When family offices' members make decisions, they're frequently operating under pressures – not all them about investment. Staying composed and united is an art and maybe also a bit of a science. A regular writer for FWR sits down with an expert to glean insights.

Family Wealth Report contributor and Circulus Group founder Joe Reilly speaks with Paul Edelman, PhD, founder of Edelman & Associates, about a conundrum surfaced in Edelman’s recent Circulus Family Office Summit session: why technically sound investment recommendations do not always become decisions that families can understand, own, and stay with under pressure.

In prior FWR conversations, Reilly and Edelman explored family and organizational dynamics through Succession and Slow Horses. This conversation brings that same interest in judgment, pressure, and decision quality into a more direct family office setting.

Joe Reilly: At the recent Circulus Family Office Summit, you led a session on high-stakes investment decisions and how family dynamics can affect judgment, alignment, and ownership. What led you to focus on the distinction between approval and ownership?
Paul Edelman: In many family office settings, there is a moment when everyone appears to have agreed. The investment team has done the analysis. The recommendation is sound. The risks have been explained. The tax implications have been modeled. The investment committee or family approves the recommendation.

For a time, the matter appears settled.

Then something changes. The market moves in an unexpected direction. The outcome disappoints. A family member begins to question whether the decision was necessary, or whether alternatives were explored carefully enough. The decision was approved, but it may not have been fully owned.

Approval meant that the family agreed to move forward. Ownership meant that the family understood the decision well enough to accept the consequences of the choice, including the possibility of disappointment.

Reilly: What does ownership add that approval alone does not?
Edelman: It helps the decision hold under pressure. In a family office, investment decisions often carry meanings that go beyond the portfolio. A decision may look technical on the surface, but for the family it may also carry meaning about legacy, control, loyalty, stewardship, fairness, authority, or a rising-generation voice. If those dimensions are not considered before agreement, they can return later as discomfort, resistance, or blame.

Reilly: Why do investment decisions become family decisions?
Edelman: Because capital is never only capital in a family office. It carries history, identity, obligations, and expectations.

Take a concentrated legacy holding. From an investment perspective, the question may be straightforward: how much concentration risk is appropriate? But from the family’s perspective, reducing the holding may also feel like changing the family’s relationship to the enterprise or the founder who created the wealth.

A liquidity decision can have the same complexity. One branch may experience liquidity as flexibility and responsible planning. Another may worry that it encourages entitlement or signals that the family is drifting away from the habits that built the wealth. An impact-investing decision may feel to one person like a natural expression of family purpose and to another like a departure from financial discipline.

The investment question is real, but it is rarely the only question. The harder question is: what does this decision mean to the people who must live with it? That is where advisors can be surprised. They may see a portfolio decision. The family may be experiencing a decision about identity, loyalty, control, fairness, or trust.

Reilly: You’ve done prior work on conceptual thinking and how senior leaders and investment professionals think through complex situations. How does that connect to this topic?
Edelman: My work on conceptual thinking has focused on how people make sense of complex situations when there is no simple answer. One thing that distinguishes strong performers is their ability to anticipate the likely consequences of an action. That includes the immediate consequences as well as the consequences likely to follow.

That is essential in investment work. It is just as important in family office decision-making. A recommendation may solve one problem and create others. Reducing a concentrated holding may lower financial risk, but it may raise questions about legacy, loyalty, authority, or whether the family is moving away from the enterprise that created the wealth.

That is why the implication step deserves attention. Before asking for agreement, it helps to ask: What would this action make easier? What would it make harder? What would it make more likely? What might it make more fragile?

These questions help people move beyond whether they like or dislike a recommendation. They help the family understand the tradeoffs they are accepting. Ownership begins when the family can see the choice clearly enough to accept those tradeoffs.

