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Green, Yellow, or Red Zone Families: Which Do You Have in Your Advisory Practice?
Jim Grubman, Ph.D
Leo Tolstoy, Anna Karenina:
HAPPY families are all alike;
every UNHAPPY family is unhappy in its own way.
August: Osage County
© CAMBRIDGE FAMILY ENTERPRISE GROUP, 2017. THIS MATERIAL MAY NOT BE QUOTED, REPRODUCED OR DISTRIBUTED WITHOUT WRITTEN PERMISSION.
FACILITATIVE SKILLSMOST IMPORTANT
TECHNICAL SKILLS MOST IMPORTANT
THE ONE-AXIS MODEL OF WEALTH ADVISING
2017 FAMILY ENTERPRISE XCHANGE SYMPOSIUM
© CAMBRIDGE FAMILY ENTERPRISE GROUP, 2017. THIS MATERIAL MAY NOT BE QUOTED, REPRODUCED OR DISTRIBUTED WITHOUT WRITTEN PERMISSION.
FACILITATIVE SKILLSMOST IMPORTANT
TECHNICAL SKILLSMOST IMPORTANT
HIGH COMPLEXITY
LOW COMPLEXITY
HIGH COMPLEXITY
PERSONAL and
FAMILYDYNAMICS
TECHNICAL TASKS
THE TWO-AXIS MODEL
© CAMBRIDGE FAMILY ENTERPRISE GROUP, 2017. THIS MATERIAL MAY NOT BE QUOTED, REPRODUCED OR DISTRIBUTED WITHOUT WRITTEN PERMISSION.
HIGH COMPLEXITY
LOW COMPLEXITY
HIGH COMPLEXITY
PERSONAL and
FAMILYDYNAMICS
TECHNICAL TASKS
INCOME MANAGEMENT FOR
HIGHLY ANXIOUS CLIENT
STRAIGHTFORWARD INVESTMENT ACCOUNT
CLIENT
FINANCIAL SKILLS TRAINING OF
RESPONSIBLE YOUNG ADULT
FINANCIAL PLANNING FOR COUPLE IN SEVERE
CONFLICT
SINGLE BRANCH WEALTH MANAGEMENT WITH
MULTIPLE ENTITIES AND TRUSTS
HIGH-CONFLICT MULTI-GENERATIONAL
GOVERNANCE, FAMILY COMMUNICATION AND
PHILANTHROPY
TRUST MANAGEMENT FOR BIPOLAR CLIENT
COMPLEX ESTATE PLANNING FOR RECENT
WIDOW
EXPERIENCED MATURE INVESTOR WITH COMPLEX
TRUST ACCOUNTS
FINANCIAL EDUCATION FOR UHNW GEN 3
MANAGEMENT OF OVERSPENDING BY ACTIVE
ALCOHOLICHEALTHY MULTI-GENERATIONAL GOVERNANCE,
COMMUNICATION AND PHILANTHROPY
GRUBMAN AND JAFFE, PRIVATE WEALTH MAGAZINE, DEC. 2010
2017 FAMILY ENTERPRISE XCHANGE SYMPOSIUM
© CAMBRIDGE FAMILY ENTERPRISE GROUP, 2017. THIS MATERIAL MAY NOT BE QUOTED, REPRODUCED OR DISTRIBUTED WITHOUT WRITTEN PERMISSION.
HIGH COMPLEXITY
LOW COMPLEXITY
HIGH COMPLEXITY
PERSONAL and
FAMILYDYNAMICS
TECHNICAL TASKS
INCOME MANAGEMENT FOR
HIGHLY ANXIOUS CLIENT
STRAIGHTFORWARD INVESTMENT ACCOUNT
CLIENT
FINANCIAL SKILLS TRAINING OF
RESPONSIBLE YOUNG ADULT
FINANCIAL PLANNING FOR COUPLE IN SEVERE
CONFLICT
SINGLE BRANCH WEALTH MANAGEMENT WITH
MULTIPLE ENTITIES AND TRUSTS
HIGH-CONFLICT MULTI-GENERATIONAL
GOVERNANCE, FAMILY COMMUNICATION AND
PHILANTHROPY
TRUST MANAGEMENT FOR BIPOLAR CLIENT
COMPLEX ESTATE PLANNING FOR RECENT
WIDOW
EXPERIENCED MATURE INVESTOR WITH COMPLEX
TRUST ACCOUNTS
FINANCIAL EDUCATION FOR UHNW GEN 3
MANAGEMENT OF OVERSPENDING BY ACTIVE
ALCOHOLICHEALTHY MULTI-GENERATIONAL GOVERNANCE,
COMMUNICATION AND PHILANTHROPY
GRUBMAN AND JAFFE, PRIVATE WEALTH MAGAZINE, DEC. 2010
© CAMBRIDGE FAMILY ENTERPRISE GROUP, 2017. THIS MATERIAL MAY NOT BE QUOTED, REPRODUCED OR DISTRIBUTED WITHOUT WRITTEN PERMISSION.
