*(5/30/21 UPDATE: A FULL TRANSCRIPT IS UNDERNEATH THE OUTLINE).
In this podcast, I spend some time speaking with wealth management industry expert, Brittain Prigge, about the role of communication and expectations with wealthy families. We both agree that broadening communication within wealthy families is the surest way to reduce the risk of wealth destruction across generations. Brittain brings many real world examples and wisdom to this important topic. She has unique insight into the art of getting these (often difficult) conversations started and how to keep them productive.
BRITTAIN PRIGGE, CFA is BALENTINE’S President and Head of Relationship Management. Balentine is the Atlanta-based RIA with over $4B in AUM. A founding partner, Brittain also sits on the Management Committee, helping steer the strategic direction of the firm. In 2014, Brittain was named one of the Top 100 Women Financial Advisers by the Financial Times in its inaugural list, and in 2020 Atlanta Business Chronicle honored Brittain as a Women Who Mean Business honoree.
As a reminder this conversation is for educational purposes and is not investment advice- enjoy the conversation- there are lots of useful points here.
What are the misconceptions around discussing Wealth in the Family?
Is this a one-time event or more of a culture that needs to be built?
Importance of Alignment at the Head of The Family-
The Danger of Assumptions
The Importance of Historical Context
Immigrants / or Natives?
Birth order / Blended Families?
How Do You Start the Conversation?
Example Questions: Defining wealthy
Who are you beyond your wealth?
How do you wish to be remembered?
Who are we beyond wealth?
What features/values do we want to persist?
Documenting Legacy: There is no ONE way to do it
Letter of Wishes
Creativity- Video, Social Media tools
Timing? Family meetings?
How Often? Where? Who has input? Who is moderating?
Education- how do you make sure everyone starts out from the same place?
Preparing for Asymmetries of Knowledge, Interest, Attention
Dealing with Conflict
Complex Family Systems
Siblings- dealing with baggage, galvanizing for the future
Blended Families- Unique Issues
In-Laws- Bringing together Diverse Backgrounds, Making them Involved
Ultimately the most difficult question: Fair vs Equal
How do we stay in touch with you and follow what Balentine is doing in the space?
INTRO: Welcome back to the â€œWealth Actuallyâ€ podcast, the show that features artists, entrepreneurs, experts and commentators that will give you the right knowledge, planning and guidance so you can preserve your assets and enjoy your wealth, learn more and subscribe today at weatlhactually.com.
And now here’s your host, Frazer Rice.
FRAZER RICE: Welcome back to the â€œWealth Actuallyâ€ podcast, I’m Frazer Rice. Today, we’re going to be talking about having difficult conversations with wealthy families and we have a noted expert in the field. Britain is a CFA and the president and head of relationship management for Balentine. In 2014, Britain was named one of the top 100 women financial advisers by the Financial Times in its inaugural list. And in 2020, the Atlanta Business Chronicle honored Britain as one of the women who mean business honorees. As a reminder, this conversation is for educational purposes and is not investment advice.
Brittain, welcome aboard.
BRITTAIN PRIGGE: Thank you so much, Frazer.Â I’m honored to be part of your podcast. I’ve listened to you a lot.
FR: Well, we’re thrilled to have you and it’s terrific to have your viewpoint on. What I would describe is really tricky discussions that wealthy families are having. Maybe to start, though, could you take us through your background a little bit and how you ended up at Ballantine and working with some of these higher level families?
BP: If you want to go all the way back, I am from Alabama. I grew up playing tennis. I went to Vanderbilt on a tennis scholarship and ended up in Atlanta solely because of friends, but started getting interested in the stock market and got a job just to get a job, but ultimately decided dealing with the institutional-type wealth was what I wanted to do. And it got more and more interested in families and adding value in ways beyond investments. Pretty early on, I would say I’ve been a relationship manager for about 30 years and that’s the core of who I am and what I do. Though I also manage a four billion dollar firm!
FR: As we start to horn in a little bit on the difficulties that families have in discussing money within and among themselves. What are some of those first major misconceptions around wealth discussions that you’ve seen in your experience?
