Helping members of enterprising families communicate with one another can be challenging, but it’s critical to their overall success. And one of the most important flows of communication is between the founders and the next generation, who could hold the keys to a family’s financial longevity.
Lucy Ryan works with the next gen, helping them navigate complex family office environments, take on leadership roles and identify possible paths in life. Her clients range from as young as 11 years old to “children” in their fifties, but most of her work is with younger family members in their 20s and 30s.
A lot of the challenges spring from a lack of “goal alignment,” says Ryan, who is director of engagement and education at Cole & Associates in Vancouver.
“Maybe the next generation is hoping to take a certain direction, and their parents’ generation isn’t quite ready for that, or there’s a misalignment about the priorities,” says Ryan. “Often, how people are communicating, such as the language they’re using or style of communication, can be heard quite differently. Part of my role is to be an interpreter.”
Ryan addresses conflicts using strategic approaches.
One of them is “managing up”—coaching the next generation to help them communicate with older family members. She defines it as finding ways for the next generation to change the behaviours or influence the decision making of the generation above them.
“That sounds like a bad thing, but I don’t think it is if you have a common goal that both are trying to reach,” says Ryan. “It can help Generation 2 give Generation 1 the information they need, or set the stage for decisions to be made with their voice included.”
It’s important every voice is heard, she says. “Even if they don’t make the final decision, or have the power to make that decision, they can still feel their point of view was heard.”
Methods of communication between generations are important as well. For instance, they can be problematic if the next generation prefers texting. That can present a security risk when the topic is a sensitive family issue.
“A lot of our clients want to text us rather than using email, so I try to train the next gen to professionalize more and treat it as if it’s business, even with their family,” says Ryan. “Text is okay for a quick FYI, but we encourage people to formalize a bit more and go to email.”
Another challenge Ryan encounters with multi-generational communication is that sometimes parents find it difficult to stop parenting.
“Often you’ll see parents parenting their children who are in their 30s and the leaders of the family office now,” says Ryan. “They’re supposed to be the ones making decisions and having the authority to do that, but they keep getting spoken to with this power dynamic.
“So I do a lot of coaching, reminding everyone to stay in that adult-to-adult zone.”
Members of the next generation are excited to be at the table, she adds, and it’s the parents who generally slip up. “We’re often reminding parents to treat this as a work environment and not the dining room table.”
Seeing their children in a new light
As someone who experienced growing up with wealth and the challenges of navigating family expectations, Mark Leyton is uniquely positioned to help next-generation family members like himself define their roles and earn respect.
Now managing director of the Leyton Family Office, a single-family office based in Ottawa, Leyton says one recurring issue is that as the younger generation gains experience, the older generations often don’t appreciate what they have to offer and continue to see them as less than they are.
“This can be frustrating for the developing generation, as they’re often ready to take part in decision making at some level long before they’re given the ability to do so,” Leyton says.
Older family members sometimes find it difficult to see the evolving capabilities of the next generation.
“They remember you running around in diapers and saying silly things. If parents could become open sooner to the notion that their children have experience that is valuable, perhaps with the right guidance, this perspective could be beneficial in both the family circle and the business.”
Younger family members also sometimes feel they have something to prove, Leyton adds.
“Children of wealthy families often grow up with a certain expectation of quality of life and finances. In many cases, the older generation feels respect must be earned, particularly within the business. The younger generation has to show they aren’t entitled but are hardworking, capable and deserving of their voices being heard.”
Succession could be at stake
Doing so could also result in a smoother handoff of responsibilities when the time comes for succession, Leyton adds. Ideally, the older generation would acknowledge the developing strengths of their next gen, communicating effectively what they like, what they don’t and what still needs improvement.
“The previous generation will often have goals in mind for the next gen that may not align with what the next gen wants, but fulfillment will never be achieved by either if the discrepancy between these goals isn’t accepted or understood,” says Leyton.
If there’s resistance from older family members, then rather than get upset, or try to manipulate their way into more power or responsibility, the next gen should continue showing that they’re reliable and dependable, Leyton adds. “It’s important to be professional and not let frustrations from the family circle come into the family office.”
Asking the right questions is also key when individual goals of the next gen stray from the family path. Leyton encourages them to explore their options, as he did with his own show jumping career before becoming a family advisor.
“If they’re an artist, they’re going to want to paint,” he says. “No amount of pressure, guilt or encouragement is going to make an artist want to be an accountant. But I would try to ask enough of the right questions to see if there’s a way to blend the two worlds—maybe there’s another way they could be involved and add value to their family business.”
Gerry Meyer, founder and CEO of the Meyer Advisory Group in North Vancouver, says both sides need to have multiple conversations about where everyone wants to be in the future.
“What does the future look like, and how do I want to be involved in that future? And if this is how I want to be involved in this future, then how do I set myself up to be successful?” Meyer says. “Those are questions to be answered equally by the active generation running the business and by the rising or next generation.”
If succession is in the cards, Meyer says planning should start “long before most people want it.” He recommends a three- to five-year transition timeline, with both generations exploring expectations, aspirations and potential roles.
“It sometimes helps to have an independent individual who has really no vested interest in the outcome be the facilitator for those conversations to take place,” says Meyer. He often sits down with participants separately so he can learn about their expectations, concerns and potential trouble spots before bringing the group together.
Occasionally he turns to more dramatic techniques to shake up the conversation.
“I ran a session with a family where everybody was holding back because dad was in the room, so they don’t want to say anything, because they don’t know if dad’s going to agree or not,” says Meyer. “So during a break I asked the dad not to come back, and with his permission suggested a scenario where everyone pretended he had suddenly died.
“This allowed the family to discuss matters as if dad was no longer involved in the business. It was a learning moment for both sides, and most importantly, dad learned that his kids thought about things a little bit differently.
“Sometimes I have to be a catalyst to help the family have that conversation.”
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