Family Wealth Report recently talked to Greg Rogers, a prominent figure in the industry, about the challenges of finding great advisors, understanding how to manage a legacy and the achievements of a business luminary who recently passed away.

This month, family office consultant Joe Reilly interviews Greg Rogers, founder and managing partner of RayLign Advisory, about finding good advisors, having empathy and the legacy of the late Scott Budge. (To some of Joe’s interviews for FWR, click here and here and here for examples.)

What are some of the changes you have seen in the UHNW industry over your career?
Greg Rogers:  When I founded RayLign in 2005, the goal was to change the dialogue for families from focusing on the financial speedometer to a more explicit emphasis on long-term well being of the family that considers utilizing the family resources toward human development. We were early in this observation and business focus.  However, there is now increasing recognition that sustainability of family wealth and well being relates to the preparedness of each ensuing generation and each individual. Part of this change relates to the tremendous opportunity for experience sharing and cross-generational learning given that it is now common for three and four generations within a family to be living at once.

The pressures on wealth manager’s margins are increasing. Are there ways to become efficient without sacrificing service or losing clients?
Greg Rogers: No doubt wealth advisors are facing increasing margin pressure, arising from five organizational demands: 1) business management to oversee a competitive environment, growing organizations, technological efficiencies and service quality, 2) the arms race to cover a global investment opportunity set that is increasingly being driven to consider ever more creative ways to solve low return and high risk environments, 3) acquisition and retention of high quality client engagement professionals who exhibit both technical understanding and strong “bedside manner” (emotional intelligence) to support an expanding scope of services, 4) technological investment for efficiencies in business development, service delivery, and the client experience, and 5) a fiercely competitive environment that demands clarity of business model, values, service competencies, and fees.  We find that the primary way to enhance efficiency while maintaining high quality service is to be laser-focused on the target client you are trying to serve. This requires being honest about one’s core competencies, and partnering well with third parties to access and integrate other required capabilities. 

How should an advisor present themselves to a prospect family?
Greg Rogers:  That’s easy – authentically!  Advisors can’t be all things to all people, and can’t be something they are not.  The culture and values come through in every interaction with employees and the external community.  In our view, every interaction with an advisor is “data”, informing everyone who comes into contact with the organization about that firm’s core values.  This doesn’t mean a firm can’t be a product company, a solutions company or some combination of the two. It simply means you need to have conviction about who you are and what you stand for, and make sure the business model is aligned. In many cases, we see inconsistencies between a firm’s business model and its aspirational cultural values.

Most families don’t have any experience in comparing and contrasting different wealth managers.  What do you think a family should really look for in an advisor?
Greg Rogers:  Our particular expertise is related to helping the entire family system work effectively together, which includes finding and maintaining the right advisory partners.  As part of this work, we always start by defining the needs of the client. This is challenging since in most cases the family is trying to solve so many things at once. Facilitation is required to understand what is needed to support the collective shared activities, and what the individual family units and members demand.  

Once needs are defined, the structural options can be evaluated, with the most important aspect being “cultural alignment”. Advisors are extensions of your family values and decision making, and therefore, cultural alignment is paramount.  Advisors of this sort are partners more than vendors and, as a result, will engage in healthy conversations about service expectations, relationship connectivity and fee transparency.

Do you think wealth management firms should have a full time family dynamics person?
Greg Rogers: The skills that a family dynamics specialist brings to an advisory organization are related to “relationship processes” - group dynamics, decision framing, listening, communicating, and empathy. These are skills that all organizations need in order to better attract, retain and grow client and employee relationships. Would it be helpful to have an expert on staff that represents this skill set? Of course it would. However, since the demand for these skills are high, and the supply is limited, many advisory firms simply run these people into the ground because they ignore the need to train-up the broader organization. The question then becomes: is it more important to build these skills throughout the organization to become a more attractive place of employment, and to strengthen the client engagement? The answer is a definitive “yes”.

How do you think about moving families from apathy or dysfunction to collaboration?
Greg Rogers: We prefer not to use the word “dysfunction” since each family has its own “family logic” that the advisory team needs to understand and work with. And by calling families “dysfunctional”, it lets the advisory relationships off the hook since they can point to the family as the problem, when in reality the advisor can contribute as much to the dynamic as any part of the family system. Effective collaboration is about teamwork, and like any high-performing team, it requires leadership, purpose, aligned goals, and communication. If the family doesn’t ultimately value what it takes to achieve desired outcomes, then it’s hard to move them forward in a positive direction.
 
Are there unsolvable family problems?
Greg Rogers: There is no family problem that is unsolvable, yet there is one characteristic that is required to make problem solving possible - empathy.  Empathy is the ability to internalize what it means to live in someone else’s shoes, to avoid judgment, and to understand one’s own biases and reactions. Empathy provides the environment for a family to manage inevitable conflicts by respecting each individual, modeling teamwork, valuing transparency, and creating resiliency through the many systemic forces at work. We find it nearly impossible for families to resolve conflict when there is a void of empathic capacity. 

Do you think inherited wealth destroys motivation?
Greg Rogers: I do not believe inherited wealth necessarily destroys motivation. It certainly can do so if the family doesn’t communicate well about the purpose of the wealth, or if the effort isn’t made to prepare inheritors. We have found that when the family wealth conversation is framed to support the human development of each family member, that the opportunity exists to overcome issues of entitlement and motivation.

Can you teach someone to be a good beneficiary?
Greg Rogers:  Historically, legal structures have been set up to “protect” the beneficiary from the negative effects of wealth; however, the solutions led to an institutionalized experience for the beneficiary. Family governance facilitators, with leadership by John A Warnick and Hartley Goldstone, are flipping the historic beneficiary relationship on its head, to have trust and related resources support the growth and development of the beneficiary. Yes, you can teach anyone to be a good beneficiary, when resources are prioritized to help their development.

I was very saddened to hear about the loss of your longtime collaborator and friend Scott Budge.  Could you talk a little bit about his contribution to RayLign’s thinking as well as the wider family wealth community?
Greg Rogers: I mentioned “The Road to Character” by David Brooks, at Scott’s Memorial. The book refers to the different virtues of a resume (projecting what we want people to believe) versus a eulogy (what people actually experience us to be). For Scott, they were the same. He was a caring, thoughtful person in professional and personal settings, and in particular was one of the great all-time listeners. I met Scott during my training at the Ackerman Institute for the Family, where we shared a common obsession for the long-term well being of families.  

Scott was an intellectual heavyweight with regards to the history and application of psychology.  He was uniquely able to make the language of psychology consumable for families and their advisors, in both a clinical and consultative setting. With Scott’s help over the years, we have built an expansive network of professional family dynamics relationships that will continue to collaborate together to help carry his legacy forward. Scott will be dearly missed.