Important Considerations When Working with Family Businesses

Working with family businesses can seem like a daunting undertaking for financial advisors. Not only do we need to understand the fundamentals of the business itself and the family’s vision for its future, we also need to work within the context of the underlying (often complicated, sometimes messy) family dynamics. Ownership, management and family matters frequently intersect and overlap.

Each family business is unique in terms of the level of involvement of various family members. Some are deeply involved on a daily basis while others spend less time day-to-day but are still a part of the decision-making process. Regardless of who is responsible for running the business, the financial planning process also needs to take into account those family members who are not, including spouses, children, siblings, etc., since wealth tied up in the business will ultimately benefit the entire family.

As an advisor, it is important to understand the long-term goals for the business and how those will impact the family. When the first generation is ready to exit, do they plan to sell to a third party? Sell internally? Have the next generation take over? If the next generation is to take over, will they buy out their parents or will their stake be gifted? Keep in mind that family members who are associated with the business may have been a part of it for a long time, may even have grown up in it, and each one might also have their own plans for the future of the business.

Realistic succession planning is the key to a smooth transition and should include retirement dates, future ownership structure, management plans (including potential outside personnel), and more. While a family business owner may not be ready to face the tough questions, doing so early can prevent, or at least minimize, uncertainty later on. It will be critical for the family to work with a financial professional who understands the complex issues that face family businesses, takes the time to uncover each family member’s individual goals and then presents a variety of options to achieve them.

By outlining the objectives up front, you will be able to better define the scope of the relationship and set expectations for the entire family. A family-business advisor must view the business within the context of broader family relationships, including any underlying conflicts (every family has them!) Power struggles, issues of entitlement, a reluctance to give up control are all common challenges. While it is not your job to solve their problems, it is up to you to help organize the process, establish guidelines, and lead the family through. The more you can establish a relationship with the family as a whole, the more you will earn your place as a trusted advisor.

As a family-business advisor who is part of a family business myself, I am in a unique position to understand this subject from both sides. I am also well aware of the limitations of my own expertise and know that sometimes a broader group of experts may need to be brought into the process. Business valuation experts, attorneys, mediators, and other experts can be important members of the advisory team and having a vetted network of outside professionals to draw on as needs arise is invaluable. When handled properly, family-business succession planning can be a smooth and seamless process that keeps family relationships close during the transition and long into the future.

Laurie Ingwersen, CFP®, CRPC®, CDFA™, CBC, is a managing partner and senior wealth management advisor at The Harvest Group. She was recently named an Outstanding Woman of Family Business by the Family Business Association. The Harvest Group provides retirement planning as part of our Harvest Wealth Management for Life program. To speak with one our advisors, feel free to contact us today to book an appointment.

Important Disclosure:

The Harvest Group Wealth Management, LLC is an SEC registered investment adviser principally located in Waltham, MA.  Information regarding our firm’s services can be found at A copy of our current written disclosure brochure discussing our advisory services and fees remains available upon request.

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