"Shirtsleeves to shirtsleeves in three generations" is a popular adage used to describe an all-too-common arc of family wealth: one generation builds it, the second generation spends it, and the third must roll up their shirtsleeves to start all over again. The reason for this might be poor communication between family members or a lack of financial savvy among younger members, but the upshot is the same: the wealthy often see their financial legacies vanish in short order.
But according to David Herritt, head of Truist's Center for Family Legacy, there are plenty of ways to out-fox the third generation curse—and have a lot of fun while doing it.
The Center for Family Legacy, part of Truist Wealth, relies on a novel approach to manage familial dynasties. Rather than bank—literally—on casual conversations between family members, Herritt and other Truist experts have developed a gamification approach, putting their families through team building exercises, from solving puzzles to navigating obstacle courses, to bring them closer together.
These sorts of activities help enliven a financial planning that, too often, consists entirely of families sitting around a stodgy office while the older members who control the family wealth make all the calls. It's critical, says Herritt, for financial planning to focus not only on that generation, but on the next generations as well. He calls shifting this focus a "family wealth" outlook.
"You can have all of the wonderful estate planning techniques in place, and you can be investing in the right way and still not be successful because of all of the family dynamics and the things that are happening behind the scenes that don't allow you to execute those plans in the way they were built by your financial advisors," says Herritt.
Creating a 'joyous' environment
Herritt and the other professionals at Truist realized that, for all members of the family to truly buy into a financial planning, it's helpful to impart lessons in what he describes as a "joyous" environment—one where different generations and households can get to know each other better and build trust. This is especially useful in situations where, for example, cousins may not spend a lot of time together, but are tasked with being stewards of familial wealth. Having them participate in activities together before they inherit substantial sums can help them better communicate with each other down the road.
The exact activities and conversations that Truist constructs will vary from family to family, depending on their communication styles, culture, and needs. They could be as simple as having family members play a Jeopardy! or Family Feud-style game, or something more complicated—perhaps an escape room activity or a travel adventure based on on the reality TV show The Amazing Race. For younger children, Herritt finds a scavenger hunt developed around their family's history can be a good introduction to family values.
One family's activity was a real-life game of Clue. Truist rented out rooms in a boutique hotel, and around 50 family members were broken into groups to solve riddles spread throughout to "save" their kidnapped financial advisor. The riddles included finding certain provisions in estate planning documents and reading through insurance paperwork, among others.
"It gets the competitive juices flowing," says Herritt. "This family was so competitive that we ran out of rooms. But there's really a function behind the fun."
The intricacies of the game also vary. Some families may just answer questions about their own businesses Family Feud-style, which is a smaller lift than, say, a game of Amazing Race, which Herritt says once took the team six months to plan and involved air travel to bring everyone together. Truist has also produced its own physical board game called, what else, "$hirtsleeves to $hirtsleeves."
The cost is also dependent on the scope of services, and fees are paid on a per meeting basis, in addition to any investment management fee.
These types of activities can be especially important for families managing a business or enterprise, says Herritt. It can also help cut through years, and even decades, of cumulative resentments and biases. Money conversations are difficult no matter what—doubly so with family members. Through these exercises, different family members learn how to work together in a low stakes environment.
"It's building that trust in each other and understanding that, hey, it's not that cousin Joe doesn't like me, it's just he's a very direct communicator," says Herritt. "So how can I communicate back with him in a way that it's healthier, and he can communicate with me so it's healthier. How do we work through some of those things?"
Often these activities are a jumping off point, says Herritt. It takes practice and repetition for families to get better working with each other and manage their wealth effectively.
"Every family has some level of unhealthiness in it, right? But we're not psychologists or psychiatrists, so we're not going to be doing therapy or anything," he says. "This is just helping them work through some of the communication challenges that every family has."