BP: I think the assumption that you understand how the patriarch matriarch, whom we also call G one feels as well as how G1 to G3 feel, I think there’s so many different types of feelings about wealth and the expectation to be a good steward of wealth and often G1 to G3 are insecure and sometimes there is some guilt there being what we call the trust fund child. And sometimes there’s an assumption that people feel a certain way. So I think not assuming that any situation is like the other, especially when you’re on our side of the table, is a mistake.
FR: One of the things that I’ve seen, too, is that many families, patriarchs, matriarchs in particular, sort of think the wealth discussion is a one time event, not unlike some misconceptions around estate planning. I built this structure. I’m good to go. Don’t have to think about it anymore. Do you see that a lot where families come in and say, I want to check the box, I will impart information to the next generation and then we’re off and running?
BP: What I see is two things.
One is often these entrepreneurs that we deal with that often have a net worth that is and could be in the hundreds of millions, tens of millions is very different when it’s on paper or in the company as opposed to when it becomes more liquid. So I think there’s an assumption sometimes that you don’t need to do any of this planning unless you have liquidity, which I think is wrong. And there’s also an assumption, as you said, we’re going to have this discussion.
We’re going to go in with his day planning attorney. We’re going to make all these decisions and have these solutions in a one time deal. And often that is a difficult process and B, don’t necessarily come out with the solutions that are the right ones. I think what I found over time is estate planning, wealth and legacy. Any kind of governance is a process. And if you try to go to a solution too quickly, you’re probably not going to come out with the best outcome when you get to that sort of solution.
FR: A quick issue, where do you see problems when maybe the matriarch and patriarch, the generators of the wealth or the sort of stewards of the family wealth currently when they aren’t aligned? What happens if one message from one side is a little bit different from the other? You see that causing lots of issues as it steps down generations.
BP: Absolutely. And I actually won’t have a conversation, a full family conversation until I feel real comfortable that the patriarch and matriarch are on the same page I will find in our business. It still is a male dominated industry and often the male. The patriarch has more of the decision making power always has, which is often a mistake. And a lot of times the matriarch has not even been talked to about it. How do you feel? And often if you do it right, you could have a year’s conversation with the patriarch matriarch or maybe just one or the other to really understand how willing they are in order to give up some of this decision making power. And if there are two people, there has to be compromise. So is the assumption that everybody feels the same way. It’s just not right.
FR: And you talk about the danger of assumptions. What do you do to kind of break that down and to get everyone on the same page? I mean, there’s sort of the assumptions around how people feel, which is by no means a small component of it. But there’s also the assumptions as to what people know and what they’re educated about regarding wealth and even how members of the family think or interact with each other.
BP: I have probably the greatest coach, I would say, in the world on the whole aspect of wealth and legacy and how you talk to clients. And that’s a man named Dr. Jim Grubman. And the first several sessions we had, he would stop me and say, you’re doing it again, you’re doing it. So if you make assumptions, the family is going to make assumptions. You must take the time to go through the process and not try to get there too quickly.
And that is I find that most of these people, a lot of them have built businesses and they’re used to making decisions. And you just find it is a process that takes a lot of questions and asking the questions and then actively listening is imperative for someone on our side of the table.
FR: If you are going to try to consult in this way, how do you think about building mutual context among family members, whether it’s historical or, you know, the idea of whether the family is first generation American or whether they’ve been here for six or seven generations or, you know, issues around birth order or blended families or even just the history of how the wealth was built. How do you think about that in terms of getting everyone on the same page knowledge wise so that people break down those assumptions?
BP: All those different aspects are important culture. Is hugely important, understanding and acknowledging the difference in the different generations, just one to two to three where they come from, they could be very, very different. They’re in the same family, but the way they grew up is vastly different. And we talk often about Jim Webb and where this in his book about natives and immigrants to wealth and the immigrants to wealth often could be the first generation who grew up and made the wealth and have a very different thought process about it.
