Family office insights this week:

• Love Conflict will tear us apart - here’s how to stop it

• Daniel Kahneman on how we internalize our successes

• Want to work at the family office of someone famous?

• A book on strategies to manage high-stakes conversations

• Another great family business podcast

When Families Fight

How Family Offices resolve conflict 🎯

When money and family mix, conflicts are almost inevitable. Add in the simmering tensions that can arise from family members working together - especially when issues of privilege and contribution come into play - and it’s easy to see how things can blow up.

In a family office, these conflicts can be damaging financially and emotionally. They are also potentially fatal for the family office.

Left unchecked, conflicts can tear families apart and decimate the wealth they've worked so hard to build.

So, how do you handle conflict in a family office? Today it’s a look at family conflict and strategies to prevent and resolve them.

The Root of the Issue: Why Conflict Happens

First, it’s crucial to understand why conflicts arise in family offices.

The causes are as varied as the families themselves, but here are some of the most common issues:

1. Differing Priorities: Family members often have different visions for the future. While one member might prioritize growth and risk-taking, another might be more conservative, focusing on preserving wealth for future generations. 

2. Generational Gaps: Older family members might have built the fortune from scratch and have a particular attachment to how things are done. Younger members might want to innovate, invest in new areas, or support causes they care about.

3. Lack of Communication: Misunderstandings are rife in family offices where communication is poor. When family members don’t talk openly about their goals, frustrations can fester and eventually boil over.

4. Personal Relationships: Unlike typical corporate settings, family office disputes are often personal. A disagreement over an investment strategy can quickly become entangled with decades-old family dynamics, making resolution more complex.

The Stakes: Why It Matters

The stakes in a family office conflict are sky-high.

Beyond the obvious financial implications, there's the potential for lasting damage to personal relationships. If you don’t adequately resolve a conflict, it can lead to:

Financial Losses: Poor decision-making or stalled investments can result from unresolved disputes, potentially leading to significant financial losses.

Damaged Relationships: Family ties can be permanently damaged, leading to long-lasting rifts that can split the family apart.

Reputational Damage: I cringe when I see disputes in high-profile families spill over into the public eye. These situations don’t help anyone and the reputational damage can be catastrophic.

Loss of Talent: If the environment becomes too toxic, talented family members or key non-family staff might choose to just walk away.

Early Detection: Spotting the Warning Signs 🚨

The best way to deal with conflict is to catch it early. Here are some signs that trouble might be brewing:

Frequent Disagreements: If family members are consistently at odds during meetings, it’s a red flag that deeper issues could be at play.

Withholding Information: When family members or staff start to withhold information or exclude others from important decisions, trust is eroded, and conflict is almost certain to follow. A lack of transparency can be toxic.

Avoidance: If some family members start to avoid meetings or discussions altogether. If this starts happening, it could be a a sign that they’re unhappy with how things are going (there could be other concerning reasons for disengagement).

Side Conversations: When you notice more side conversations or "meetings after the meeting," it’s a sign that not everyone feels heard in the formal settings.

Strategies for Resolution: Taking Action

Resolving conflicts in a family office requires diplomacy, communication skills, and, sometimes, tough love. Here are some ways to approach it:

1. Open Communication Channels 🗣️

The first step in resolving any conflict is to ensure that everyone has a chance to voice their concerns.

Hold a family meeting and encourage open, honest discussion. Make sure everyone feels heard. Sometimes, just getting issues out in the open is enough to defuse tensions.

2. Bring in a Neutral Third Party 🤝

In some cases, it might be helpful to bring in a neutral third party, like a mediator or family office consultant. This person can facilitate discussions and help the family reach a resolution that everyone can live with.

Sometimes an unbiased observer can see solutions that those within the family might miss.

Here’s a great clip from the TV series Succession when a mediator utterly fails!

3. Set Clear Roles and Responsibilities 🗂️

Conflicts often arise because of unclear roles and responsibilities.

Clarifying who is responsible for what - and ensuring that everyone agrees - can help prevent future disputes.

