www.pwc.com Leveraging family meetings May 18, 2017
About the speaker Charlie J. Carr, CFP Managing Director Family Enterprise Advisory Services charles.carr@pwc.com 214-953-7059 office Charlie inspires families to achieve their legacy for the next 100 years. He oversees PwC s family enterprise advisory offerings, which includes solutions for families, their family business and family office. He leads projects in family governance, succession planning, setting up family offices, and performing diagnostic reviews of existing family offices to ensure they most effectively support the family and its desired legacy. Charlie has worked in professional services for over 25 years, as a consultant, banker and wealth advisor. For the last 13 years, he has worked exclusively with very wealthy families, their businesses and their family offices. He holds a Bachelor of Business Administration in Accounting and Management from Baylor University and is a CERTIFIED FINANCIAL PLANNER TM. Charlie coached youth baseball for 15 years and has developed and taught a personal finance class for high school students. 2
Agenda Family governance Purpose of family meetings Sample agendas Topics and speakers Best and worst topics/speakers 3
Family governance 4
What is family governance? The process by which a family is directed, controlled, and held accountable. It includes the governing bodies (boards, various committees), as well as the process of defining and maintaining family values and culture. Governance incorporates authority, accountability, leadership, and stewardship, and is key to ensuring adherence to the family s value system. 5
Governance structure of a complex family enterprise Family Governance Family Assembly Family Council Business Governance Shareholders Assembly Council of owners (Trust) Family Office Investment Committee Board of Directors Family Foundation Education Committee Family Retreat Redemption Fund Venture Capital Fund Governance CEO Management 6
Life cycle Evolution from embedded to standalone family office Successful family businesses follow a common path as they begin providing personal services within the family business before eventually forming a separate family office. Family business (embedded FO) Family office Phase Growing and successful business Family trusts Shareholder services division Virtual or hybrid family office Full family office Description Benefits Challenges Business creates wealth that will last generations Source of wealth and identity Employment Succession Estate taxes Establish trusts to pass wealth, minimize taxes. Define succession Tax planning Protect wealth Ownership succession Trustees Education Financial services Family identity separate from business identity Business staff (typically in CFO s office) dedicated to handling family finances Provide wealth management for family Tax efficiency Family privacy Different HR policies for SSD staff Family comfort with using business staff Distraction for business staff Create separate entity; outsource many services either to family business or outside vendors Family privacy Manage family risks Tax efficiency Reliance on outside vendors Staffing and succession Growing family and wealth justifies hiring more staff and bringing services in-house Control over resources Increased costs 7
Key elements of good governance Business agreements Articles of incorporation Bylaws Company mission statement Strategic plan Board charter or mission statement Buy-sell agreements Family agreements Family vision statement Code of conduct Family charter or constitution Strategic plan 8
Family enterprise advisory services Common challenges of a wealthy family (small sample) Business challenges Business continuity Board development and governance Voting/non-voting structures Non-family executives/board members Leadership succession (non-family and/or family) both board and executives Strategic planning Attracting non-family talent Ownership by non-family executives? Distributions, liquidity, exit plans Relative importance: business vs. family unity? Policy setting Family employment policies (education, experience, roles, in-laws, etc.) Role of owners working in the business Compensation vs. distribution Preparing the next generation Family challenges Estate complexity Number of trusts and entities Shared ownership: partnership and fund accounting Tax filings Roles of trustees and beneficiaries Investment complexity Variety of custodians/advisors Illiquid holdings: HF, PE, RE Reporting, asset allocation Legacy Education Family reputation Family communication Personal security Risks: financial, privacy, reputation, legal Renew the wealth engine as the family grows 9
Purpose of family meetings 10
What is a family meeting? Business meetings Monthly family lunches Quarterly family gatherings Annual retreats 11
Purpose of family meetings Build family unity and cohesion Have fun Establish/build family legacy Educate Communicate Govern 12
About family meetings Participation Frequency Locations Length Funding Facilitation 13
Sample agenda 14
Sample agenda Weekend retreat Family meeting components: Welcome Activities/ icebreakers Culture/ history Communicate Governance Education Fun Thursday Arrive at resort 7pm Family dinner ABC restaurant Friday 8am Breakfast Café room 9am Opening remarks Update from each family branch 10am Icebreaker activity #1 10:30am Business update Patriarch President Noon Lunch Café room 1pm Cybersecurity education Outside speaker 1:30pm Review family vision Family council representative 1:50pm Family history Family elder 2pm Estate planning Outside speaker 3pm 5pm Family fun activity Free time 6pm Reception XYZ restaurant 7pm Dinner XYZ restaurant Saturday 8am Breakfast Café room 9am Update from family council Council chair 10am Icebreaker activity #2 10:30am 11am Training for trustees and beneficiaries Economic/market update and investment review Outside speaker Investment advisor Noon Lunch Café room 1pm Icebreaker activity #3 1:30pm Foundation strategy discussion Philanthropic committee chair 2pm Communication styles Outside speaker 3pm Family fun activity 5:30pm Reception MNO restaurant 6:30pm Dinner MNO restaurant 8pm Sunday Family casino night 8am Breakfast Café room 9am Personal security FO president 10am Strategic planning Council chair 11am Closing remarks Patriarch 11:30am Depart 15
Sample agenda One-day meeting Family meeting components: Welcome Activities/ icebreakers One day meeting 8:30am Opening Patriarch 9am Ice-breaker Facilitator 9:30am Business update Business president 11am Investment update Investment advisor Culture/ history Noon Lunch Communicate 1pm Estate planning discussion Outside advisor Governance 2pm Technology and cybersecurity training Education 2:30pm Financial education Based on topic Fun 3:30pm Charter/ strategic planning Facilitator 5pm Q&A, ongoing discussions Facilitator 6pm Family dinner 16
Sample agenda Multi-family retreat Family meeting components: Welcome Activities/ icebreakers Culture/ history Communicate Governance Education Fun Thursday Arrive at resort 7pm Family dinner ABC restaurant Friday & Saturday 8am Breakfast Café room 9am Keynote (education) Outside speaker 10am Education break-out Various 11am Break 11:15pm Education break-out Various 12:30pm Lunch 1pm Free for activities Various 6pm Reception XYZ restaurant 7pm Dinner XYZ restaurant Sunday 8am Breakfast Café room 9am Family meetings Separate by family 2pm Depart 17
Topics and speakers 18
Agenda: sample fun activities Sports Croquet Bocce ball Golf Tennis Volleyball Float trips Other activities Paint pictures Build a bike Build and race cardboard boats Escape room Wine tasting Service trips Museums 19
Agenda: sample education topics Technical Personal Role of trustee/beneficiary Investments Tax Financial planning/budgeting Estate planning Technology tools Leadership Communication styles Active listening Emotional intelligence Money scripts Passion/purpose Specifics on the business 20
Planners: top things for speakers to consider They are here voluntarily Don t be boring Don t expect them to know your lingo/acronyms Share the horror stories Be interactive Tell real stories Be transparent 21
Best and worst examples 22
Best and worst examples from family meetings Interactive let s learn from each other s stories 23
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