In this episode, Tina Milligan, Managing Director at BMO Family Office, part of BMO Wealth Management, illustrates the importance of family meetings.

With over 20 years of experience working with family offices, Tina knows that holding family meetings and having open lines of communication are vital elements for families who are connected through wealth. Here, she covers family meeting guidelines suitable for different family needs. BMO Family Office is a FOX Thought Leaders Council member.

Subscribe to FOXCast on Apple Podcasts here. 

Listen Now: Family Meetings are Where Expectations are Set and Trust is Reinfoced

Below is a transcript from the conversation:

KC: To start, can you share a little bit about your background that led you to working with families in this capacity?

Tina Milligan: I have spent all of my career working with families, as business owners or in family offices. I'm a CPA and an attorney but have spent most of my career playing mostly the CPA role, either in a CPA firm or in financial institutions. And as you talk to families who have an operating business and/or are transitioning to become a family office, the conversation around treating now the family office just as an operating business was operated is really important. And what I learned is that's where family meetings and the communication and transparency are incredibly important. So, it has really been spending my time, first and foremost, talking about tax matters. But, you know, tax is not all there is. The soft matters and the communication are incredibly important. So, that's really what's led me to having this conversation.

KC: About family meetings, what in your vocabulary do they mean?

TM: Well to me, it doesn't have to be formal like a corporate board meeting, necessarily. What it means to me, and what I think is the center and the importance, is just the communication and setting expectations and transparency for family members—so that they have trust, they have understanding of their role, they understand their responsibility within the family wealth construct. And having meetings and having that that level of communication, whether it's sitting down at a board table or sitting down around the family dinner table, it's incredibly important. Because without those expectations and the conversation to have everyone understand roles and responsibilities, I think much is lost in terms of preparedness for wealth.

KC: Yeah. At what point do you recommend to a family to instate these [meetings] and give some guidelines on how to hold them?

TM: You know, I think as soon and as often as possible, frankly. Even with younger children, the idea of sitting down and having them have an age-appropriate understanding of the family business and/or the family office and how it came to be, and what the values and the vision and mission are, or the family purpose is important. And there's always ways to do that at all different ages and amongst all different family members. So, you know, as soon as possible. How can people be prepared if they don't know what to expect, and don't have an understanding and/or the education?

KC: Can you be more specific on levels of formality?

TM: I mean, I think it really depends on the timeframe for the family. So, we'll work with families where it's maybe an earlier stage business but also very successful, and they maybe don't have yet the family office but they're starting to have some distribution of wealth from the business that's becoming personal. And they might have younger children. And at that point, I think then the formality is really about, maybe the family dinner table, and establishing the values, vision, mission.

But then as the as the business grows, and perhaps family members are now part of the business, then a more refined formality with a tried and true agenda, strategic planning, adjustments to the vision, mission, looking at benchmarks—things like that become more important where you've got a formal agenda.

I do believe any meeting, whether informal or otherwise, does have a purpose—and therefore, some form of agenda. But it isn't until you're really rising to running the family wealth, and its rhythms, to the level of really being its own business, that it has to be as formal. But again, I think the elements can be there in any level of formality.

KC: And what is the frequency you recommend for, let's say, one of these large families?

TM: I would like to say, certainly annual. And having a large family with a family retreat, where it's not just about business, it's also about getting to know each other and some other components of relationship development. And then, depending on how involved family members are with the actual financial management of the family office, it might be quarterly. You know, no two families are the same. But what I would say is, certainly at least once annually. And then if there's investment management or due diligence on private investment things like that, it certainly tends to be quarterly because when you're looking at performance and trying to be strategic.

KC: Let's say it is annually. What would need to be covered? What would the structure be?

TM: So, I think that it is important to make sure that there's a way to be inclusive and include all the family members. So, you know there's going to be business. But then there might be family members who aren't as involved, and so you might have to right-size the conversation in regard to some of the business matters so that they're aware, but maybe they're not the ones who have to make decisions. So, I do think obviously business matters are important.

I think that's something that that can be very confusing especially as a family office begins to emerge, because the number of entities and the complexity increases. And so, knowing sort of where they fit and where everything intertwines is really important to outline.

There should be action items that should be actionable. If you have a meeting, obviously, you're working towards the strategy. And therefore, there should be things that—decisions and/or refinement of goals and objectives that come out of that meetings, so that there can be actions and measures going forward.

KC: For the next meeting.

TM: Correct. Correct. I mean it would be rare to have a family meeting and not have there be something that they're working towards. Whether it’s an adjustment to the investments, or estate planning matters that need to be done, or some tax planning, whatever it is … Education for the family so that they have a better understanding of the entities, etc. There's always something.

KC: So, at FOX, we are completely aligned with you on the importance of family meetings. But in an effort to illustrate that importance even more, can you talk about what you've seen when families don't hold these formal meetings and what happens?

