In this week’s blog, Jamie Weiner of Inheriting Wisdom, raises some thought-provoking questions on what families and their enterprises should reveal and when, questioning the prevailing notion of advocating transparency as the “best practice” in family enterprise advising.
The Transparency Myth in Family Enterprises: The big reveal or less is more
James Weiner, Psy.D.
In family enterprises, transparency — the concern about how much to reveal, to whom, and when — is a complex issue. How to protect the enterprise, the businesses and wealth that fuel the financial and philanthropic interests of the family is one consideration. At the same time concerns about the impact of wealth on individual lives as well as the cohesion of the family raise different questions leading to a unique set of conclusions about the “need to know.” Some families’ silence about their success even within the confines of the home, confirms that the topic of “transparency” goes far deeper than whether or not to reveal the balance sheet.
The term transparent refers to the property of transmitting light without appreciable scattering so that bodies lying beyond are seen clearly. (Free Merriam Webster Dictionary) Trends exist in what is the best practice in family enterprises. The current thinking is that a frank, obvious and easily understood approach will offer clarity for future generations and allow families the opportunity to prepare across time.
The very nature of privately held assets, often referred to as “closely held,” implies an opaque approach protecting the decisions and activities from the outside, i.e. competitors, predators, and the government. Many founders, in particular, shield the family from any information. Estate plans are written to protect the assets from creditors and, as a last ditch effort, to protect the family from itself and those who married in. Today as more generations are alive at one time and we gain more knowledge about multi-generational families both the psychological and financial pitfalls of this approach have become more apparent.
What we understand is that how, when, and why families choose to be transparent lives at the crossroads that guide how families navigate transitions and build the cohesion that sustains over time.
The significance of family enterprises is well documented, including the positive impact on the global economy, the opportunities created for giving back, and the potential given future generations. To preserve these entities, business consultants, as well as professionals’ with specific technical expertise and an industry offering special private client services, have tried to keep pace with an increasing number of entrepreneurs. Yet those who work and live in this space are well aware of the challenges that families face both inside and outside of their businesses. As a result making decisions about when to be transparent and when to be guarded is a little like pulling thread through the eye of a needle.
The question is whether the big reveal, alone, is a sufficient step toward helping the family cope in ways that strengthen the fabric of the family, support the independent success of future generations and provide for the leadership to sustain the activities of the family enterprise.
David Berek from Handler Thayer, LLP, who has worked with hundreds of families and their offices; Christin Cardone McClave, a third-generation family member of the family that owns Cardone and founder of Unifi-Coaching; and Dr. Jamie Weiner, co-founder of Inheriting Wisdom and co-author of The Legacy Conversation will bring their experience to this topic on Thursday, October 17 at the FFI conference in San Diego. Utilizing case studies, the personal story of a family member, as interactive discussions, participants will be introduced to a decision tree for helping family enterprises with these difficult decisions.
About the Contributor
Jamie Weiner is the co-founder of the Chicago-based Inheriting Wisdom, a specialty consulting firm that design legacy plans for families and provides training on legacy issues for their wealth. He can be reached at email@example.com.
Stay tuned next week for another issue of The Practitioner.
Yours in Practice,