HIGH COMPLEXITY
LOW COMPLEXITY
HIGH COMPLEXITY
PERSONAL and
FAMILYDYNAMICS
TECHNICAL TASKS
LEVEL OF CONFLICT
COMMUNI-CATION STYLE
LEVEL OF FAIRNESS
DECISION-MAKING,
GOVERNANCE
PRESENCE OF ADDICTIONS
SITUATIONAL FACTORS
2017 FAMILY ENTERPRISE XCHANGE SYMPOSIUM
© CAMBRIDGE FAMILY ENTERPRISE GROUP, 2017. THIS MATERIAL MAY NOT BE QUOTED, REPRODUCED OR DISTRIBUTED WITHOUT WRITTEN PERMISSION.
HIGH COMPLEXITY
LOW COMPLEXITY
HIGH COMPLEXITY
PERSONAL and
FAMILYDYNAMICS
TECHNICAL TASKS
LEVEL OF CONFLICT
COMMUNI-CATION STYLE
LEVEL OF FAIRNESS
DECISION-MAKING,
GOVERNANCE
PRESENCE OF ADDICTIONS
SITUATIONAL FACTORS
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© CAMBRIDGE FAMILY ENTERPRISE GROUP, 2017. THIS MATERIAL MAY NOT BE QUOTED, REPRODUCED OR DISTRIBUTED WITHOUT WRITTEN PERMISSION.
HIGH COMPLEXITY
LOW COMPLEXITY
HIGH COMPLEXITY
PERSONAL and
FAMILYDYNAMICS
TECHNICAL TASKS
LEVEL OF CONFLICT
COMMUNI-CATION STYLE
LEVEL OF FAIRNESS
DECISION-MAKING,
GOVERNANCE
PRESENCE OF ADDICTIONS
SITUATIONAL FACTORS
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√
√ √
2017 FAMILY ENTERPRISE XCHANGE SYMPOSIUM
© CAMBRIDGE FAMILY ENTERPRISE GROUP, 2017. THIS MATERIAL MAY NOT BE QUOTED, REPRODUCED OR DISTRIBUTED WITHOUT WRITTEN PERMISSION.
HIGH COMPLEXITY
LOW COMPLEXITY
HIGH COMPLEXITY
PERSONAL and
FAMILYDYNAMICS
TECHNICAL TASKS
LEVEL OF CONFLICT
COMMUNI-CATION STYLE
LEVEL OF FAIRNESS
DECISION-MAKING,
GOVERNANCE
PRESENCE OF ADDICTIONS
SITUATIONAL FACTORS
© CAMBRIDGE FAMILY ENTERPRISE GROUP, 2017. THIS MATERIAL MAY NOT BE QUOTED, REPRODUCED OR DISTRIBUTED WITHOUT WRITTEN PERMISSION.
HIGH COMPLEXITY
LOW COMPLEXITY
HIGH COMPLEXITY
PERSONAL and
FAMILYDYNAMICS
TECHNICAL TASKS
LEVEL OF CONFLICT
COMMUNI-CATION STYLE
LEVEL OF FAIRNESS
DECISION-MAKING,
GOVERNANCE
PRESENCE OF ADDICTIONS
SITUATIONAL FACTORS
2017 FAMILY ENTERPRISE XCHANGE SYMPOSIUM
11 © CAMBRIDGE FAMILY ENTERPRISE GROUP, 2017. THIS MATERIAL MAY NOT BE QUOTED, REPRODUCED
OR DISTRIBUTED WITHOUT WRITTEN PERMISSION.
Family StructureGenerations, branches, members
Inclusion of in-laws and/or youth (16 – 30)
Strong history of divorce/blended families
Family FunctioningGovernance structures in place
Decision-making model (stated vs actual)
Leadership style (patriarch/matriarch or others)
Spiritual or faith-based family
FACTORS AFFECTING
FAMILY COMPLEXITY
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12 © CAMBRIDGE FAMILY ENTERPRISE GROUP, 2017. THIS MATERIAL MAY NOT BE QUOTED, REPRODUCED
OR DISTRIBUTED WITHOUT WRITTEN PERMISSION.
