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Guest Post – Family Offices, Relationships, and Succession

At Deep Knowledge Investing, we focus on helping you earn higher risk-adjusted returns. It’s our job to help you make more money to support whatever goals you have. Today, we’re featuring a guest post to address the crucial issue of how to communicate with family members about what will happen when you are ready to take a step back from running your business and managing your finances. Done poorly (or not at all) and it could lead to hurt feelings, destruction of family wealth, and impairment of family relationships. Handling these conversations well can lead to security and opportunities for multiple generations to come.

Amy Castoro is the CEO of The Williams Group. She works with family offices to ensure they are prepared with a plan for when it’s time for the next generation to take a leadership role. She also works with wealth advisors to ensure those advisors are offering the right resources to clients. As Amy says, if you’re not talking to your clients about preparing their kids, someone else is.

Given the number of family offices and wealth advisors who subscribe to DKI, I thought this was an important topic to share with you. What follows is a guest post from Amy sharing some stories about why good communication is crucial to ensure that family success and relationships continue for your children.

If you’re interested in learning more, please reach out at and I’ll be happy to put you in touch with Amy. This is not a paid post and DKI has no financial interest in The Williams Group. We’re sharing Amy’s stories and decision-making framework because they’re relevant to many of you.


By Amy Castoro:

If the HBO series Succession taught us anything, it is the importance of good governance, along with trust and communication skills.  The heads of affluent families worry their wealth will cause discord in the family, or derail the motivation of their offspring so the topic of the family money is often kicked down the road, often until it is too late.  Family leadership is unable to have the conversations productively,  long term simmering resentment creates unsurmountable voids in relationships.  Silence is the great destroyer of wealth, it is essentially being indifferent to the relationships required to implement the estate plans as intended.


As David Edelson entered his late 80s, he began to rethink his years of hesitation about turning the business over to his only daughter, Kathy.  She knew the business, having worked there all her adult life. He was slowing down, tired more easily, and couldn’t put in the 12-hour days of only a few years ago. David had held tightly to the reins of leadership and kept Kathy from becoming the company president of the family corporation. With his advancing age, he knew she’d have to take the reins. David called Kathy into the office and made the announcement that he was finally promoting her to president. She was “ready” and so was he. He was shocked when his daughter said: “Daddy, I’m 65 next week and scheduled for retirement. Maybe one of the grandkids might be interested, but now one’s a doctor, and the other’s a musician. I doubt either of them are interested in giving up their professional careers.


Not talking about the family business or the succession plans to support it, stack the odds of a successful transfer against them.  Successful defined as the family staying intact and in control of the money.  Research conducted with over 2,500 families tells us that 65% of the breakdown of a successful transfer is directly attributed to trust and communication.  25% lies with the lack of prepared heirs, meaning what gets them out of bed in the morning.  And 10% has to do with misaligned values or differences in opinions on the use and purpose of the wealth.


In another family, two brothers who were very close, both with families inherited the penny stocks that were created by their grandfather. One brother wanted to cash them in and pay off their mortgage, put the kids through school. The other brother felt the money was “legacy family money” and was not theirs to cash in.  Twelve years later a judge made the call. In the end, the brothers ended up paying the estate attorneys more than the value of the stocks.  The real cost however was that they no longer speak to each other.  Perhaps this could have all been avoided if Dad were to have sat the boys down and shared his vision for the wealth.


Families who take time to prepare their next generation to responsibly manage wealth have a dramatically higher success rate. For example, a mother asked us to work with her two adult children to co-manage a $600M foundation. When we interviewed the next generation, we learned they could not be further apart in their desire to work together, commitment to rebuild their relationship, or their fundamental values.  One was devoutly committed to the Catholic church, the other an atheist. One was happily willing to accept family distributions and the other was embarrassed by the family wealth.  The son was a laborer, working long hours committed to missionary work, while his sister dedicated her life to serving the LGBQT community and running a suicide hotline. Through a series of meetings focused on building trust, learning new ways to have conflict be generative, and engaging in longstanding pending conversations they rebuilt their relationship.  Today they work together to fund programs aimed at serving underprivileged children, through both missionary work and suicide hotlines. The brother was recently asked to be the godfather of his sister’s child.


