Here is the second half of an interview by family office consultant Joe Reilly with Jim Grubman and Dennis Jaffe - authors of Cross Cultures: How Global Families Negotiate Change Across Generations - about their explorations of different wealth cultures and why Western ways of thinking will often not work with newer global wealth.

Click here to read the first half of the interview.

Family Wealth Report doesn’t necessarily agree with all the comments stated below, but is grateful to be able to share them and welcomes reader feedback.

Joe Reilly:  In both of your books Strangers in Paradise and Cross Cultures, you mention that people who expand beyond the family’s original culture often don’t really fit in either with their home culture or the culture of their adopted home.  They are like “Third Culture” people.  What are their particular issues?

Jim Grubman:  This is a well-known phenomenon discussed in the literature about expatriate families, missionary families, migrants, and now global family enterprises.  Children in these situations are influenced partly by the heritage cultures of their parents and grandparents – perhaps originally middle-class people from a certain country or culture – and yet partly from the new, sometimes dramatically different economic or ethnic cultures they get exposed to while growing up.  They wind up having many skills in navigating the world, with greater perspective than their peers who grow up only in either culture.  But they may also feel not fully connected to either world.

In today’s globally-connected, highly mobile world, they are more than multicultural – they are “ambicultural,” a blend of cultures.  They are at home many places, not one place.  If the stresses in their family are significant, they may feel truly rooted in no one culture.   As one client said, “when the world is your home, you belong everywhere… and nowhere.”  One advantage of strong family ties is that each generation does still remain rooted in a primary culture, whether Individualist, Harmony, or Honor culture.  Your identity may be global, but you know where home is.

Joe Reilly:  Is trust created differently in each culture?  How does this affect how advisors can gain a better understanding of their client families?

Jim Grubman:  One major difference among the cultures is how people develop trusting bonds with those outside their family – that includes advisors, business partners, and consultants.  In the Individualist model of the West, people trust others who appear to have reliability, predictability, and competence.  Your credentials and behavior determine who you are, what you can offer, and can be depended on to deliver.  Who you know or where you came from is less relevant than what you do.

In Honor culture, and to a degree Harmony culture, there is less willingness to trust outsiders.  What you do may be less relevant than who you are and who you know.  Personal ties and membership in trusted networks are a much bigger source of trust.  That’s why it takes a lot longer and more social contact to build business relationships in Honor and Harmony cultures.  It is also why, once trust is broken, it can be very hard to recover it unless you really work on the relationship.

This can be a mystery to Western advisors who are used to being taken at their word right from the beginning, closing deals and getting to know client families quickly.  I’ve seen a lot of Individualist advisors be dismissed by Asian or Middle-Eastern prospects by going too fast, assuming too much, and not taking the time to build the relationship.

Joe Reilly:  Are decisions made differently in each global culture?  How can you be sensitive to these differences?

Dennis Jaffe:  The cultures differ in the degree of hierarchy—the power given to the family elders or leader versus lesser family members.  There are also major differences in the ability to talk up directly and to listen to individual family members with their ideas and desires.  Take, for example, a family where the father and other leaders grew up with unquestioning respect for authority and little transparency.   Imagine, then, that a young person from that family goes off to attend private school or university in the US or the UK where the individual matters and can speak out.  He or she is likely to come back and behave in what would seem like a disrespectful manner to the decision-makers in the family.  Even more so, the family may not know how to go about dealing with this, since to talk about it would be an affront to the leader’s authority.

A family can be helped to understand that the elder generation grows up within a hierarchical, authoritarian, and traditional decision-making style, while the rising generation has been educated in a more egalitarian, consensual, and democratic style.  In Cross Cultures, we show how advisors and families can adapt certain negotiating practices developed for helping global businesses come together around different cultural styles, like a German company with divisions in Brazil and China.  We realized that some of the techniques from business can be applied to branches and generations of families.

Joe Reilly:  You have given us a very pragmatic model to understand cultural transitions and clashes, but what about some practical advice?  How can I use this model once I grasp where a family is coming from?

Jim Grubman:  This is absolutely a model that can help the family’s advisors step in with useful techniques.  You can teach families that their intergenerational or branch issues arise from the natural cultural transitions of these financially successful families.  Discuss with them how their economic journey up has become a journey across new cultures, leading to natural differences in perspectives.  That opens the door to their listening to each other better rather than just defending positions.  And with that, they are ready to start negotiating their own form of blended culture within their family, with the guidance of their trusted advisors.

Another practical implication is that families can learn to anticipate the effects of their culture changes.  They can learn from other families that this will happen and to prepare for it.  They can anticipate future challenges and prepare for them before there is a crisis.  You can help families build in more resilience by helping them adapt their heritage for the new environments they find themselves in.

Finally, advisors absolutely need to prepare themselves for the new global culture of wealth.  More client families have multicultural aspects to them.  If you haven’t already seen this with your client base, you will see it in the coming years.  Advisors need to stop seeing all clients through the lens of their own cultural biases.  They have to start learning broader skills for building trust with different kinds of clients, for understanding how other cultures make decisions, and for how other cultures communicate in ways that may be very foreign to the advisor.  Otherwise, you will lose clients to those advisors who have these skills.

Joe Reilly:  Dennis, your work with successful global families has led you to establish the 100 Year Family Research project. What have you learned so far from these long-lived families?

Dennis Jaffe:  The study has been going on for four years now.  Instead of the usual research analysis of average or failing families, we wanted to look at the ones that were highly successful.  We interviewed two members of more than 80 long-lasting, large global family enterprises from 20 countries, families who’ve had a successful business or shared assets for more than three generations and also sustained connection and identity as a family. We call them “generative” families.

We’ve uncovered several major findings.  One is that these families made a conscious decision to invest in developing a great family, not just a great business.  They want to put the wealth they have generated to good use for themselves as a family, for future generations, and for their world.  Another finding is that these families always developed good governance—separating the business from family dynamics but at the same time managing either the business or their investments according to shared values.  They work together as a family to make decisions in ways that are consistent with their cultural heritage.

They also develop family educational activities that regularly bring the family together, allowing them to adapt and innovate across generations.  They actively encourage, education, mentor and inspire the rising generation of the family to be engaged in different roles with their family enterprises.  They develop their human capital to serve the family and their social and community mission, using their resources.  Basically, these families reshaped themselves to act as voluntary communities that stand for certain values.  They put their values into practice in their personal relationships, business and financial dealings, and community and social ventures. They also actively recruit their next generation to be part of their family, their business, and community engagement.  It’s really pretty remarkable.