There’s no advisor playbook for family succession feuds, but these skills help: UBS

Family conflicts can be extremely difficult for advisors to navigate when it comes to business succession planning, but UBS experts have laid out the skills and strategies that can help defuse an often incendiary situation.

This could be, for example, a conflict between the business’ founders and the next generation. Indeed, the younger generation maybe wants to take the reins, but the founder has no interest in selling.

“That’s one where there’s not a playbook, there’s no perfect playbook on that,” said Greg Merrill, a private wealth advisor at UBS, during a media roundtable on generational transition for family business Thursday. Merrill has even seen situations where one UBS advisor is working with one generation of a family, while another member of the wirehouse’s advisory team is working with another family member. “That adds complexity,” he said.

So, how can advisors navigate situations like this, where family members are at war with each other?

Importance of collaboration

“Ultimately, you just try to embrace collaboration,” said Merrill, noting that there are professional advisors who are also conflict resolution specialists.

Family feuds, of course, are nothing new in the financial advisory industry, although conflicts can require specific skill sets.

Dave Leibell, advanced planning specialist at UBS, explained that the wirehouse’s family advisory team works to help family stakeholders resolve these issues.

“Most of the time, in a functional family, meaning nobody is crazy, you can bring them together if you get the right advisors,” he said. “And that’s why it’s so important to have somebody on the softer side of things, the non-legal, structuring side of things.”

“Because if you can get them to realize the consequences of their actions, even after their deaths, and how they are going to be remembered, you can make an educated decision,” Leibell added. “But sometimes it’s tough, because if the son wants succession and the son’s not really ready, that also has to be dealt with.”

The need for ‘softer’ skills

Leibell explained that dialogue on the softer side can go a long way to resolving challenging situations such as this, but he acknowledged that it can slow down the business succession process.

Clearly, there is a pressing need to resolve these issues. UBS’s latest Global Entrepreneur Report, released in March, found that nearly a third of respondents are considering a business transition within five years. However, this figure rises to 57% among those aged 65 and above. The highest proportion of entrepreneurs – of all ages – considering an exit, was in the U.S., where 63% of respondents of those surveyed are thinking about exiting their business.

Set against this backdrop, planning is key. According to the Exit Planning Institute’s National State of Owner Readiness report, 83% of respondents surveyed in 2013 had no formal exit plan, and 81% had no strategic business plan. However, 76% of respondents wanted to transition in the next 10 years. Fast forward 10 years to 2023, and 68% had sought outside advice on their exit, up from 38% in 2013. 

“Our job is to create the environment for them to have that conversation – a lot of times they don’t know where to start, and we’re servicing both generations, we’re generally the trusted advisor for the family,” said UBS’s Merrill

“So, if we create the safe space to have the conversation, that’s kind of the biggest job,” he added.