Succession planning: For those seeking help with family transitions, buyer beware

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In the last while I’ve had a tax lawyer say to me that “I do this type of work,” referring to dealing with complex family dynamics. I’ve had an insurance agent say to me that “the kids often ask me for career advice.” And a social worker recently told me that their personal counseling of a family member is linked to the work they are doing in transition planning within the family business.

The list goes on, but I suspect you see the essence of the problem. Succession planning and inter-generational transfer of leadership, whether in the family business or family office, has become the Wild West. The list of service providers includes accountants, tax accountants, tax lawyers, bankers, human resource practitioners, management consultants, insurance agents, social workers, estate planners, investment dealers and so forth all claiming to be in the business of “succession planning.”

Here’s the challenge. When advising families, regardless of whether a will is being drawn up or strategic planning is taking place focused on transferring leadership of a business unit, function or the entire enterprise, it is virtually impossible to avoid having to deal with family dynamics. And, of course, the more complicated the dynamics the more the service provider needs to be deeply versed in how to tease out the root issues and deal effectively with them.

To say that “I work in that arena” is like saying, “I’ve gone to the dentist countless of times, therefore I know how to pull teeth.” Or, “My family went through a succession process, therefore I’m expert in succession planning.”

The demand for succession work is on the rise, driven in part by the countless number of baby boomers who are about to retire or have recently retired, with varying levels of wealth, some with extraordinarily valuable estates and businesses. The field has thus been inundated with people who purport to be skilled in succession planning. Yes, they can help families shelter their hard-earned estates with tax, insurance and investment strategies when the patriarch/matriarch passes on. Some might recognize that they need to become better acquainted with family dynamics as they keep running up against family differences that impede progress toward assisting their clients.

The challenge, however, is that a large number of these business people do not stay in their swim lane. Why? In some cases it’s to maintain ownership of the client by not inviting practitioners with appropriate training and skills to the table. Others are fearful of having their fees cannibalized, and some are afraid of losing their client. Some cannot admit that they are in over their heads, and others genuinely believe that they can assist and all that is needed is common sense.

The practitioners I truly get a kick out of are those who state that “we have a team behind us” – referring to people they know in a variety of fields they can call on – with them, of course, serving as the quarterback. The “mythical team” rarely shows up, but it’s a powerful selling tool.

As they say, “the road is filled with good intentions” … or not. Recognizing that they need to differentiate themselves from one another, many of these “succession planners” are turning to 6-day to 12-month “certification” programs offered by universities or private companies selling the notion that, if you pay the $10,000 to $20,000 fee, you can hold yourself out to be a legitimate family business/family office practitioner with some sort of non-sanctioned designation following your name. Some business people who follow this route even claim that their certificate is the “gold standard” for those who work in the field. Well, none of these certifications are government-regulated with peers and community members in place to oversee who delivers what service and their qualifications. And the public has no recourse should the service fall apart, or worse.

What ought the unsuspecting public do to protect themselves?

First and foremost, recognize that a tax lawyer is a tax lawyer, an HR practitioner deals with HR issues, insurance agents sell insurance. This is how these folks earn a living. They are not experts in individual, family and organization dynamics and processes, all of which are essential to crafting and implementing successful succession plans when transitioning the family business or family office. You may get wonderful advice from your barber, taxi/Uber driver or hairstylist, but we all know what the value of the advice is, even though it may be well-intentioned.

So, who is truly qualified to deal with the broader issues pertaining to succession and is in the best position to act as the quarterback, especially if in your heart-of-hearts you know that your family and their dynamics will undoubtedly present challenges? There are now graduates of MBA programs who have followed a specific two-year educational program in Family Business and Entrepreneurship – preferably, including an internship working alongside an experienced practitioner with a similar background; or, they have that particular MBA plus they have comprehensive training (not one or two courses) in social work, clinical psychology, etc., which gives them a level of expertise regarding individuals and families, coupled with the business acumen.

Ideally – and this will undoubtedly sound self-serving – those with a background in organizational psychology and are licensed practitioners (which typically means that they have a doctoral degree, well-defined internships and are part of a regulated profession, regardless of province or state) ought to be turned to first and foremost for succession planning. They, in turn, can support all of the other professionals who need to be assembled to provide a comprehensive service that will ultimately be embraced by all family members and stand the test of time when the patriarch or matriarch are neither active or have passed on.

Since most people aren’t familiar with what is frequently referred to as an industrial/organizational psychologist, let me explain their typical expertise that is relevant to family businesses and family offices. Most of them will have master’s and doctoral level training in business strategy and processes; individual, family and organization dynamics; psychological testing for career planning and executive coaching; change management; leadership training; organization design; and performance management and evaluation. In addition to internships during their academic training, they will have completed one year of post-doctoral supervised training, completed regulatory exams for licensure and been evaluated for their ethical practice standards. They must also complete annual training to maintain their standing with the psychology board that regulates the profession.

Gerald Pulvermacher has been in practice as a licensed psychologist for 50 years. His firm, Gerald Pulvermacher & Associates (GPA), is a global boutique consultancy with highly credentialed practitioners in a variety of disciplines. The firm is best known for its work transitioning leadership in family businesses and family offices to the next generation, supporting the next gen via executive coaching, working through thorny issues so that family members are willing to embrace change, helping the next gen craft and implement their organization strategy, organization redesign (should that be required), change management, development of governance structures and family charters that will stand the test of time. GPA works closely with specialists in insurance, tax, legal and investment but does not offer these services. GPA has worked extensively with families in such sectors as real estate, automobile dealerships, professional services, home care, staffing and energy, as well as related engagements with hospitals, Crown corporations, energy, lottery, long-term care, pipeline, airport, central banks, pension funds, insurance companies, merchant banks and partnerships.

More from Canadian Family Offices:

• Nitty-gritty of succession: Holding a mirror to families, looking for leaders
• Wealthy people and family offices: Hackers see you and know you’re not ready
• Ten things keeping well-to-do Canadians awake at night
• As ‘godfather’ of family offices in Canada, Tom McCullough and his vision stand test of time

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