Family businesses rely on teamwork. The family infrastructure sets the inherent expectations and role model (good or bad) for teamwork to management and employees. The family team concept should also apply to their advisors. Most families base their advisor decisions upon relationship, often times with tenure taking blind precedence over the quality of service. Although I acknowledge that the average family business is increasing in sophistication, I continue to see abuse and malpractice caused by predators who are seeking to take advantage of the natural tendency of family business leaders to rely upon relationships to make important decisions. Unfortunately there are far too many wolves wearing sheep’s clothing.
One would think that family business leadership should solicit the opinions and ideas of all advisors on important decisions such as those pertaining to key manager retention, strategic planning, significant capital outlays, insurance, acquisitions, sale, etc. Unfortunately the presumption is that if the decision does not fall within the advisor’s professed discipline (law, accounting, investments, banking, etc) their input is not needed. However, in an environment influenced by relationships, in the absence of the multiple perspectives and active debate between advisors, there is significant vulnerability to bad advice from underperforming or self-serving advisors. More important, there is no opportunity to tap into the power of team: Together Everyone Achieves More. The reality is that not all advisors offer the same level of professional expertise. However, irrespective of the level of expertise, the independent perspective and input of all core advisors is important to quality decisions.
The fundamental responsibility lies with leadership to create teamwork among their advisors and not allow themselves to be manipulated by salesmen disguised as wolves in sheep’s clothing. Family business leadership should demand that all significant decisions be presented to an advisor team that consists of at least the attorney and the accountant. No one should get a pass based on a cop-out such as “I don’t know anything about life insurance”. Every advisor should be expected to express an opinion from their unique professional perspective on any issue. The net result will be an improvement in the quality of decisions and the predators will seek unprotected prey elsewhere.
Read the last blog of this series titled, “Family Business Is Not a Bad Word“
Sign up for our monthly e-newsletter to stay informed on how to overcome related succession planning issues.