Family Enterprises: Field or Fad

A lot has happened since the field of family enterprise started to emerge as a distinct area of knowledge and practice. 

It is now accepted that the family enterprise client is a complex economic and emotional system in which the distinct and separate needs of a family, a group of owners and an enterprise must be balanced. This makes it impossible to detach the interests of the family from their enterprise and advise them as if they were separate entities. However, blending these distinct interests poses new challenges for advisers.

Most advisers examine the needs of a family enterprise client through the lens of a technical specialism. The specialist’s perspective is valuable and provides effective assistance in aspects of what a family enterprise needs, but it is only fair to acknowledge that there are risks associated with this approach. 

The main one is that not many enterprising families consider their lives and relationships to be reducible to a series of specialist problems to which there are proficient, technical answers. Their reality, in contrast, involves the bigger task of making crucial decisions about the transfer of wealth, power, roles and titles while being fair, loving and considerate with the family and their business interests.

The Soft Stuff

The argument might be made that responding to this challenge of advising an emotional system involves specialists developing so-called soft skills. This term describes an indistinct cluster of personal characteristics that apparently enable advisers to interact more effectively with a client and the way forward, therefore, is to combine soft skills with hard skills, being the adviser’s chosen technical specialism.

This is, however, an adviser-centric view of the world. Family enterprises could reasonably argue that the conventional nomenclature should be reversed because for them the so-called soft stuff is in fact the hard stuff.

In my view the task of establishing an effective adviser relationship with a family enterprise involves more than combining specialisms with so-called soft skills. It is about understanding the challenges that arise in a complex family enterprise system as these change over time and how these changes affect a range of vested self-interests in the family and the enterprise. This involves a combination of knowledge and skills that need to be learned and then mastered through practice, like any other field of professional work.

Field or Fad?

But is family enterprise a distinct field of practice? The way in which many advisory firms are organised already acknowledges the need for advisers to focus on a particular sector. For example, the financial sector is sub-divided into banking, investment funds or private equity. Economic sectors like retail, tourism, commercial property, entertainment or bio-tech, to name but a few, attract the attention of advisers who want to really get to know what is happening in that sector so that they can provide better advice to clients.

Given the number of family enterprises in every country there is a case to be made that this distinct type of client needs focussed attention. New research offers reliable insights to the realities faced by family enterprises, and there is an excellent opportunity for advisers to consume these new ideas, mix them with their technical expertise, and gain a competitive advantage by providing a superior service to the family enterprise market.