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Finding Family Harmony in Financial Planning

An Interview with Rod Zeeb of The Heritage Institute

Rod Zeeb is CEO of The Heritage Institute which he founded in 2003. The Heritage Institute helps professional advisors and high-net-worth families with their multi-generational planning, estate planning, and family legacy planning to ensure the successful transfer of wealth and values across generations. Rod and I recently chatted about the unique challenges and opportunities faced by high-net-worth families in estate planning and wealth management. Rod shared his expertise on preparing the next generation for inheritance, fostering family unity, and leveraging philanthropy as a tool for education and legacy building. Here are some highlights from our discussion.

Insights from Rod Zeeb on Preparing Heirs for Inheritance

Understanding Family Dynamics

Estate planning isn't complete unless the people who are receiving the inheritance are ready for it. In football, the quarterback can throw a perfect spiral, but if the other team catches it, it's not a good pass. A well-structured financial or estate plan isn’t enough.

We focus on preparing the family, and especially the next generation, for the inheritances they will receive by understanding the family's desired outcomes and then building plans and providing tools and training that help them stay together with their wealth over multiple generations. A lot of parents are reluctant to discuss money with their children. They say things like “If we tell them how much money there is, they’re just going to go off the rails.” We address those concerns by focusing first on the family's values and desired legacy rather than the money. We ask, “What's the family's known for beyond wealth? What do you want to be known for?”

Philanthropy as a Training Tool

Philanthropy is a great way to teach children about money management and decision-making. We use philanthropy a couple of different ways. One way you can use it is to set up, let's say, a donor advised fund for them. You involved them in determining where they think want the funds to go. So, you have them do the research and come back and make suggestions about how we should invest it in charitable organizations. It gives the kids an opportunity to take something, work with it themselves. If they make a mistake, they make a mistake. But it's them doing it for their reasons.

It's amazing. You can do some of that with very young kids. One of our clients has a 9-year-old who went online, reviewed the 990s from non-profits the family funded. The child discovered that one of the charities was keeping a larger share of the donation for themselves rather than using it to help their constituents. She delivered a proposal to her family to reallocate funds away from that organization and toward those recipients who were directing most of the funds to the people they’re meant to help. The father told me, “This is the best training tool ever. How many adults would have done that?”

Dealing with Family Conflicts

Doug Floyd has a great quote that says “you don't get great harmony when everyone sings the same note.” So, when people come in and say, “we want unity,’ the follow-up question is “do you really want unity? Or do you want harmony?” You develop harmony by allowing the kids to sing their own parts their own way. That frees up a lot the anxiety the kids may have about the process because those kids are used to being told what to do and they don't have a lot of choices. As an advisor, when you first come into the room, sometimes the kids’ arms are crossed and they’re leaning back in the chair because they expect you to be telling them things. That changes when you start asking what they really want? Typically, no other professional has asked them what they want. That really shifts the relationship with the next generation.

Still, not all family members may get along or be willing to participate in the planning process. Our approach is to "invite them all but work with the willing." We can’t let one individual hinder the progress of the entire family. A good question to ask the parents is, “What is it that you want for your family? If you're gone and 10 years later the family gets together, what would that look like? What do you want to see? Now, what's it going to take to get there? Sometimes we hear, “Well, our kids don't even talk to each other right now.” So, we start there. “What if we could get them talking?” we ask.

Thoughts for Financial and Legal Advisors:

My advice for advisors is to ask more and talk less. One of our mantras is “What they say is FACT, and what we say is OPINION. Even if you are saying the same thing!” So ask your clients what they really want instead of letting them tell you what they think you want to hear. Most of our clients come through financial or legal advisors, after some estate planning has already been done. Ideally preparing the heirs for their inheritance should be considered before finalizing the estate plan. It’s not unusual for there to be changes to those plans once our clients identify what they really want for their kids – beyond the money - long-term.

Advisors are often hesitant to talk to the kids about wealth and philanthropy because they’re afraid to open a Pandora's Box. They don't want to walk into that room and have the kids blow up. So, we start with the parents' desired outcomes. What is it that they would really like to see and how would you measure success? Instead of asking how much our clients want their kids to get, when and how. I'd ask, what impact do you want the inheritance to have on your kids? Which tells us how much, when, and how. And when you have that as a planning input, you've got so much more to work with.

There’s one question that makes all the difference: “Are you confident that your children and grandchildren are prepared to protect, manage, and grow the inheritance you're going receive?” Then, give them plenty of time to think and respond.


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