How to avoid Roy rage, and other ‘Succession’ dramas, in your family office 

By ALEC FOEGE  

No wealthy family wants its financial fate sealed by Logan Roy. Yet ironically, the brash, bullying patriarch portrayed by Brian Cox on the popular HBO series Succession has helped raise awareness of the perils of lacking a clear succession plan for a family office. 

Concealed financial interests, sleazy backroom deals and pitting offspring against offspring are just a few of the juicy plot twists with which the elder Roy wreaks havoc on the show. 

Alas, reality often resembles fiction.  

Only 58% of family offices have a succession plan in place, and 54% do not trust their next-generation leader to run the office, according to a survey of family-office professionals by Agreus Group. More damningly, 33% of patriarchs and matriarchs say they are simply unwilling to relinquish control. 

5 THINGS TO DO TO AVOID SUCCESSION DRAMA

• Establish clear lines of communication between generations — and keep them open. 
• Hire a third-party facilitator who is respected by all key family members. 
• Discuss and address contrasting family values, particularly varying political and charitable-giving perspectives. 
• Define what a “successful” succession looks like, and determine the best ways to achieve it. 
• Create a plan that’s flexible enough to accommodate unexpected life events, such as a death or illness. 

Clans with family offices tend to have more developed succession plans in place. In those cases, scheduled meetings about the operations and finances of a family business typically are routine. But that doesn’t necessarily mean a family office has addressed topics such as who will own certain entities, which members of the next generation will be formally involved in the business, and what are the values the patriarch or matriarch wishes to impart to those members.  

Often, when families are busy operating a private business or real estate empire, the succession infrastructure remains incomplete.  

“They might have an operational succession plan in place but not a financial succession plan,” said Homer Smith, founder of Gig Harbor, Washington-based Konvergent Wealth Advisors, which helps assemble “virtual” family offices for its clients.  

FACILITATING THE TRANSITION

A lack of clarity around expectations and a lack of communication can result in squabbles and even lawsuits. “Especially for founding members who created the business[because] they’re used to being in control and making all the decisions on their own,” said Rachel Gil, a director at Cresset, a Chicago-based multifamily office. “That’s great when you’re starting a business. But when you’re beginning to make that transition, you do have to start relinquishing that control, even in terms of sharing information.”  

It often takes a dramatic event such as a death or divorce to address such sensitive issues as who will now control the family portfolio. And as family offices have become increasingly popular, so have neutral third-party facilitators hired to preemptively mitigate conflicts. 

“That’s a service I do a lot, where I have to come in with a lighter touch,” said Frank Paolini, a partner at the Chicago law firm Neal Gerber Eisenberg. “Many times, it’s easier for me, as the adviser who is the professional and can go to Mom and Dad and doesn’t have that emotional baggage or connection.” 

Previous generations of family-office professionals had different views on what their jobs entailed. “When I was starting out, a trust was irrevocable. ‘Mom and Dad said they wanted this, and you can’t change it,’ ” said Paolini, who began his career as a tax attorney before expanding into advising family offices.  

“I’ve always said that life is messy, and you can’t predict anything. And why would you put handcuffs on somebody from the grave?” 

FAMILY-OFFICE VALUES

While many family offices employ smart, thoughtful professionals who put together solid succession plans, they sometimes don’t share those plans with anyone but the family leader. Then when other family members learn about them, they’re not happy.  

“Hopefully, we can help them communicate more smartly or at least do some better planning to avoid conflicts,” said Smith of Konvergent. 

As with so many money matters, succession plans are rarely only about money. Paolini recalled a billionaire client in his 80s who was concerned about how his children and grandchildren would handle his hard-earned wealth once he was gone. In response, Paolini recommended the client include philanthropy and active board participation as requirements for his heirs and benefactors.  

A lack of action can stem from an older generation that is reluctant to share sensitive information such as financial data with the next generation. “It’s all about communication and working toward transparency,” said Cresset’s Gil. “Sometimes it helps to convince the older generation, ‘The next generation is going to find out about the business and wealth at some point; the question is whether you’re around to answer questions or not.’ ”