Then third generation who grew up with NetJets, and you cannot pretend that they didn’t go to a private school and they didn’t have everything that they needed. They didn’t have to scrap or that it’s just you come at it differently. So I think the acknowledgment of that and what people have not done for so long is, gee, three from an early age, how do you feel? What is your relationship to money? And I have a lot of questions we can ask to open up these conversations, but I think parents, grandparents are astounded when they actually stop on their side to actively listen to three about how they might feel if across the board you can’t assume based on culture or where you come from or where you grow up, it’s all based on the individual.
So asking the questions and I’ll tell you another thing, having the right to have the conversation is huge. I think you have to earn the right. And I think people in my position often are looked at as just one or two, two person. So if you don’t earn the right with G three to form that bond or trust or they don’t think you’re on their side of the table as well, that can cause distrust and distrust in this process as a killer.
FR: That, to me, is one of the problems with the whole wealth management industry that they’re facing is how do you reach the next generation? How do you become their person? How do you earn that? Right. And maybe a better way to ask it is how do you start that conversation with a segment of the family that is either suspicious or unknowing or just maybe curious, but not equipped necessarily to engage in the discussions? And how do you bring them along at the correct pace so that they’re involved and at the same time you’re able to make progress with the overarching structure?
BP: I’ll tell you this through a story. I have two young clients who have recently turned thirty five twins. Their mother, father and aunt died all within three months. And twenty twenty nine of them are an interesting lot. And they went from needing to work, know seventy five thousand dollar jobs to never needing to work again.
I was one of the first calls they made to help with just trying to understand everything that was happening. I think that comes from the fact that 10 years ago I sat with one of them before she was getting married out on the porch downstairs here at a restaurant and tried to talk to her about why we needed a prenup when she was going to get married. And she said, why are you trying to ruin my marriage? Brittain Prigge, you’re trying to ruin my marriage.
And it was interesting because we formed a relationship based on that conversation and my understanding of how she looked at all of it that lasted. And so I think the fact that over the past year, we she and her twin sister and I have literally talked weekly trying to help them get through what is the horror of having to settle three estates and lose three of the most important people in your life. But being able to be the go to person again, you have to earn that right. And sometimes you have to go through some tough conversations. So I think that is really, really important. And assuming that you can earn that trust without some time is a mistake.
FR: You’re getting involved with wealthy families. Often times, that comes from the patriarch or patriarch, the wealth generators or maybe the people who are the decision makers around the wealth. What are some of the discussions you have with them to get them to be thinking beyond their generation and to be thinking from a legacy perspective, from a next generation perspective? What is their wealth going to be from a stamp on the world type of perspective? And ultimately, I guess, sort of how do they define their legacy? How do you get them to think about that in the same way that you had that discussion with the two twins?
BP: Again, it takes some time. They have to be ready. What I often talk about when I start this conversation and a lot of times people think my kids are too young, I don’t need to have that thought yet. I don’t need to have that conversation yet. People also say, why does anybody care? Do I really think my grandkids are going to care about any of this? What I start with now is to say you have in my mind a responsibility.
And the family goal often is to create good decision makers in all the various roles and responsibilities. These next generation will have an adult life and saying it’s doing them a disservice if you don’t do this, if you don’t teach them how to be a good steward of the wealth, if you don’t teach them how to deal with a trust, if you don’t teach them what your expectations are with income from a trust, educating them about the values, it’s so fun to watch the light go on.
I have a client who has been a client for over 20 years and he has Parkinson’s and he has started thinking more and more. Fortunately, two years ago we went through the process where he took one year to get comfortable enough to let me have a family meeting and have these discussions with due to and by the way, to are in their 40s. You’ve got to recognize that the patriarch has to be ready to transfer that decision making power, because that’s really what it is.
And you also have to let them understand, A, they’re different than you are. They didn’t build it. They’re probably more native. The interesting thing is when you got some natives that are children and children that are immigrants, literally different because of how they grew up and maybe their ages. So it’s a lot.
