What is a Family Wealth Coach?
Despite more “coaches” popping up in the wealth advisory world, the profession of a wealth coach in the industry is still a relatively new concept because the term coach as a profession is traditionally steeped in the areas of sociology, psychology, and education. Not just a financial coach, the wealth coach must corral all family members to take uniform action to achieve defined goals directly related to managing shared assets for sustaining family wealth for many generations. This means getting family members aligned around a common vision and mission prescribed by a shared purpose while engaging rising generations to perpetuate stewardship.
This may sound simple but the reality is there is no magic pill or silver bullet that guarantees family members are prepared to step into the shoes of their predecessors because while academic education is important much more is needed, both in terms of knowledge and soft skills, when it comes to effective co-management of substantial and complex shared family wealth. Enter the wealth coach whose overarching objective is to alert family members to the real risks involved when you are a passive owner who lacks the hard technical skills necessary to understand the complexity of the family balance sheet and/or the soft skills needed to work cohesively and with minimal conflict in a group dynamic where everyone has a stake and a seat at the table.
Does My Family Need a Wealth Coach?
When it comes to generational family wealth, if proactive wealth education and stewardship practices are not instilled in the minds and actions of the rising generation by the wealth creators early on (which they typically aren’t), seeking to suddenly change years of learned behavior and habits developed as a result of being raised in an environment of extreme privilege and money is an undertaking that is no small feat.
We all know habits are tough to break and there’s scientific evidence that backs this up. Habits are formed for many reasons but in a nutshell, the human brain is built to be highly efficient and what may have started to be an action that was meant to benefit us at one point in time in our lives may no longer serve us in the present and some cases can do more harm than good. Habits are learned behaviors that become repetitive because our brains cause our body to act on automatic pilot in certain cases so that it can redirect precious energy to doing other things, so much so that after a while we engage in habitual behavior outside of our thinking consciousness. Children of the rich have all of their needs and desires met at a whim and through other people’s efforts. They believe they’ll never have to worry about money and they’ll never have to worry about earning it – a perfect storm enabling habits for a life of leisure, an entitled mindset, and an underdevelopment of a healthy self-identity tied to a larger life purpose. If nothing is done early on to dispel this result, by the time teen and adult years are reached habits and ways of thinking have hardened and hoping they’ll be able to handle the complexities involved in managing substantial wealth when the day comes is simply unreasonable. Hope is not a plan.
Benefits of a Family Wealth Coach
In the coaching profession, people seek help because they get “stuck” and can’t break out of it on their own to achieve a goal they deeply want. Families with generational wealth inevitably come to a fork in the road where the financial assets are at great risk not necessarily due to investment returns or tax planning but rather because of the growing number of family branches consisting of multiple generations, all with diverging interests and allegiances. If family members can’t work together to effectively co-manage shared assets then it is less a matter of whether and more a matter of when the wealth will be dissipated due to a lack of trust and communication, inadequate preparation of heirs, and lack of common vision . However, acknowledging this is not enough, goals must be set and actions must be taken. Because habits and conditioned behavior are incredibly hard to change, this fork in the road is where a family gets stuck and remains there to the detriment of wealth and family relationships.
A wealth coach can help family members break the cycle of unhealthy habits and learn new and better ones so that action is taken and transformational change can occur. The coach works with the family to develop long term strategies that include supporting family members in understanding the current reality and future impact; clearly defining goals; exploring alternatives and evaluating options; allocating roles and responsibilities; creating a plan of action with details that are specific, attainable, and likely to happen; providing structures for accountability and processes for measuring progress. Coaches are trained to facilitate discussions that challenge family members to examine their assumptions, perspectives, unconscious habits, personal biases, and filters to unlock the great potential from within. This encourages open and respectful dialogue that advances the family towards taking action and maximizes the likelihood of success in meeting their goals. What’s more, as a neutral, objective, and confidential third party, the wealth coach establishes an environment of safety that is so critical for family members with a history of complicated family dynamics that can be easily triggered to derail efforts. Finally, coaches can offer tools and practices to teach family members necessary skills when working with others such as effective communication, group decision-making, conflict resolution, and receiving and giving feedback for improvement.
 Based on a study conducted by Roy Williams and Vic Pressier as discussed in their book, Preparing Heirs: Five Steps to a Successful Transition of Family Wealth and Values (2003).