It takes a lifetime to build a good reputation and only a moment to lose it. It’s a cliché, but it’s truer than ever – at least when applied to wealthy families in the age of social media.
In an era when nearly every tweet, Facebook post or media comment is taken as a potentially divisive political statement, high-net-worth people need to tread carefully online or risk ruining one of their most valuable assets: personal and corporate standing.
That’s what Charles Marino, chief executive officer of Sentinel Security Solutions, a global security and crisis management company in Columbia, S.C., has seen up close in the past few years. A former Secret Service agent who has served on protection details for three American presidents and a former U.S. Homeland Security advisor, Marino now consults for wealthy families and executives.
Security, he explains, must now include more than mere physical protection.
“Reputation protection is something that, unfortunately, falls through the cracks and should be a big part of how ultra-high-net-worth families ensure they protect themselves,” he says. “They spend a lifetime building their personal brand, so they really should focus on how to protect that.”
Reputation is, at its core, about opinion. And it’s perhaps as important to growing long-term wealth as choosing the right investments. Garner favourable opinions of your family or corporate brand and opportunities will follow. A poor reputation, on the other hand, can lead to fewer business prospects, more boycotts or simply a dearth of swishy social invites.
But reputation management is no easy task as the recent cultural shift to valuing transparency has taken hold, driven by social media, the Internet and social activism.
And therein lies the rub. How to maintain an aura of transparency while avoiding reputational harm by saying the wrong thing or even maintaining silence when the public demands a (potentially damaging) statement?
You have a choice: prevention or cure
Reputational management can be handled two ways: prevention or cure, says Daniel Trimarchi, director of family enterprise advisory services at KPMG Canada in Toronto. Prevention is about being proactive and anticipating potential problems. It’s also a better tactic than looking for a cure – or reacting to online attacks after they happen.
Unfortunately, family members themselves can be their own worst enemies. “Often the biggest reputational risks are those information shares or overshares,” he explains.
In crisis management there is such a thing as having too many chefs in the kitchen.Charles Marino, Sentinel Security Solutions
To prevent foot-in-mouth disease, he recommends creating boundaries within families determining who gets to say what online or to the media. Or they should hire a public relations firm to act as a first contact for media and to craft social media messages.
“It really needs to be a long-term, family decision,” says Marvin Schmidt, founder and first vice-president of the Schmidt Investment Group, a multi-family office at CIBC Private Wealth Management in Edmonton. And be sure everyone is on board. “If it’s not a unified front, your 24-year-old becomes the voice.”
Marino agrees, saying he often speaks to families about creating a “one-voice policy” that allows only a small group of people to speak publicly. But just as vital, only a few family members should be given access to important internal information, which could be leaked more easily if talkative Uncle Larry caught wind of it.
“In crisis management there is such a thing as having too many chefs in the kitchen. You have to identify who you feel you need at the table to make these important decisions and, more importantly, who doesn’t need to be there,” he says.
Protect the family name
Another way to be proactive? Protect the family name. Literally.
Shannon Wilkinson, founder and CEO of Reputation Communications, an online reputation management firm in New York, has worked with wealthy families for more than a decade. She says some families give their newborn babies more than silver rattles – they register their usernames online, or open their Twitter handles so they can’t be hijacked and misused years later.
“Unfortunately, people can create fake websites. There are legal means to have them taken down, but it’s not a fast process. The same is true for Twitter,” she says. “People should really lock those things down.”
Yet even if a family wants to remain out of the limelight, complete silence online is not an option.
Oversharing on social media especially risky for the wealthy
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Without a LinkedIn page, or a family office website, “you have no digital defense,” she says. In other words, if a family finds itself feeling the heat over, say, a former employee’s tell-all interview, those articles will be the first links readers find when they search. And those links won’t drop to the second page – and essentially out of sight – unless something else takes their place. That can take months or even longer.
The best line of attack is, again, to anticipate problems and create a wall of neutral online information. Hire an online reputation management firm to create a website that lists philanthropic interests. Or have articles written and placed in publications about family causes.
Wilkinson recalls a conversation she had recently with a wealthy client who seemed hesitant to create a LinkedIn account when he didn’t need it for networking or career building.
“I said, ‘Well, Jamie Dimon, the head of Chase Bank, has a LinkedIn entry. He doesn’t need one, but he has one,’” she says, mentioning that the social media platform ranks high in Google searches and can almost always takes one of the top spots in the search results.
“Even if you don’t work, it’s just a valuable piece of Internet real estate.”
Finally, perform thorough background checks on any employee who will be in contact with the family. That goes double for new love interests, says Wilkinson. Their background could come back to bite the family.
“If you’re dating someone who has a history of making lewd or racist or inappropriate comments on social media, your relationship with them is kind of an endorsement. It can really impact your reputation,” she says.
So what should a family do if the worst happens and their name is dragged through the mud?
“Less is more,” says Schmidt. Make one statement, but then leave it at that. And keep emotion out of it. “Because once you start pushing back, it usually doesn’t just end there. The media wins in these things because they control the context and the sound bites.”
Ultimately, the best plan is to think beyond spin.
Want to make a statement about equality and voting rights? Give your company half a day off to go vote, Schmidt advises. Or hire for more diversity and great talent.
“Because that,” he says, “will speak louder than any post you’ve made.”
Space launches could have been disasters
Don’t get Charles Marino started on the topic of billionaire founders shooting off into space. The CEO of Sentinel Security Solutions thinks these minutes-long trips are a bad idea – but not for the reasons you might expect.
To some, spending hundreds of millions of dollars to hop on Virgin Galactic or Blue Origin may seem tone-deaf during a deadly pandemic, but the blowback could have been far worse had there been a catastrophic failure during the minutes-long flights, he says.
“Many times these ultra-high-net-worth people are not just name-only. They’re also attached to their brand,” he says, pointing out that Branson’s vehicle even had “Virgin Galactic” emblazoned on its side.
While the successful flight was meant to usher in a new era of private space travel, if the rocket had experienced a catastrophic malfunction, the fiery image would have ricocheted online around the world. The disaster would have affected the founder, the brand, employees and stock prices.
Think serious, long-term reputational damage – all within mere seconds.
“Look, they had a good trip and Virgin Galactic stock went up nine per cent,” Marino says. “But you have to play these things out both ways.”