This short
article from Financial Advisor magazine may appear to be insignificant in the
big picture but exemplifies a serious and noteworthy problem in the
representation of professional advisors in mainstream media publications.
Firstly, the
article oversimplifies a complex subject which applies to most family
enterprises, and secondly suggests that advisors incorporate multigenerational
planning for the sole purpose of retaining clients or “assets” in the firm.
Thirdly, it is not serving to contribute or uphold the professional standards
of financial advising or family enterprise advising, and should instead recognize
this area as a growing field.
The trouble with
investment firms, generally speaking, is that they are focused on making money,
which is not necessarily the same thing as working in the best interest of their
clients. This story cites one of the largest investment firms in North America,
and the reader must take this into account.
The article singularly
suggests that advisors incorporate multigenerational planning into their
practices in order to maintain assets and retain clients and their heirs. One
could argue that many advisors, and family enterprise advisors in particular,
are seeking to incorporate multigenerational planning into their discussions
with clients for many reasons and would not initiate a discussion about generational
transition for the purpose of retaining “assets” with a firm. A good family
enterprise advisor working in the best interest of a client would already be in
discussions with a client about wealth transfer, or would at the very least not
begin the conversation about wealth transfer solely for the purpose of
retaining a client.
The article says
parents and children are reluctant to discuss family financial issues, which is
not necessarily true. The real danger for family enterprises is that advisors
don’t know how to adequately address complex family issues. The ultimate
problem that could cause irreparable harm is that the advisor does not
sufficiently understand family dynamics or how to navigate them.
The article says
that “fostering this conversation is a way to build a relationship” – but
negates to address the complexity of the family relationships which the advisor
is about to wade into. As most designated family enterprise advisors would
already know, the advisor wouldn’t aspire to be the trusted “family advisor”
just to retain the family as clients but instead to help the family survive and
thrive with the resources they have.
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