The following is part of a conversation I had in person with Vic Preisser back last fall. It was on Halloween day to be exact! Preisser is an Iowa native (living in California) and was back in Des Moines on family business. He agreed to meet with me and we spent a nice hour chatting at the Smokey Row Coffee House.
Preisser is a partner with Roy Williams at The Williams Group in California. They specialize in addressing the problem of over 2/3 of all family wealth transfers failing after transition to the next generation. The Williams Group has researched the causes of failure with 3,250 families of wealth and offers post-transition planning for families and professionals. Their services include preparing heir families for wealth and responsibility, assisting other estate planning professionals, and mentoring and coaching heirs.
This year The Williams Group has created The Institute for Preparing Heirs to offer training for professional advisers in their process on how to successfully work with families of wealth and the their other advisers.
Preisser’s online biography states that he applies his 40 years of business and government experience to family ownership issues, focusing upon the development of career paths for family members/heirs.
He has served as the Director of the Institute for Family Business and Resident Professor of Management at the University of the Pacific. His specialty within The Williams Group is coaching and mentoring heirs on career choices, assisting heirs as they adjust those choices, and training institutions to work with their high net worth clients on wealth transfer issues.
He is a strong advocate for transparency and accountability in the management of family assets. He has substantial expertise in developing routine communication tools for heirs (and benefactors) to use as they track their progress toward the mission of the family wealth.
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Q1: Patrick Van Nice: Mr. Preisser, welcome back to Des Moines. One of the assessment tools you make available to families is the Family Readiness Assessment. Could you describe what that is and what families can learn from it?
Preisser: With the Family Readiness Assessment we can give a family wealth client an extraordinary accurate picture of tomorrow. If they choose to do something about it or if they choose to do nothing about it – we can tell them what tomorrow looks like. Not because we are smart, not because we do any therapeutic or counseling, we deal with where they’re at right today and where they want to be tomorrow.
For the Family Readiness Survey, every family member completes a 50-question anonymous and confidential questionnaire including the spouses and children & grandchildren over age 16. The responses are compared with 3,250 families in our proprietary research database. Three critical areas that are essential for successful wealth transfer: trust and communication levels; heir preparedness; and clarity of the mission for the family’s wealth, are carefully measured. The outcome for the family is a detailed, written report providing them with their individual results and specific recommendations for action for the family.
So (looking at the charts shown below) there's A, B, C, D, E & F family members. So you don’t know who it is. Levels of readiness are on the “Y” axis. We know if you’re below this level (Preisser is pointing to a horizontal line on the chart), you’ll fail - if all family members aren’t at least at this level. We know that in this area, you are at risk. We know that at above this level, you are pretty much ok. You’re going to make out great.
This is the big Family Readiness Survey and this is a wonderful example of before and after coaching. Where they get to get above this line in 3 principle categories. Which are Trust and communication; heir readiness; and a sense of unified mission.
This is one page (the chart) out of a ten page report which has textual recommendation findings. But this is the analytical base that no one else has in the country because it’s a comparison. This is not an evaluation of the family. Instead, it says “compared to families that succeeded.” Here's post-coaching (Preisser points at the 2nd chart). Same family. Base line and results. These aren't claims. They're results! We can do retesting in the future. It depends on the family.
For the Family Readiness Survey, every family member completes a 50-question anonymous and confidential questionnaire including the spouses and children & grandchildren over age 16. The responses are compared with 3,250 families in our proprietary research database. Three critical areas that are essential for successful wealth transfer: trust and communication levels; heir preparedness; and clarity of the mission for the family’s wealth, are carefully measured. The outcome for the family is a detailed, written report providing them with their individual results and specific recommendations for action for the family.
So (looking at the charts shown below) there's A, B, C, D, E & F family members. So you don’t know who it is. Levels of readiness are on the “Y” axis. We know if you’re below this level (Preisser is pointing to a horizontal line on the chart), you’ll fail - if all family members aren’t at least at this level. We know that in this area, you are at risk. We know that at above this level, you are pretty much ok. You’re going to make out great.
