareness of these issues. The challenge with that is some of the advisory firms and wealth-management firms in Canada and globally are saying, ‘We can solve these issues,’ and they’re masquerading this as an issue of governance as purpose and legacy, as opposed to getting to the root of the problem: emotions.
Can’t these advisors deal with these emotional governance issues?
I think that their intentions are good, but I’m going to use a rough analogy: It’s like a general practitioner saying, ‘I can perform cardiothoracic surgery.’
You note in the report that there can also be a do-it-yourself mentality among business owners when it comes to addressing issues like these.
Stuff like this is very difficult to do yourself. And I think it’s difficult sometimes for people to acknowledge the limits of what they’re able to solve within the family.
Where does that leave them?
When we work with founders, one of the first things they tell us is that they’re scared, and they don’t know what to do and who to talk to. These founders are high chargers, incredibly successful, and, in their view, showing emotion is vulnerability, and that means weakness.
Because we’re human beings, we’re going to bring emotions to the table.
What are they afraid of most?
Not knowing how to talk to the family. When I ask founders for their vision for the family, usually it’s the superficial stuff. ‘Well, I want family harmony. I want them to love each other, to communicate.’ And when we ask, ‘What’s the vision for the wealth? The money?’ They can’t really answer. And when we say, ‘What’s the vision for both of them combined?’ then they’re like, ‘I never even considered that.’
What is their biggest worry about family harmony?
They say, ‘I’m afraid that when I’m gone, the money is going to destroy the family.’ And you know what? They’re absolutely right. That’s a genuine concern, and a genuine reality.
What is emotional governance and how can it help?
Emotional governance is having your emotions and feelings in such tight regulation that they’re an asset and not a liability to the system that you’re involved in, which includes yourself, your relationships and your wealth.
So you’re governing your emotions?
Yes. A Canadian client family of ours says: ‘We need to leave our little wounded children outside the boardroom door and ensure it’s adults only when we’re having business conversations and ownership conversations.’
How can families work on these issues?
The first thing is they need to say, ‘Even though we’re worth hundreds of millions of dollars, at the end of the day we’re human beings, and human beings have these funny things called feelings, and feelings are actually a good thing. They’re not something that should be shunned or ridiculed or be ashamed of. And we need to acknowledge that we have these feelings.
Governance doesn’t regulate emotions. Individuals do, but they need coaching to be able to do that.
And we may want to ask ourselves, what’s the impact that these feelings have on the system? What’s the impact my feelings have on my siblings, on my decision making, and on how I feel about money?’
You mention in the report they should normalize the struggle.
Yes, normalizing means saying, ‘We are part of this thing called a family of wealth, and that means there’s going to be pressure, there’s going to be emotional challenges. That doesn’t make us dysfunctional, it makes us human.’
Families should look for external experts like you to help with these conversations?
Yes. Families say, ‘I need an international trust, so I’m going to go talk to an expert trust lawyer at one of the top law firms.’ Think of me as a very specialized tax lawyer, but on the emotional side.
What can family business advisors do to help?
They should observe the emotional undercurrents. A lot of advisors consider that this isn’t their mandate, but it’s not too hard to gently and compassionately say, ‘Hey, I’ve noticed something. Would this be worth exploring?’
Can some advisors be a little too close to the family, so having a third party is preferable?
Yes, a lot of these advisors are emotionally vested as well. And some advisors don’t want to rock the boat, because they don’t want to lose the client.
What’s important for the advisor community to understand?
When family members can communicate with each other the way they want to, everything else flows easier, because the emotions are regulated. Governance doesn’t regulate emotions. Individuals do, but they need coaching to be able to do that.
What am I looking for in an outside advisor on these issues?
You’re looking for someone who only does this work. On LinkedIn, there’s folks who have their title as family architect, family governance. And when you scroll down, they sell insurance, they’re lawyers, it’s not what they do on a full-time basis. They’re biased by the offerings they bring to the table: insurance products, wealth products, structural products.
Some advisors don’t want to rock the boat, because they don’t want to lose the client.
Your report highlights major emotional disconnects between the generations. Can these be solved by families?
If there’s a true desire, yes. The question is, do they really want the wealth and the family to work together in harmony?
And if the desire is there, can they govern their emotions and make things better?
Yes. What is overlooked and often taken for granted by the community of families and advisors alike—and this is a global thing, not just in Canada—is that our emotions are inherent in every single decision we make. Because we’re human beings, we’re going to bring emotions to the table.
So if we can master how we manage those emotions, the decisions will be better decisions.
Mary Gooderham is a writer, editor and communication advisor based in Ottawa. She leads Cohen Gooderham Communications and has worked as a journalist for more than 40 years at The Globe and Mail, as a recording officer at the International Monetary Fund and as a custom content creator for online and print media. She’s been a contributing writer at Canadian Family Offices for four years, focusing on investment strategy, trusts, philanthropy, women in finance and estate planning.
The Canadian Family Offices newsletter comes out on Sundays and Wednesdays. If you are interested in stories about Canadian enterprising families, family offices and the professionals who work with them, sign up for our free newsletter here.
Please visit here to see information about our standards of journalistic excellence.