FR: So one of the important things to me, it seems in sort of transferring these values and the ethos to the next generation is writing it down and getting it into a tangible form. What are some of the tactics that you see that work? And I noted somewhere in my reading what you did, that it can be as simple as a letter. It can be as involved as a book. It can be a series of videos. It can be all sorts of things. What have you seen from an example perspective that has been effective?
BP: I think what I’ve seen a couple of times is I’ll encourage people to write what they call a philosophy of wealth. And it’s funny, I talked to one guy about it for literally two years and he runs a lot and he started saying on my runs, I started thinking about what they might be interested in and it would go home and write down bullets that he thought about his career and also lives that he had made over time. So I think just that understanding of what is important, what was meaningful, what happened in your life that made you either change, I mean, stories about the business and how many businesses do you hear?
The stories that they almost went something big happened, some big decision that made a difference or some risk or some fear or something, and then going forward about the business. But after that, the expectations, what gives you pleasure? What do you think is important with regard to being a. Steward of the wealth, and I’ll tell you, there are people who don’t care as much and I might push it and then I realize they don’t care. If they don’t care, I can make them care.
It’s the different constituencies of wealth in the family business world. I mean, it’s beyond just the family in the wealth. You’ve got employees, you’ve got vendors, you’ve got communities that have been built around family businesses. And sometimes I’ve seen it with the next generations. There’s some passing understanding of that. But to write that down and to talk about why those components were important to the first generation and the wealth creation, sometimes that can be a real eye opener. I’ve seen it multiple times in meetings where something that went beyond the piece of paper sort of brought into a deeper understanding of where people came from.
Again, I go back to how often I think it’s interesting that people don’t necessarily think, gee, three, well, they don’t think that father will care. I think they often clamor for information, you know, tell me your story. And what I found is that it doesn’t have to be with wealthy people. It’s all people. Tell me your story. Tell me what happened in your life to make you believe the things you believe and how what made you teach me what you taught me as your heir to believe?
And ultimately, it’s the value. The money is important. The money as big as money is what we all talk about. But what’s behind the money? And often there is a lot and there is often heartache and there’s often tragedy and there’s often sadness that’s really important to the make up of ultimately the family. The family is, let’s call it, as ready as they will be to have a family meeting and to have sort of this joint endeavor to understand the direction not only of the wealth, but of the family generally.
FR: How do you think about that in terms of the tactics around family meetings and how often where who has input those types of things? There are tripwires all along that where if you forget to get somebody’s input or you have them too often that people get bored or not often enough that people forget, how do you try to balance the cadence and the input and the general structure of these meetings? Now, a year ago, I would not have said, you better figure out how to connect with people over Zoom because that’s a new thing.
BP: I am such a face to face and personal person. You’ve got to go to dinner. You got to meet him. You got to understand what they’re thinking about. Well, that’s not as possible anymore. So we have to figure out something new, another story that I think is really, really telling. I have a client who we’ve had for a little over 10 years, recently sold his business and started a foundation and wanted to bring in all his children and their spouses and stepchildren and everything.
The core was around. He had a child that died, mental health, substance abuse. And so the family meeting was to discuss the foundation, to discuss what is going to be the mission of the foundation, understanding this might take us six months to get there, but with the absolute conviction that the patriarch and matriarch really wanted all of these children to feel ownership in that mission and therefore understanding there had to be some discussion. So for two months, we had discussions with the patriarch and matriarch, just like you were talking about, making sure they’re on the same page, kind of getting for things around this mental health understanding.
But what was so rewarding to me and where I found it a privilege is sitting on this Zoome call and facilitating the conversation, but then stepping back and having these two who are all in their 20s and related in a certain way, but not blood related, talk about taking that core of the mission and taking it even further. So each of them, there’s six of them have a say, had an understanding. All of them fortunately did have that core because of the tragedy that happened.
But how they took that one of them with women and single women and children, one with education, same mental health starts these days in kindergarten where the divide starts. I literally had to ask three questions and the conversation just flowed. And so that was the first. And we don’t expect to get this mission drawn up until probably November, December. But that is just so rewarding to watch. And you’ve got to give credit to the patriarch and matriarch for allowing that conversation to happen and people feeling comfortable enough to participate.