This is the big Family Readiness Survey and this is a wonderful example of before and after coaching. Where they get to get above this line in 3 principle categories. Which are Trust and communication; heir readiness; and a sense of unified mission.
The "Mountain Family" Readiness Assessment Pre- & Post-Coaching
Q2. Van Nice: How has the data base of families you've studied changed over the years?
Preisser: Our study groups keep getting bigger with more data input. Now we segment it by generation. And we say, “Are there any signposts early on?”
Q3 .Van Nice: In your study where The Williams Group discovered that over 2/3 of wealthy families fail in the transfer of that wealth, have you seen any trends that identify the causes of families failing?
Preisser: That’s what our whole coaching process has evolved into. It’s identifying three major areas: 60% of all the failures that have occurred in families in post-transition are directly traceable to a breakdown of trust and communication within the family. With another 25% there is a failure to have heirs who are ready. Which goes to the lack of trust. Lack of communication. Only 2-3% of failures are because of document problems. Internal trust and communication! (Preisser pounds his hand on the table once for each word for emphasis).
Q4. Van Nice: Could you elaborate on what you mean by trust within a family?
Preisser: When I say trust, I have a very special definition of that word. Which probably doesn’t match yours. There are three legs to the trust stool. And if any one of those legs is missing, they fall over. The three legs are:
1. Reliability. Do you do what you say you’re going to do when you do it, DAD OR MOM (emphasis Preisser’s)?
2. Sincerity. Do you mean it when you say you’re going to do it? Does your outside story match your inside story (Preisser touches his heart as he says this).
3. Competence. Given your structure in life and your skills, are you competent to do what you’re promising me you’ll do? Example: “Mom, you’re an OBGYN. You’ve got to deliver babies. Don’t promise me you’ll be there with us on Christmas morning. Because if you’re client’s having a baby, you’re gone – and I know that. So you’re not competent to make that kind of a promise. So don’t!”
And if all three of these don’t exist, in a platform of I CARE, “I care what the outcome is”, you do not have authentic trust.
Q5. Van Nice: How can a person develop all three of those legs?
Preisser: Over time you do. But we’ve learned because we’ve made hundreds and hundreds of mistakes. We learned how to learn. How to keep learning. You’re in trouble when you stop growing.
Q6. Van Nice: When in the process does the family as a group come to define their Family Mission?
Preisser: The family mission statement comes after meeting face-to-face and after the initial family meeting and after working on communications & trust.
Q7. Van Nice: For professional advisers who want to work with their client families of wealth in this way, what are the benefits for those advisers?
Preisser: You - the adviser - want to make sure that there are two things that are huge outcomes of this: First, you teach the family ahead of time how to retain their assets in post-transition. You can’t do that during post-transition. You really have to do it pre-transition. The second thing you do is you retain the clients into the second and third generations.
Q8. Van Nice: Do you often have situations where there’s a family business?
Preisser: 70% are family businesses. 80% of the time, the family business owner thinks they’ve figured it out. But it just ain’t landing right with the kids and they know it ain’t gonna work somehow or another. But they don’t know where to turn.
Q9. Van Nice: Could you describe some more what post-transition planning is?
Preisser: Post-transition planning refers to the period following the transfer of the estate to heirs and beneficiaries. Planning for the transition should occur BEFORE the transfer actually occurs. The planning would include identifying family and personal values; developing and fulfilling a family mission; discovering, building and using individual talents of the family members; strengthening family relationships; and learning to work with advisers. |
Q10. Van Nice: How does the post-transition planning affect the family’s estate plan?
Preisser: Because of post-transition planning whole new entrées open into what you can do with your estate structure if you trust your kids to have certain competencies and skills. There become a whole lot of freedoms. Trusts no longer have to be restrictive vehicles.
Van Nice: Thanks, Vic for meeting with me today.
Preisser: You welcome!
Note: Together Roy Williams and Vic Preisser have authored several books including Preparing Heirs (2003), Philanthropy Heirs and Values (2005) and For Love and Money (1997). All three books are available at www.thewilliamsgroup.org
The charts shown above are from The Institute for Preparing Heirs.
The charts shown above are from The Institute for Preparing Heirs.
