Previously published in Family Business Magazine

Dramatic change is on the horizon, and multigenerational businesses are facing critical transition issues as ownership in private companies and substantial wealth are transferred between generations. Because few families are ready for these transitions, the family office will play an increasingly important role in supporting the family. 

Family Office Exchange (FOX) has worked closely with families, family office executives and advisers for more than 30 years. According to the 2019 FOX Family Office Benchmarking Report, the rising generation is often unprepared to take on a leadership role. 

This FOX proprietary study found that while 41% of families identified “helping the rising generation become productive adults” as one of their top three priorities, 78% of respondents lacked a formal program to educate their rising generation. 

FOX has identified three fundamental tips to guide family offices in planning family education programming:

1. Take a more strategic role in helping families prepare future leaders

A key succession challenge is that the rising generation is unprepared to take on a leadership role. Family office executives should become the champion for family learning and design or work with outside experts to institute programs beginning at an early age. Key building blocks for this program may include fostering personal identity and growth, increasing financial acumen, teaching leadership skills, defining the responsibilities of shared ownership and engagement, and providing training in family governance and participation on the board.

Families that do this well form working multigenerational committees to tackle the questions and develop goals related to family learning. In time, these working groups evolve to become a family education committee. Committee members work together to create family learning tracks, set education expectations and plan learning events. With structured assistance from a learning champion or consultant, families reap the rewards of engaged and educated participants.  

2. Focus on family values

All learning programs should be anchored to the family culture, history and values. FOX experience suggests that family learning not only prepares future leaders but also can serve to bind the family more closely together.

Common approaches include:

• Exploring and understanding how shared family values can be articulated in the future.
• Openly discussing the family culture and where divergent views may reside.
• Tying family values into core learning programs on topics such as investing, philanthropy and wealth transfer.

Families that focus on shared values and regular communication are more cohesive, better organized and able to work together effectively. Many families begin rising generation education, or in-law onboarding, by focusing on the family history and values. In some cases, families also focus on finding meaning and purpose in life, in conjunction with these values, before embarking on a specific education curriculum. This “family first” approach provides a foundation for all future learning. It gives learners cultural roots before they begin technical education. 

3. Understand that one size doesn’t fit all

Families often span multiple generations, geographies and levels of sophistication. Family learning requires thoughtful planning and customization to meet the needs of the entire family. Programs should also address multiple styles of learning and provide different educational settings, including peer groups, family groups, individualized coaching and online learning.

Families that have thriving and productive rising-generation members allow for autonomy and belonging. It is important to encourage the rising generation to express their personal identity and choose learning opportunities that fit their life paths. It’s equally important that all family members feel a sense of belonging and understand the education and participation that is expected of them. This includes family attendance at industry learning events, in-house programs, education sessions at family gatherings and meetings with consultants.  

A family that is committed to education will also create a pathway for engagement with the family business, including such options as traditional employment, customized learning experiences and an idea lab. The idea lab provides a way to capture the innovative suggestions of all family members who aren’t interested in an onsite experience and provides an appropriate way for them to offer input. It creates engagement and shields company staff from an unexpected call from a family member. Each pathway offers a customized approach for those who want to engage on a different level. Allowing flexibility in how family members engage with the business can work well to accommodate everyone in a diverse family. 

The priorities and focus on family education will differ for each family, but the family office can play a key role in making the case for a well-thought-out plan and emphasizing the importance of preparing for transitions.