Well, one of the cool things about that is the whole family. It sounds like it’s gotten to see how the rest of the family thinks and what’s important to them. And that’s some of that context that I think many situations are missing. And ultimately, without that shared context, that’s where shirtsleeves to shirtsleeves really does happen. And people go their own way and the liabilities increase a lot faster than the assets do. And ultimately, that’s how things devolve when people are able to communicate closely together and have that shared context. You have a better chance of extending things.
You know, there’s so much that goes into that. But I do think understanding three years down the road, I remember that Sonja really did have a passion for this.
So it makes sense that she wants to increase the giving amount to this type of organization. I remember that I was there when we first heard that. I also think having those discussions while the patriarch and matriarch is alive again, if they are willing to allow this type of discussion because it’s going to be different than it would be if it were just few is really important. What I find is when people leave in their will, here’s the expectations or have people, three siblings who might like each other a lot in the house in Nantucket when one just can’t afford it.
Trying to put that on them is really, really difficult when the context is positive, lots of great things can happen.
FR: What happens when the context is negative? There’s baggage between the siblings. There’s misunderstanding or distrust among the generations. Ultimately, there’s conflict. Have you been in situations where that’s the case and how do you handle that?
I will find it often is people say third generation. A lot of times it is their generation, but it could be second generation. It’s just when a lot of times people do things for estate planning purposes, put trust together, put siblings together, and all of a sudden you realize 20 years later, they just don’t have the same values. They don’t think the same way. They don’t want to invest the same way. They don’t want to buy things the same way.
They don’t want to vacation in the same places. So often in a situation now where we had this fantastic process where all the forty two entities of the companies couldn’t invest together and ultimately it’s fallen apart because of problems with the family business. And they are literally distributing everything and the whole family is divided. It is really, really hard to watch. I’ll say on our side what we can do is facilitate the fairness, if you will, and have conversations.
But sometimes it’s better to say it’s better if we’re not all tied together. Maybe the family discord comes from being together and if you do split things up, you can come back together as different entities with your own thoughts, ideas, family, entities that aren’t just combined because the grandfather decided it. I will say that does happen a lot and it’s devastating. With other devastating is when money tears you apart, when certain siblings are part of the business and other siblings are not.
They say you shouldn’t be part of this. You shouldn’t be getting the fruits of my labor. It happens a lot and I think it happens a lot when there’s not planning done early on. And just assuming here’s what could go wrong, let’s try to alleviate that.
So one of the ways that I see that that context can be challenged is when other people, outsiders, interlopers, whatever funny thing we can call it, marry into the family. And you have people who come from completely different backgrounds no matter what happens. And they’re joining this family, let’s call it a family enterprise, but it’s certainly a structure.
FR: How do you help integrate those people in a way that’s comfortable for the matriarch patriarch family structure and at the same time provides the safety and comfort for both sides as they enter into these types of situations. And I can see it ultimately when you’re around a family business that can get complicated, does the spouse participate or not participate? That integration is an issue. And I do think around that.
BP: My view on that is and this is really practical, is you’ve got to be real clear with what is the decision maker going to allow? And if, in fact, you know that the decision maker is not going to allow the new in law a seat at the table for a time certain, be honest about that. And if they will never allow it to be honest about that, too. And I think that that often provides conflict. But I think being real clear about what the rules are is helpful.
I can’t help but think about Meghan Markle and their little family and saying I would assume you kind of knew what the proposal is for her. But I think what happens is you get in there and I’ve had another situation where a child was getting married to somebody who was older and she knew he had a trust. And he came to me and said, I’d like my trust money. And I said, that’s unfortunately not how it happens. So try to facilitate a conversation.
The outside the new in-law was say, and my parents would never, ever, ever do that. You know, they would give me anything that I was on my name. And I said, this family just doesn’t work that way. And they are very specific about what goes when. Based on that, they’re actually G3. And ultimately there’s a split in the family because of this in-law who comes in and says, I come from. A different place, this is wrong and pulls the child away, I mean, devastating, they don’t see their grandchild and it comes and that is specifically because of money, those kind of situations when I can’t facilitate some sort of help.
