Wealth of Wisdom Chapter Summary: Creating a Family Owner’s Manual

The sudden transfer of significant wealth has been likened to a meteor strike! The sudden need for knowledge and information at the illness, incapacity, or death of a family member can create a series of cascading problems, if not addressed proactively.

In his chapter in Wealth of Wisdom: Top Practices for Wealthy Families and Their Advisors (Tom McCullough and Keith Whitaker, 2022), Josh Kanter, a multi-generational family member and business and wealth advisor discusses the importance of having a “Family Owner’s Manual” for family enterprises and families of wealth. Josh argues that while some families spend enormous amounts of time and money on planning for succession, many often fail to consider the succession of information.

Josh shares his personal experience of his father's death and the subsequent realization that there was so much they didn't know, despite thinking they were prepared. What followed was a prolonged “I wish I knew that” phase that is still ongoing years later. To help other families avoid facing a similar situation in the future, the “Family Owner’s Manual” was born - a single-source document that would expand on the traditional "Emergency File." It is a valuable organizational tool that can provide an educational roadmap for partners, heirs and advisors. The tool allows families to improve current planning by identifying information blind spots and help preserve the legacy that the family has worked to create.

The chapter emphasizes that the real value in the family manual creation process is getting beyond the "what and where" and focusing on the "how and why." The transfer of knowledge about important history, rationale, and priorities is crucial when making timely and strategic financial and non-financial decisions. This can help families think beyond the various components and consider the whole picture behind the family’s legacy (the whole is greater than the sum of the parts!).

The ideal manual should cover several main categories, some of which are summarized below:

1. Demographics – details on family members, pets, advisors, friends, mentors, and confidants. Personal information should include medical information, information about incapacity or death, travel and leisure programs, non-investment properties, and digital accounts.
2. Investment information - details on investment strategy, investment vehicles, investment advisors, and financial statements.
3. Business interests - information about the family business, including governance, management, and succession planning.
4. Philanthropy - the family's philanthropic goals and objectives, as well as the history of the family's charitable giving.

Creating a family manual is not a one-time event but an ongoing process as with each year that passes, additional complexities are introduced into our lives. Families should review and update the manual annually, or as significant events occur. The author also suggests that families should involve professional advisors in the creation process, such as estate lawyers, investment advisors, and family offices.

At Northwood, we have seen countless sudden wealth transfer situations, where critical information had not been shared proactively. Unfortunately, the burden usually falls on the heirs to sort through the details to the best of their abilities. These murky transitions often complicate the succession plan, create stress and drag out timelines. We are firm believers – like Josh – in the importance of having a family owner’s manual. It can provide an educational roadmap for family members and advisors, improve current planning, and help preserve the family's legacy. As each passing year seems to add complexity to our lives, the need for, and benefit of, such a process grows exponentially. It’s never too early to start.

You can read more about the family owner’s manual (and over 60 other helpful tools for families and advisors) in the new book Wealth of Wisdom: Top Practices for Wealthy Families and Their Advisors (Tom McCullough and Keith Whitaker, 2022), You can also listen to the podcast interview with Josh Kanter and Tom McCullough in the Wealth of Wisdom podcast series on your favourite podcast app or at www.wealthofwisdombook.com.

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