Family CommunicationOpen vs avoidant vs conflictual
Presence of secrets
Presence of longstanding conflicts or rifts
Level of fairness
AddictionsSubstance abuse
Significant overspending
Gambling/sex addiction
FACTORS AFFECTING
FAMILY COMPLEXITY
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2017 FAMILY ENTERPRISE XCHANGE SYMPOSIUM
14 © CAMBRIDGE FAMILY ENTERPRISE GROUP, 2017. THIS MATERIAL MAY NOT BE QUOTED, REPRODUCED
OR DISTRIBUTED WITHOUT WRITTEN PERMISSION.
Family Events/Situational FactorsSuccession – upcoming, needed, or overdue
Liquidity event(s)
Entrances/exits – death, divorce, estrangements, upcoming major moves
Strong history of divorce/blended families
Medical crises
Mental health crises
Other Factors?
FACTORS AFFECTING
FAMILY COMPLEXITY
√√√
2017 FAMILY ENTERPRISE XCHANGE SYMPOSIUM
© CAMBRIDGE FAMILY ENTERPRISE GROUP, 2017. THIS MATERIAL MAY NOT BE QUOTED, REPRODUCED OR DISTRIBUTED WITHOUT WRITTEN PERMISSION.
HIGH COMPLEXITY
LOW COMPLEXITY
HIGH COMPLEXITY
PERSONAL and
FAMILYDYNAMICS
TECHNICAL TASKS
LEVEL OF CONFLICT
COMMUNI-CATION STYLE
LEVEL OF FAIRNESS
DECISION-MAKING,
GOVERNANCE
PRESENCE OF ADDICTIONS
SITUATIONAL FACTORS
16 © CAMBRIDGE FAMILY ENTERPRISE GROUP, 2017. THIS MATERIAL MAY NOT BE QUOTED, REPRODUCED
OR DISTRIBUTED WITHOUT WRITTEN PERMISSION.
Cultural HeritageFACTORS AFFECTING
FAMILY COMPLEXITY
2017 FAMILY ENTERPRISE XCHANGE SYMPOSIUM
© CAMBRIDGE FAMILY ENTERPRISE GROUP, 2017. THIS MATERIAL MAY NOT BE QUOTED, REPRODUCED OR DISTRIBUTED WITHOUT WRITTEN PERMISSION.17INDIVIDUALISTHONOR COLLECTIVE
HARMONY
INDIVIDUALIST CULTURE North America, Northern Europe, UK, Australia, New ZealandCOLLECTIVE HARMONY CULTUREChina, Hong Kong, Singapore, Korea, Southeast Asia, [Japan, Indonesia] HONOR CULTURELatin America, Southern Europe, Middle East, Africa, India, Russia, [Indonesia]
© CAMBRIDGE FAMILY ENTERPRISE GROUP, 2017. THIS MATERIAL MAY NOT BE QUOTED, REPRODUCED OR DISTRIBUTED WITHOUT WRITTEN PERMISSION.18INDIVIDUALISTHONOR COLLECTIVE
HARMONY
2017 FAMILY ENTERPRISE XCHANGE SYMPOSIUM
© CAMBRIDGE FAMILY ENTERPRISE GROUP, 2017. THIS MATERIAL MAY NOT BE QUOTED, REPRODUCED OR DISTRIBUTED WITHOUT WRITTEN PERMISSION.19INDIVIDUALISTHONOR COLLECTIVE
HARMONY
INDIVIDUALIST CULTURE North America, Northern Europe, UK, Australia, New Zealand
Self-worth based on personal dignityPeople are equal and have individual rights, above the familyAssertiveness, directness, transparencyEveryone should be heard in decision-makingShared leadership is possible and encouraged within a familyTrust is built by what you do as an individual
© CAMBRIDGE FAMILY ENTERPRISE GROUP, 2017. THIS MATERIAL MAY NOT BE QUOTED, REPRODUCED OR DISTRIBUTED WITHOUT WRITTEN PERMISSION.20INDIVIDUALISTHONOR COLLECTIVE
HARMONY
COLLECTIVE HARMONY CULTUREChina, Hong Kong, Singapore, Korea, Southeast Asia, [Japan, Indonesia]
Self-worth is collectively determined and maintained(face is to be preserved)The family and community are pre-eminentOne should respect and fulfill one’s place within the familyIssues should remain ambiguous and unspokenDecisions and relationships are hierarchicalTrust is built more on relationships
2017 FAMILY ENTERPRISE XCHANGE SYMPOSIUM
© CAMBRIDGE FAMILY ENTERPRISE GROUP, 2017. THIS MATERIAL MAY NOT BE QUOTED, REPRODUCED OR DISTRIBUTED WITHOUT WRITTEN PERMISSION.21INDIVIDUALISTHONOR COLLECTIVE
HARMONY
HONOR CULTURELatin America, Southern Europe, Middle East, Africa, India, Russia, [Indonesia]