TM: Well, that's where I think expectations aren’t set. And all of a sudden, you've got perhaps a breach of trust. Or just plain old misunderstandings. In fact, there are statistics out there that show, where there isn't this formalization or communication plan to allow the family members to understand what's going on, 60 percent of the families end up not having trust within the family. Which is a pretty staggering statistic, frankly, in the studies that were done.

And with that also comes the inability to prepare the heirs, because again, they don't have expectations. They don't understand their roles and responsibilities, and certainly weren't able to start to formalize an education plan to get up to speed. And they might have to do it at a time when there's mourning, because someone has been lost and they have to learn quickly and certainly can't learn it in a way that, otherwise had they been sort of slowly indoctrinated, would have been a lot more disciplined and more worthwhile.

KC: For setting expectations and doing communication in today's world when everybody is so far-flung, do families find it challenging to get together once a year, and is it necessary to be together in person?

TM: I totally think that. And there is a cost too. I mean there's one there's everyone's schedules and then there's the cost of having a larger family retreat or meeting, right? So, because I am passionate about the need to have communication, I think that finding ways to have calls, video chats—anything that allows the communication lines to stay open—family newsletters, maybe shared sites, whatever it is, are incredibly important. Because you just see you can't miss the ability to communicate that expectations and have that level of transparency to keep the family aligned together.

With that, though, I think comes an important need to set expectations and etiquette. Because I just had a family conference call and it was it was really great, because each of the family members knew that they needed to—even though they knew each other and knew each other's voices—because of sound quality, they still made sure everyone knew it was them talking. When they weren't talking, they had it on mute. They made sure that they were somewhere that wasn't loud and noisy and disruptive. And when they did need to get on and off because they were going to be in a noisy place, they let everybody know. You know, they were seasoned at having calls because they're literally spread across the country, which is I'm sure true of many, many families.

KC: Right. Let's say for a family that suddenly has a liquidity event and was not connected through wealth, so never really had the need to do family meetings before, suddenly finds themselves in a place where they feel like they need this—how do they go about starting? 

TM: So, I've got several families that are in that position right now. And the first thing we do is, we start with, again, “the blueprint.” So, you know there was an operating business, and now the business is being sold. And what does that mean and how does that translate? And so, we helped draw the big picture with the entities, and obviously the people that were players, and how that translates.

And so, and then with that big picture we start to set a cadence around how the strategy changes from an operating business. And of course, that requires meetings. And in a simple example, where a business is sold and now they're moving into just traditional investing, maybe there's not going to be direct investment into new businesses yet, a quarterly investment meeting is a great place to start a cadence around having those meetings. Because we're talking about performance, and alongside that we continue to look at that blueprint to see how it's changing over time, and then bringing it back to what the overall family goals objectives are. Not just not just the overall family, but each sort of tree of the family as well.

And then as that evolves, I've found that now we're bringing in an estate planning conversation, and there's a tax part to that. And then, how do the family members who haven't been involved, because mom or dad were running the business, how do they now start to understand this new entity and its operations? And start to gain the financial education?

So, that's a part of the agenda as well. I mean, again, it's tailored for families, but for the most part, the elements that I've just described are a great way to start. It’s always got to start with the goals and objectives, and then the ultimate strategy. And then we build it in, and it's really easy to build around a quarterly investment meeting, because that's already a normal cadence. But it can be evolved and can change in whatever way fits the family, of course.

KC: So, sequentially, it sounds like just schedule the meetings, and then identifying the issues and tackling the issues just kind of falls into place.

TM: That's right. I mean you have to start with baby steps, because it's a transition particularly for a business owner who now is a wealth owner. I feel like I spend a lot of my time making their investment life, which is now their wealth, run for them much like a business. Sort of in the same kind of reporting fashion, and otherwise, because that's what they understand. And it also helps them feel like they're still at the helm. And by them feeling that way, it makes it easier for the matriarch, patriarch—whoever created the wealth, to then help share that same sort of understanding and education with their kids and/or grandkids.

KC: For families like that, that you've helped them with setting a cadence for meetings and that have started to hold formal family meetings what has been some of the feedback?

TM: Particularly for the business owner transitioning to wealth owner, it has been … they really like it. There is always a little bit of hesitation at the onset because again, they're used to seeing … They understand their business intimately, and now all of a sudden there's this investment world, or private investment world, that they're not so much the creator and the driver. So, being able to translate that and then put a similar type of cadence around meetings and strategy is refreshing to them.

And as a as they get more comfortable, they're like, “well, this is not so different.” So, I think they enjoy it. It takes a little time to get it up and running, and it ever evolves. Because obviously, new family members come into play. Grandchildren are born and so planning is never ending. But with the structure of an agenda and meetings established at ready times, again, quarterly and then and then perhaps annually, it always makes sense. They know what's coming.

KC: So, if somebody wanted to learn more about what you do or get in touch with you …

TM: So, it's tina.milligan@BMO.com.

KC: Great. Thanks so much for joining me today. I think this is really important. It's not something people necessarily think about as the first thing that a family in this position might need but is certainly crucial.

SB: Well, thank you for having me. I obviously enjoy talking about this. So, let me know if there's any more than I can help with.