What Motivates People to Plan?

Business Leader Post, January 24, 2013

Thomas D. Davidow, Ed.D.

This question was posed by WealthCounsel, a publication that services the estate planning industry. The answer was to “avoid chaos and discord among family members and beneficiaries.”

Here are some additional statistics: 88% of family owned businesses say they will maintain control for the next five years; 70 % of FOB’s have more than 75% of their net worth tied up in the company, yet only 25% of their senior generation members have completed an estate plan; Less than two thirds of family business owners know the senior generation’s intentions.

There appears to be a disconnect between families’ concerns and their ability to act on those concerns. What is that about?

The planning process is difficult. It involves making decisions that have emotions at their base. One has to acknowledge and internalize the reality that no one escapes—we all have a limited time on this earth. This is a difficult reality to process.

The decisions themselves are complex. One has to weigh the all the issues—wealth, money and relationships—in the same thought process. It is common for many family businesses to not know the answers to many of these complex questions.

Families need help and guidance through the process. The planning process is best done with qualified professionals who have advised others. My message to advisors is that planning or worrying about the absence of planning is on their clients’ minds. Ask them about their “worry” and let them talk about it first before you begin planning. They need to clear their emotions out before they can begin to think.