Reilly: How can an advisor tell when a family has approved a recommendation but may not really own the decision?
Edelman: One sign is that agreement comes too quickly, especially when the decision is consequential or symbolic. Quick agreement is not always a problem. Sometimes the family is aligned and the decision is clear. But sometimes quick agreement means people have not yet thought through what the decision will mean.

Reilly: What other signs should advisors look for?
Edelman: A second sign is silence from important stakeholders. If a family member or branch is going to be be affected by the decision but is not saying much, that may reflect agreement. Or it may reflect caution, deference, confusion, or a belief that the decision has already been made elsewhere.

A third sign is that people can repeat the recommendation but cannot describe the tradeoffs. They can say, “We are reducing concentration risk,” but they cannot say what the family is accepting in exchange: tax consequences, loss of control, emotional cost, changed relationship to a legacy asset, or future constraints.

Reilly: You also pay attention to whether the family has discussed what would cause the decision to be revisited. Why does that matter before approval?
Edelman: Having that discussion is one test of ownership. If the only reason to revisit the decision is discomfort, the decision is vulnerable. If the family can say, “We will revisit this if liquidity needs change, if the position becomes a different percentage of total family wealth, if tax law changes, or if the purpose of the capital changes,” then the decision is more grounded.

Reilly: What does a better process actually change?
Edelman: It changes the conversation from advocacy to comparison among alternatives.

In many high-stakes decisions, the family is presented with a recommendation and asked, in effect, whether to accept it. That can unintentionally turn the conversation into a test of loyalty or confidence. People can begin to hear the issue as: Are you for or against the CIO’s recommendation? Are you supporting the founder’s legacy or abandoning it? Are you being prudent or reckless? Are you being disciplined or entitled?

Reilly: What difference does that shift make in a family setting?
Edelman: Once people are placed in those positions, the conversation can begin to polarize. Family members start sorting themselves into pro and con camps. Each side may see itself as protecting something important, such as prudence, loyalty, fairness, or discipline, while seeing the other side as reckless, disloyal, entitled, or naïve. At that point, labels begin to replace curiosity, and it becomes harder to think together.

Any single perspective is incomplete. Each person sees part of the situation; no one sees all of it. When partial views harden into positions, the family loses access to information it needs. A stronger process keeps more of the picture in the room before people are asked to commit to a decision.

Reilly: What can advisors do to keep more of the picture in the room?
Edelman: They can stop asking whether people are for or against a recommendation and instead ask: What are the credible paths, and what would each make easier, harder, more likely, or more fragile?

This shift helps the family make better use of the investment analysis. The family can compare alternatives and understand how different choices affect risk, liquidity, tax exposure, control, governance, trust, and future flexibility.

Reilly: What would that process look like in practice?
Edelman: I usually look at the decision through four lenses: context, outcomes, implications, and action.

First, context: What is the full situation the family is facing? That includes the investment facts, but also the family, governance, tax, legal, liquidity, business, and relational context around the decision. Who are the stakeholders? Who has authority? What prior decisions or family history are shaping this one?

Second, outcomes: What is the family trying to accomplish, protect, or avoid? Values are important, but they need to be translated into outcomes clear enough to guide action. “Stewardship,” “legacy,” “responsibility,” or “family unity” may mean different things to different people.

Third, implications: What would each possible action make easier, harder, more likely, or more fragile? This helps the family move from debating a single recommendation to comparing credible options.

Fourth, action: What will be decided, communicated, implemented, and revisited? A decision is not complete simply because a recommendation has been approved. The family should know who is responsible for what, what remains open, and what conditions would justify taking another look.

Reilly: Which of those lenses tends to get rushed?
Edelman: In practice, it is usually implications. People may understand the recommendation and agree with the stated objective, but they have not fully considered the consequences of the choice.

That is how vulnerability can arise later. The family may have agreed on the goal, such as reducing concentration risk, creating liquidity, increasing flexibility, or expressing values, without fully understanding what the choice might unsettle elsewhere in the system. The decision may solve the problem it was designed to solve and still create pressure around legacy, control, trust, authority, or future flexibility.

