Survey says: How to calm the waters when client families don’t see eye to eye

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Whether it’s adult siblings squabbling over whether to sell their parents’ business, or a disagreement about putting grandma’s palatial Muskoka cottage on the market, even tight-knit families can unravel when multiple agendas are at play.

How can families resolve these conflicts and move forward? We asked professionals at three family offices how they help wealthy clients make tough decisions when opinions clash – and still keep the peace (or at least, avoid litigation).

Elke Rubach, president, Rubach Wealth, Toronto

“I want to teach people to discuss these conflicts because sometimes they think if they don’t talk about them, they’ll get solved miraculously. But guess what? No.

“So, first, you need to understand who’s hiring you. Who’s retaining you? But you can’t pick sides. You need to remain neutral. Then it’s about bringing all the parties to the table and having an adult conversation. How do we maximize the value of this asset, business or cottage? Who vetoes whom? Then you set the ground rules.

“If it’s a decision about keeping or selling the business, well, I can usually see that some of the family members are willing to run it – but are they able? Just because you’re cute, or your last name is – fill in the blank – doesn’t mean you’re the CEO.

“It gets emotional. That happens particularly when you’re doing intergenerational transfers. You have the founder, with a lot of pride, saying, ‘You don’t know what it’s like to risk your shirt. There were days I slept in the car. You entitled brat!’ And the other side says, ‘I’m not an entitled brat. Let’s just automate this to make it better and faster.’

“You keep it professional, and you keep bringing everyone back to the whiteboard because that’s where the rules are that everyone has agreed to. What happens if you’re angry? Where do we draw the line? When is it time to stop the meeting? We decide those in advance and we keep to the rules.

“Generally speaking, everybody wants harmony in the family. The biggest fears are living beyond their savings and a war in the family. But if one of them doesn’t care, then that’s a different story. That’s a whole other problem! Sometimes you get the rowdy ones who come just to make a point. I’ve seen ashtrays fly – and they didn’t fly on their own.

“If you’re not making progress, you’ve got to be the first one to acknowledge that. If everything gets really stuck, you bring other advisors in. But the most important thing is to have these tough conversations early, because if you don’t, and grandpa founder passes, welcome to World War Three.”

Jason N. Vincent, president and chief operating officer, Matco Financial Inc., Calgary

“There are three key components when dealing with conflict. Trust is at the very top. You can’t manage conflict very well if you don’t have trust from the family. You’re hanging on for the ride versus out in front of it. To build that trust you need to have a history of giving great advice, or you lose credibility.

“Then there are two major buckets when you try to manage conflict: The first is qualitative – the numbers. It’s a more direct, black-and-white way to look at a scenario. You can take a problem and do financial modelling.

“The other bucket – qualitative – is more difficult to manage. Now you’re getting into different viewpoints and attitudes. That’s where you run into the problems. You don’t have to scratch the surface too hard to find current examples of this. Look at the Rogers family and the Shaw family. These are two high profile families that are embroiled in the qualitative side of things. ‘I want to go off on my own,’ versus ‘I don’t want to go off on my own or I don’t like my brother. I like my sister.’ All of these different pieces cloud long-term decision-making.

“So you’re trying to find common ground that helps you further the whole family entity, not just one side or the other. You take a step back and say, ‘Our goal here will be to establish options.’ The secret sauce is to try and define options that have actionable items. So instead of sitting down with both sides and talking in circles, you say, ‘I hear you and here is an option.’ And you listen to the other side and give them options, too.

“Usually working with a first-generation family is easier because the patriarch is still involved in the conversation and they wield more influence. They’re strong-arming the family into a direction. It’s actually more difficult when you’re dealing with second- or third-generation conversations. They might be the kids or the grandkids who don’t have the same values or beliefs as the founder.

“Or I have clients who mention, ‘I’d like my kids to keep the business going.’ And I have to say, ‘Are they aware of this? Do they know what your intentions are?’ If not, that’s a recipe for disaster. That means you need family meetings and to groom the kids and grandkids.

“These conversations can happen over a period of years. If it’s something as minor as wanting to sell a recreational property, it can go fairly quickly. But if it’s about a business the family has built over 40 years, it often takes time to arrive at a position where you finally have actionable items you can execute.”

Christopher Singh Gandhu, partner and family office leader for KPMG Canada, Calgary

“You’ve got to acknowledge the elephant in the room. Conflict is simply another form of tension, and if you have too much, it can lead to a breaking point. You can’t let things fester. You have to deal with them.

“Besides, conflict can actually be a huge driver of positive change, so there’s no reason to avoid it. The better way to deal with it is to just step away from the conflict, elevate it, and think about ‘why.’ Where is everyone in the family coming from? It’s not a zero-sum game. If I get my idea passed, I win and you lose. These families are in business together, so we have to focus on common goals and learn to collaborate.

“So, let’s assume the family has some governance in place. We have a facilitated meeting with rules of conduct, and everybody has a voice and can share their opinions. Then you want to look at the why. Why do you want to sell? There may be legitimate reasons. Perhaps these two opposing parties are at very different ages. One of them is in their thirties and is entrepreneurial, and the other party is in their seventies and looking to retire. There is a purpose behind trying to monetize the business.

“As soon as you elevate the conversation above the conflict and talk about the reasons why, you find some common goals. People aren’t polarized any more.

“Here’s a hypothetical: Someone who is retiring needs money to travel the world. So can we meet that objective? Is there another way we can get you to the finish line without selling the business? It’s not uncommon for families to say, ‘You know what? You can take this chunk.’ Maybe it is better to split the business and let the entrepreneur of the family run with it. And sometimes it’s fine to sell the business. There’s no good and bad here. It’s about understanding the perspectives of each family member and giving them a venue to share their thoughts.

“It’s amazing what solutions families will come up with on their own. You might have some ideas, but they’re also very creative. No one knows their family better than they do.”

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Responses have been edited for clarity and brevity.