Matters Column

The missing piece: the family wealth counselor

April 10, 2015
| By Paul Damon |
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Family business is one of life’s most exciting, challenging and rewarding endeavors.

When you decided to start or become involved in a family business, you probably had certain objectives in mind. Your list may have included any number of unique goals, but two are common for many family business owners:

1. Providing for the financial, emotional and intrinsic needs of your family.

2. Doing something significant that makes an impact in the world.

Your list may go on, but one thing is certain: No matter what the goals of your family business, you will encounter many rewards and challenges along the way — some that you can control, some that you cannot.

As we pursue our goals and encounter the inevitable peaks and valleys, we learn to rely on qualified professional advisors wherever necessary. This team of outside experts — which might include CPAs, attorneys, insurance agents, employee benefits specialists, investment advisors, banking professionals, trust officers, or others — helps to support our journey from initial start-up to long-term, sustainable success.

The pyramid of priorities

While the above list of advisors includes many familiar and necessary contributors, it’s missing a key ally who can bring incomparable value to your team: the family wealth counselor.

A family wealth counselor works directly with a family business owner and focuses on the pyramid of priorities.

In most cases, the base of this pyramid is the business owner and his or her spouse. First and foremost, the business is intended to provide for their needs.

In examining this foundational level of priority, we ask questions like:

  • How much do we need?
  • How do we generate the income we need in the most tax-efficient way?

At the next level, the pyramid covers the owner’s family, including children, grandchildren and extended family.

In defining the requisites of this level, we bring up questions like:

  • How will we transfer the business to the next generation?
  • How much inheritance is enough?
  • How do we transfer the right amount of inheritance in a way that helps ensure our loved ones are prepared to handle it wisely?

At the top of the pyramid, we look at what is left over. For many businesses, this portion of the pyramid might be a big part of accomplishing goal No. 2 above.

Here, the great challenge and opportunity lie in using surplus wealth to bless others. Most business owners we work with hope to see as much excess go to their favorite charities as possible — rather than to the government in the form of taxes. But in order to see this hope realized, it’s critical to design and implement a complete plan that brings all objectives into clear focus.

Focusing in on what matters

Beyond guiding family business owners through the essential process of defining a unique pyramid of priorities, a family wealth counselor plays an essential role in the implementation process. As a key member of the priority planning team, the family wealth counselor coordinates and communicates with business leaders and advisors, building alignment and streamlining the process by keeping the following areas front of mind:

Clarity                                                                                   

What are the goals and objectives of the business? The family? How is the business currently aligned with these objectives?

While not always true in business, every family has two CEOs: the chief executive officer and the chief emotional officer. And both of these CEOs have essential input into whether or not the business is achieving its long-term goals. In a family business, success comes from balancing business objectives with the emotional and financial needs of the family.

Coordination

Many business owners haven’t had the opportunity to meet with all members of their planning team at the same time in order to build alignment around the strategic vision and mission of the business. But in the absence of such clear communication, confusion or even conflict can arise as a new plan gets implemented. So it’s essential to efficiently coordinate communication and effort across the team.

Collaboration

Every team member can add value to the implementation process. The key lies in establishing a comprehensive family wealth counseling plan and then working together to see it through. A family wealth counselor helps facilitate effective collaboration to leverage the best ideas and input from each team member.

Completion

Often, good plans are made ineffective by lack of completion. Studies show that in a majority of cases, couples that start a planning process with their advisors in fact never finish. There may be many reasons for this, but one fact is clear: To help ensure the best possible outcome, a designated person must take responsibility for a plan’s completion.

Many of our clients have a worldview that recognizes a greater purpose and power than us and what we see. They want to live out their values and beliefs — and they want their planning integrated with their faith. By involving a family wealth counselor in the process, they help ensure that their priorities and plans will reflect their desire to be good and faithful stewards of all God’s blessings.

You can do the same.

Paul Damon, CFP, CLU, ChFC, is a family wealth counselor with Strategic Stewardship Partners. He can be reached at paul@strategicstewardshippartners.com or (616) 288-3809.

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