Self-worth based on reputation, maintaining honor of self and familyContending with unstable governments and rule of lawTransparency is potentially dangerousStructure is hierarchical, based on family relationship and birth orderCommunication is somewhat ambiguous yet can be emotionalTrust is built on relationships and networks, somewhat on personal tasks
© CAMBRIDGE FAMILY ENTERPRISE GROUP, 2017. THIS MATERIAL MAY NOT BE QUOTED, REPRODUCED OR DISTRIBUTED WITHOUT WRITTEN PERMISSION.22
THE JOURNEY UP
POVERTY
MIDDLE CLASS
WEALTH
HERITAGE CULTURE
ECONOMIC TRANSITION IN FAMILY ENTERPRISES
2017 FAMILY ENTERPRISE XCHANGE SYMPOSIUM
© CAMBRIDGE FAMILY ENTERPRISE GROUP, 2017. THIS MATERIAL MAY NOT BE QUOTED, REPRODUCED OR DISTRIBUTED WITHOUT WRITTEN PERMISSION.23
POVERTY
MIDDLE CLASS
WEALTH
HERITAGE CULTUREHONORINDIVIDUALISTCOLLECTIVE
HARMONY
CULTURAL BLEND
THE JOURNEY ACROSSCULTURAL TRANSITION IN FAMILY ENTERPRISES
THE JOURNEY UPECONOMIC TRANSITION IN FAMILY ENTERPRISES
© CAMBRIDGE FAMILY ENTERPRISE GROUP, 2017. THIS MATERIAL MAY NOT BE QUOTED, REPRODUCED OR DISTRIBUTED WITHOUT WRITTEN PERMISSION.24
COMMUNICATION Direct, focused on what is said
Indirect, reliant on background context
CRITICISMNegative feedback given directly
Negative feedbackgiven obliquely
LEADERSHIP Egalitarian, shared Hierarchical
DECISION-MAKING Consensual, collaborative Top-down
TRUST-BUILDING Task-based Relationship-based
DISAGREEMENT Confrontational Conflict avoidant
IMPORTANT CULTURAL SCALESADAPTED FROM ERIN MEYER, THE CULTURE MAP, 2013
INDIVIDUALIST COLLECTIVE HARMONYHONOR
2017 FAMILY ENTERPRISE XCHANGE SYMPOSIUM
25 © CAMBRIDGE FAMILY ENTERPRISE GROUP, 2017. THIS MATERIAL MAY NOT BE QUOTED, REPRODUCED
OR DISTRIBUTED WITHOUT WRITTEN PERMISSION.
Cultural HeritageIndividualist, Honor, or Harmony Culture?
Impact on directness of communication
Impact on hierarchical thinking and leadership expectations
Impact on how trust is built, maintained, repaired
Impact on decision-making
Watch your bias as an Individualist advisor
FACTORS AFFECTING
FAMILY COMPLEXITY
© CAMBRIDGE FAMILY ENTERPRISE GROUP, 2017. THIS MATERIAL MAY NOT BE QUOTED, REPRODUCED OR DISTRIBUTED WITHOUT WRITTEN PERMISSION.
HIGH COMPLEXITY
LOW COMPLEXITY
HIGH COMPLEXITY
PERSONAL and
FAMILYDYNAMICS
TECHNICAL TASKS
Green Zone Clients
Enjoy them
Offer family dynamics services as needed, for enhancement of family functioning
Use as training ground for new advisors/skills
Yellow Zone Clients
Take issues seriously – take time to assess
[Choose front-line advisor carefully]
Get options for collaboration, referral, or consultation
Know and practice your referral skills
Watch pricing and profitability
Be careful on getting drawn in
Get training to enhance your skills with these clients
Red Zone Clients
Take issues seriously – take time to assess
Be careful of Yellow Zone Clients turning into Red Zone Clients
Protect your people!
Consider pricing accordingly and plan service delivery
Have skills for setting limits
Keep expectations moderate – you, and others
Be able to end engagement
2017 FAMILY ENTERPRISE XCHANGE SYMPOSIUM
G R E E N , Y E L L O W , O RR E D Z O N E C L I E N T SWhich Do You Have in Your Advisory Pract ice?
XCHANGING GENERATIONAL WISDOMFAMILY ENTERPRISE XCHANGE 2017 SYMPOSIUM
James Grubman,Ph.D.
2017 FAMILY ENTERPRISE XCHANGE SYMPOSIUM
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