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Motivation to Get Started – The Importance of the Soft Issues

Motivation to Get Started – The Importance of the Soft Issues

Posted on Mar 25th, 2021

As a family office, we understand the importance of first working on Tax Planning and Investment Strategies (for the business, real estate, and the investment portfolio) so that we can then proceed to the most valuable part of your financial planning – the soft side of communication. Starting these conversations within the family and business enterprise plays an essential role in preserving the wealth for generations to come.

Much is written on how families of wealth must find ways to navigate the conversation of money and family values (i.e., work ethics, lifestyle, fair distribution, etc.), yet the need for a Family Enterprise Advisor to speak on this subject is guided with caution.

In her article published in Family Business Wealth Newsletter on March 17th, 2021, editor Barbara Spector writes:  

“…when it comes to family business, what is really needed is a two-pronged approach. “Hard side” areas often require “soft side” sensitivities. Take, for example, debt and valuation. If you don’t look up from your spreadsheet and note the expressions on your family members’ faces, you’re setting yourself up for an argument, or maybe worse.”

Barbara then continues with a few questions from that same newsletter that we feel keenly highlight the need to address the “soft side” issues in Family Enterprise:

  1. Has your ownership group developed a policy on how much debt the family is comfortable with?
  2. Are your family members taking too much cash from the business for perks like cars, fancy meals or short business trips that turn into long vacations?
  3. How are you teaching your Next Gens about ownership, management, and stewardship?

The “hard” issues – such as tax planning, corporate structures, and investment portfolios – are critical to the successful creation, and subsequent transition, of family wealth. But equally important – and all too often overlooked – are the “soft side” issues.

So, how and when are conversations around the “soft side” raised? While the “hard” issues generally form part of a required service, “soft” issues may not be immediately obvious. It is through professional initiative and prudent planning that these conversations should be had.

At Legacy Family Office, we are experts in blending our knowledge and skills with other professional consultants to negotiate a smooth and positive plan for each unique family. With the right questions and leadership, we can help build the path to address the traditional “hard” planning, while also navigating the more difficult conversations around why – and for whom – we are doing the planning in the first place. Contact us to learn more.