Estate plans are designed to take care of assets, not relationships.  The opportunity for advisors to access the next generation, along with broadening their value proposition beyond the financials is to begin engaging these kinds of conversations.  One of our advisors found himself on the 18th hole of the golf course with a long-standing client.  Together they watched each other’s children grow, attended meaningful events in each other’s lives and had become dear friends.  The advisor was shocked when the client said he was moving his account to another firm.  When asked why, the client shared another advisor was talking to him about his family and felt it was time to start engaging in those conversations. If you are not talking to your clients about the impact of wealth on their family, someone else is.


As an advisor, you have done a great job preparing the assets for the family.  Now it is time to prepare the family for the assets.  You can begin engaging your clients on these topics by asking questions such as:


  1. In what areas do you and your spouse see eye to eye, and in what areas do you see things differently?


  1. What are you doing (other than hoping) to ensure your children will still take care of each other after you are gone? Do they know what you expect for your spouse when you are gone?


  1. In what ways does your family see you as a resource, not just a wealth provider?


  1. Are the conversations about wealth a two-way conversation or are you mainly calling the shots? What do you anticipate will happen after you’re gone?


  1. What are the conversations you don’t dare to have?


  1. How confident are you that the wealth you have amassed will bring your family closer together?


  1. Are the succession plans for your business communicated to the family? Do they have a sense of how to work for the company if they wanted to?  Are the standards for joining, keeping, and progressing through the company as a family member clear? Are the exit strategies for family members understood by everyone?


  1. If you want to sell the business, how do you anticipate the sudden wealth will impact the family members and their identity in the community? Are they ready for that?  What would you like to see happen for them to show you they are ready?


  1. Do you have concerns that the impact of your wealth could negatively impact the next generation? If so, what do you see might happen? What actions are you taking to prepare the family?


  1. What do you anticipate will happen if you do nothing to prepare your family for these conversations as well as you have prepared the estate?



As you would introduce a CPA, or Estate Attorney, you can also introduce resources to support family harmony through wealth transition.  A simple sentence: “Are you interested in some resources that may be able to support you through this side of estate planning?” will open the door to having you be recognized as someone who cares about their family well being. It also allows you to manage your boundary of advisor vs. therapist and leaves the heavy lifting to professionals.


A growing industry is budding with resources available from psychology, financial education, and family coaching. Are you interested in some resources that may be able to support you through this side of estate planning?



Information contained in this report is believed by Deep Knowledge Investing (“DKI”) to be accurate and/or derived from sources which it believes to be reliable; however, such information is presented without warranty of any kind, whether express or implied and DKI makes no representation as to the completeness, timeliness or accuracy of the information contained therein or with regard to the results to be obtained from its use.  The provision of the information contained in the Services shall not be deemed to obligate DKI to provide updated or similar information in the future except to the extent it may be required to do so. 


The information we provide is publicly available; our reports are neither an offer nor a solicitation to buy or sell securities. All expressions of opinion are precisely that and are subject to change. DKI, affiliates of DKI or its principal or others associated with DKI may have, take or sell positions in securities of companies about which we write. 


Our opinions are not advice that investment in a company’s securities is suitable for any particular investor. Each investor should consult with and rely on his or its own investigation, due diligence and the recommendations of investment professionals whom the investor has engaged for that purpose. 


In no event shall DKI be liable for any costs, liabilities, losses, expenses (including, but not limited to, attorneys’ fees), damages of any kind, including direct, indirect, punitive, incidental, special or consequential damages, or for any trading losses arising from or attributable to the use of this report. 

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