It really bothers me. Now, some things just aren’t necessarily fixable. And you do your best. You try to educate people. You try to impart information and have that shared context of the people, understand the why behind the decision making. And sometimes that’s not enough.
And it’s also really, really important. And this is one thing my mom always taught me. You got to try to look out of the everybody looks out of their eyes, the way they look out of their eyes. And so trying to understand, how did you come to the thought process you’re going through right now is really helpful. But there’s often sometimes a mistrust that comes from having money and comes from somebody say and make sure you protect. And assuming that everybody feels about the money like you feel, I’ll tell you, I’ve said it before.
There’s a certain level of wealth where I think it becomes more of a burden. And to recognize that and acknowledge especially two to three to four, that that is difficult. It’s hard. The decisions that come with great wealth are more difficult as opposed to poor little rich kid. But literally it is more difficult.
FR: Just because the problems are around money doesn’t mean that they aren’t problems and that they don’t have emotional impact and that they don’t need solving. Sometimes it’s tough to have different optics around that for the rest of the world, but at the same time, you have to fix it and you have to try to deal with it. So that points well taken.
I think as we start to wind down here, one issue that I think is an overarching component in a lot of this sort of planning and structuring and trying to have these conversations with families is the concept of fair versus equal. Equally dividing assets is sometimes simple shorthand for being fair, but at other times it doesn’t take into account the different contexts around different branches of the family. Huge question and sort of probably overly broad. But when you’re thinking about that, how does that figure into the building of context around these wealth discussions for you?
BP: I think it comes back to understanding how is it? That the patriarch or matriarch thinks, and that will be very much determined by how they grew up and not as the facilitator making any assumptions or putting my bias on anything. I think that comes back to that active listening, active listening, really understanding what is it that that they want. And I’ll tell you, people are very different. There are people that say, absolutely, I want everything. My four children.
Twenty five percent of everything. I mean, if I could split up jewelry, I’d do it that way. And I think sometimes they feel like that’s the easiest way. I’ll tell you what’s interesting and what’s a big part of what I’ve learned from listening to to G3 is often they feel differently than parents might think. Say you have a special needs child that is absolutely getting more of the. Well, absolutely. At death will have a different type of trust.
I find that most of the time due to G3 is so OK with that. Wants it to be that way. Or you’ve got three kids. One is struggling with money to have very successful businesses. They say absolutely. Give more to Sarah, who is a teacher and had a bad divorce and is single and is raising two kids by herself. Help her more than that. Again, if that communication there’s the other side where where the expectation that you will be given something is great.
And I think often people struggle with that. It’s just like, how good a parent have you been? What do you believe? How have you conveyed your values? I’m a parent of an 18 and a 16 year old, and I don’t make judgments anymore because I know they’ll come back to haunt me. So I do think fair versus equal is again, you got to communicate, you’ve got to understand and you’ve got to ultimately listen to the client and understand what they want and then try to help facilitate that discussion with the next generation based on their feelings.
FR: Well, this has been a terrific conversation. Britain, thanks so much. How do we keep track of you and what you do at Valentine?
BP Mainly our website and also if you are interested in getting any of our marketing. We said something about once a month with blogs and things that we think that people will be interested in that go far beyond investments. So in any conversation, I’d love to have this. I think it’s really, really, really important. And I think more and more people are understanding the importance of this wealth and legacy discussion and how difficult it can be.
FR: So it’s been a pleasure and a great and I’ll have that information in the show. Notes for our listeners Britain, thanks so much for being on. This is great.
OUTRO: Thank you for listening to this episode of Wealth, Actually hosted by Fraser Reiss, author of the book Wealth Actually, and a leading private wealth manager. Head on over to wealth, actually, Dotcom, where you can subscribe to this podcast, get your own copy of the Wealth actually book and connect with Fraser directly. We’ll see you next time on Wealth, Actually.