This might involve formalizing roles that have been loosely defined or restructuring the family office to better align with everyone’s strengths and interests.

4. Create a Family Constitution 📜

Many successful family offices create a family constitution - a document that outlines the family’s values, goals, and rules for decision-making.

This can be a powerful tool for preventing conflicts. It provides a reference point that everyone has agreed upon. When disputes arise, the family can turn to the constitution to guide them.

5. Focus on the Big Picture 🌍

In the heat of a conflict, it’s easy to lose sight of what really matters.

Remind everyone of the family’s long-term goals and the importance of working together to achieve them.

Sometimes, stepping back and looking at the bigger picture can help put smaller disputes into perspective.

Preventing Future Conflicts: Lessons Learned

Once a conflict is resolved, it’s important to take steps to prevent future issues. Here’s how:

1. Regular Check-Ins

Hold regular family meetings to ensure that everyone is on the same page.

These meetings should be more than just updates - they should be opportunities for family members to voice concerns and discuss any potential issues.

 2. Education and Training 🎓

Educate younger family members about the family office and involve them in decision-making early on.

This prepares them for future leadership roles and helps them understand the complexities involved in managing the family’s wealth.

 3. Ongoing Communication

Encourage ongoing communication outside of formal meetings. Whether it’s a family group chat, regular phone calls, or informal gatherings, keeping lines of communication open can help prevent small issues from snowballing into major conflicts.

Turning Conflict into Opportunity 🌟

Conflict in family offices is inevitable but it’s also an opportunity.

If handled well, conflicts can lead to stronger relationships, clearer goals, and a more unified family vision. The key is to address issues early, communicate openly, and be willing to take action when necessary.

By turning conflict into a positive force, family offices can protect both their wealth and their most valuable asset: their family.

This newsletter is sponsored by eHoldings

eHoldings is a privately held Canadian corporation that exclusively manages its founder Mike Cautillo’s proprietary capital and assets. It was created to satisfy its own niche, to grow and preserve wealth over the distant future via its unique position trading investment strategy that leverages actionable price action behaviors and fundamental market trends.

eHoldings has over the years made its insights available to accredited investors, which included facilitating exposure to Bitcoin. The company is now particularly focused on bringing its strategy to family offices through bespoke collaboration. See e-holdings.com for more.

𝕏 highlights

When a family office employee had too much downtime.

Fascinating insight from Daniel Kahneman.

The Family Office Community on Twitter is growing. It’s a more private safe space for family office people to talk. You can join for free, just answer the application question.

 💼 where to work

Three notable family office job opportunities currently open…

Chief Accounting Officer - Private Family Office (Ohio / Family Office) 

Executive Director, Outsourced Family Office - JPMorganChase (New Jersey / Service Provider)

Personal Assistant To Public Figure - Private Family Office (New York / Single Family Office)

📚 what to read

Crucial Conversations: Tools for Talking When Stakes Are High by Kerry Patterson, Joseph Grenny, Ron McMillan, and Al Switzler is a classic on dealing with conflicts. It provides strategies for managing high-stakes conversations when emotions run high. It offers practical tools to deal with conflict, de-escalate tension, and reach beneficial agreements.

📻 what to listen to

The Insead Family Business podcast from the INSEAD Wendel International Centre for Family Enterprise explores a range of family business topics from succession to transitioning from a family business to a family office.

📺 what to watch

Three ways to resolve a conflict:

• Prepare: Allow all parties time to settle and prepare in a neutral, distraction-free environment.

• Diffuse and Move Forward: Listen, ask neutral questions, and explore new possibilities to diffuse negative energy and foster collaboration.

• Make an Agreement: Once the energy is neutral, reach a consensus through a verbal or written agreement.

And finally…

I get a lot of questions from family office members and others in the industry. I try answer everyone!

Feel free to reach out directly if there’s a topic you’d like me to cover or are looking for a way to connect with family offices.

Reply here, or drop me a DM on LinkedIn or X.

Family Office Buzz will be back on Monday (here’s the last edition if you missed it) with more of the best content on family offices and beyond.

Until next week!

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