Reilly: Some advisors might worry that this asks them to become family therapists. Where is the boundary?
Edelman: That is a valid concern. Advisors should not be expected to treat family dynamics or resolve every emotional issue.

The way to hold the boundary is through role clarity. The CIO remains responsible for investment analysis. The trustee remains responsible for fiduciary judgment. The governance advisor or facilitator may help structure the conversation. The family has to understand and own the choice.

Reilly: So, what can advisors do without crossing that line?
Edelman: Advisors can notice when the process is not strong enough for the decision being made. They can clarify context, outcomes, implications, and action. They can slow premature agreement, help the family compare alternatives rather than defend positions, and make sure the family understands what would cause the decision to be revisited.

I think of this as decision support. The advisor is helping create the conditions under which the family can understand and own a consequential choice.

Reilly: You place particular emphasis on agreeing in advance about when to revisit a decision. Why is that so important?
Edelman: Families often reopen decisions when the outcome becomes uncomfortable. Markets decline. A tax result disappoints. A family member regrets the timing. One branch feels the consequences more strongly than expected.

Discomfort matters. It should be heard. But discomfort alone is not always a reason to reopen a decision.

Reilly: So, what should justify taking another look?
Edelman: A stronger process asks whether something has changed in the assumptions, conditions, purposes, or constraints that supported the decision. The question is not simply, “Are we uncomfortable?” It is, “Has something changed that is relevant to the decision we made?”

For a concentrated holding, revisit triggers might include a significant change in the size of the position relative to total family wealth, a change in liquidity needs, a tax or legal development, a major family transition, a shift in operating company needs, or a change in the purpose of the capital.

The point is not to predict everything. It is to reduce the likelihood that every episode of discomfort becomes a reason to relitigate the decision.

Reilly: In your view, what is the advisor’s exposure when this kind of process is missing?
Edelman: When decision ownership is weak, discomfort often gets displaced onto the advisor, CIO, trustee, or investment committee.

Sometimes that reaction is explicit: “Why did you let us do that?” “Why didn’t you stop us?” “This was your recommendation.” More often, it is quieter. Confidence erodes. Prior agreement is remembered differently. Family members who appeared to support the decision later emphasize the reservations they had at the time.

This is not always fair, but it is understandable. If the family did not fully understand the decision or what it would require of them, discomfort has to go somewhere.

A more robust decision process helps protect the family from false alignment and reduces the risk that the advisor becomes the target when discomfort arises.

Reilly: What question should advisors ask themselves before asking a family to approve a major investment recommendation?
Edelman: Advisors can ask themselves: Have we helped the family understand the decision well enough so that if the outcome disappoints, they can still recognize the choice they made and the tradeoffs they accepted?

That question is useful because the standard is not whether everyone is happy. The standard is whether the family understands the choice.

Reilly: Can a well-made decision still be disappointing?
Edelman: Yes. A market can move against the family and the decision can still have been reasonable. For that to be true from the family’s point of view, the decision must be understood before the outcome is known.

That is what ownership means. The family can say, “This did not turn out the way we hoped, but we understand why we made the decision, what tradeoffs we accepted, and what would justify taking another look.”

Reilly: What do you hope family office leaders and advisors take away from this?
Edelman: I hope they see that the quality of the decision process is itself a risk-management tool.

Investment analysis is essential. But analysis alone does not always create ownership. In family office settings, decisions need to hold under pressure: market pressure, tax pressure, family pressure, generational pressure, and the pressure created by disappointment.

I would not want families to turn every investment decision into a family process. Most decisions should stay within the normal channels. That added work is useful when a decision carries enough weight that quick agreement may conceal incomplete understanding. When families understand the choice, the tradeoffs, and the conditions under which the decision should be reconsidered, they are better able to stay with it under pressure. Helping families reach that level of understanding is one of the most valuable contributions an advisor can make.