Sandi Bragar is the chief client officer at Aspiriant and leads their planning, strategy and research team. The group is responsible for the firm’s wealth planning platform, which fosters client relationships and helps families navigate the complex facets of their financial lives. She also co-hosts Aspiriant’s “Money Tales” podcast.
What family governance issues do you come across?
If a family is planning for asset transfers or they’re already in motion, then it’s really helpful to have these governance issues worked out. A decade ago, in the work that we’d be doing with families, we identified some great opportunities for them to transfer assets out of their estate to the next generations and to manage their tax exposure.
Sometimes the rising generation of the family hasn’t had the opportunity to be steeped and educated in what the mission of the family is. The governance aspect helps to get all the family members on the same page and empowers them, including the younger generations.
If they’re fearful of sharing with the rising generation, there is a lot to dig into to better understand what their fears and concerns are. Resentment can come up and confusion when a family member is curious about something and they don’t know the answer.
You start to wonder, and if the family is not talking about it, it creates tension. It’s human nature to make assumptions, and often we make incorrect assumptions. You might get a little anxious: “Will this wealth and lifestyle be always available to me? Do I need to focus on generating wealth?”
How do you advise parents to bring up these conversations with their kids?
Between the younger generation and older generation, these same types of conversations are extremely helpful. Are the parents supported financially? Do they have enough of their own resources to cover their needs? And as you look down to the rising generations, how do we want to financially parent the young generation so they are developing the skills and competencies they need to not only make good financial decisions for themselves but also for the family?
Often we’ll start with the parents and advise them on how to bring up these conversations with clients. A family I’ve been working with for decades, parents with two adult children, their net worth is over $100 million. The parents had been very fearful to share info with the kids. They have multiple homes; the kids have had challenges in their own lives. The parents had set up some trusts, and the kids were starting to receive distributions at age 25 and at age 20. We said: “Let's look down the road. The kids don’t know about the trusts; there’s an opportunity here to educate them on why you set up the trust, about budgeting, finances. The parents didn’t want to be part of the conversations. They wanted us to set them up because they were concerned that they’d be too influential, and the kids wouldn't feel as comfortable.
We were able to have conversations with these adult kids — what questions do they have, what were they observing? We went back to the parents and said we should have a family meeting with everyone in the room. We went back to the kids, and they said that sounds great. We interviewed the parents and the siblings separately and came up with a proposed agenda. They were not comfortable talking about overall wealth but about the estate plan — what to expect and what not to expect. That’s how we framed it. No dollars involved. The kids walked away developing more confidence and feeling better about themselves. They were brought into the tent, so to speak. That was just the beginning,
How important is family collaboration?
Family collaboration and joint decision-making. Family history is one of the important things that we want to celebrate. In that same family, the husband has been so stoic, very rational and not emotional. In this first meeting, he was brought to tears because we were talking about some history, his experience growing up, he didn’t have wealth growing up. Emotions and vulnerability came up. Our job is to create a safe space so that they can feel vulnerable, feel heard by each other.
What we are trying to do is help the family build those muscles and the vocabulary to build the trust. Some families have a hard time communicating with each other, so we bring in a family dynamics coach. There can be triggering words; and we always start off with ground rules, encourage family to create their own ground rules, to allow some respect.
Who can help guide a family through this process?
Family wealth dynamics coaches can be really helpful, estate planning attorneys or different types of attorneys who can go deeper. That is a part of the family governance process — roles and responsibilities, to understand theirs and their team of advisers. Is there an adviser that’s missing? It could be a property manager. Sometimes, to educate the family or to take on the responsibilities of the family, delegating to a third party can be helpful when there are tensions.
Family history, culture and mission — identify what that culture is and what are the values collectively of that family and how do they get expressed in the decisions the family makes. We utilize storytelling a lot, to make observations from the story.
Family culture can be that they have dinners together, they have a text chain that they use all the time, going to sports games together. Culture can be really important when the family gets to an age where they’re expanding — how are you bringing these new family members into the family? Spend a lot of time with families cultivating their family capital — beyond just the financial and social capital, intellectual and human capital, experiences they are bringing from their careers, what is their spiritual legacy capital.
I was meeting with a family, and they have a now-deceased relative who was the wealth creator of the family. This deceased relative, who’s been dead for 30 years, was still talked about on a near-daily basis. How do we preserve that and bring that into the decision-making that the family is making? Why is his impact still important, what do they want the rising generation to know about this member? It can be too dominating. That’s another opportunity to see what works and what doesn’t work. We’re trying to get rid of the elephants in the room.