When I am preparing parents for their first family business meeting, the biggest issue they face is deciding how much to disclose to the kids about the size and composition of the family wealth. Let’s face it, in our society money is one of the most private and secretive topics. Most parents don’t want their kids to know how much they have for fear that it will alter their behavior and turn them into entitled brats.
The reality is that entitlement attitudes, if they were not present before, will usually not change after financial disclosure. In our experience, financial disclosure is like a crossing over for most families. Most parents are scared to death to do it, but in almost every instance the kids rise to the occasion, sit a little straighter in their chairs and realize the implications of being trusted with such intimate and important family information. The door opens to having really meaningful conversations about confidentiality, discretion and trust. The level of engagement of the kids in the family meeting process rises dramatically after such an event.
Don’t get me wrong, I would never advise parents to disclose sensitive financial information to their kids if I sense that the kids aren’t ready or the timing isn’t right. And sometimes parents never really get comfortable with the idea, so we don’t push it. My point is that I have witnessed some amazing transformations for those courageous enough to take that important step.
Kathy Reich, CA, CMA, CFP, CPCC
President & CEO, Canadian Family Futures Inc.