Family Business Audiocast | Episode 44 | Shelley Forsythe

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R. Adam Smith: Welcome to the Family Business Audiocast on LinkedIn. I'm R. Adam Smith, creator of this Audiocast series and a warm welcome today to our audience here and for those listening in the future. Today I'm very pleased to host Shelley Forsythe. She is the Director and Family Office Lead at the Private Wealth Department of BMO. Shelley, it's wonderful to have you here today.

Shelley Forsythe: Yeah, thank you so much for inviting me and I'm looking forward to our conversations.

R. Adam Smith: Definitely. Shelley has deep experience in family governance and legacy planning on a global scale. She serves as the Director and Family Office Lead at BMO Private Wealth out of Canada and she advises tens and tens of multi-generational families on how to build resilient governance structures that balance business priorities and wealth with family harmony.

Drawing on her background in wealth planning, facilitation and governance design, Shelley helps family offices and family enterprises navigate the complexities of succession, stewardship and also decision-making across generations. Her work centers specifically on aligning values with strategy and empowering families to preserve both their wealth and their purpose for the long term. That's great, purpose and wealth and legacy core tenants to the podcast conversation.

Let's start about the platform. So BMO's platform is unique at how it integrates the family office strategy with wealth management. Tell us a bit about BMO and the family office platform and can you walk us through how you all serve individual clients but also think about the architecture of the family enterprise and the planning legacy side of it.

Shelley Forsythe: Great. Well, basically BMO was founded in 1817. We've served clients and families for over 200 years. It actually started in Canada and expanded into the U.S. through acquisitions and we're now the eighth largest bank in North America. We use slightly different service offerings and models in Canada and the U.S. based on the size, the needs and the complexity of the family or the enterprise. Usually you have the lead relationship manager that will create teams from different business lines around the families generationally and this is really based on the goals, the needs, the priorities as well as the types of financial and non-financial assets. You know, is it just personal assets? Is there corporate entities? Are there trusts? Is there a foundation? And then of course the all-important human capital that can change over time and generations. I know that there's some families that we've been taking care of for decades and even a few that are over 100 years.

Family office in Canada and the U.S., it's a multi-family office. It's a boutique offering. It serves ultra high net worth families and enterprises both with foundational and also customized service platforms and we have a lot of bench strength. There's generalists, there's specialist capabilities across capital markets, commercial banking, wealth management and family office which we're speaking about mainly today that can include, you know, banking, investment advisory, the legacy planning side that includes wealth and specialized planning teams, trust, tax, philanthropy, family governance as well as succession and we serve over 700 families and family offices globally and then we also have an external provider program where when families or family enterprises need specialized services from either niche or boutique firms, you know, that may be where they require deeper human skill sets. Maybe there's addiction or mental health issues that need to be addressed. Art advisory would be another one or cyber security.

R. Adam Smith: The hub-and-spoke system is super essential today to the family office ecosystem as I talk about often with my clients and friends and guests here where the needs of a larger family enterprise go beyond the liquidity and the wealth and the alts into their whole lifestyle. Maybe you want to talk a little bit more about that in terms of open versus closed architecture, maybe a bit on the alts platform and then we'll move into governance.

Shelley Forsythe: Yeah, I would say for myself like alts is not my area of expertise but we definitely have, we'll call it departments and service offerings around the alt space in general so we do have definitely specialist capabilities in that arena.

R. Adam Smith: Definitely, I saw that. There's also the ever-present issue getting, you know, more and more kind of vast and complex between the internal and external advisors to a large family office, you know, within BMO and actually externally in terms of the hub-and-spoke system you talked about and having reach into all the elite third-party advisors in the world at such a large scale. So let's talk a bit about how successful advisor teams provide value when they work with complex families and keeping all the strategic planning and family harmony on track, you know, what's that balance look like internal versus external?

Shelley Forsythe: Yeah, I would say that the most important thing is the integration and coordination both of internal advisory teams as well as the external advisory teams that might be working within the enterprise. Sometimes it's the accountant, the lawyer, you could have a single family office involved, there could be family council chair, there could be advisory or board of directors and really we're there to help them navigate sort of the ongoing family wealth and enterprise and how to evolve and adapt and grow over time.

And I would say that, you know, who is leading or co-leading specific mandates or projects is important, you know, because different perspectives and expertise can really benefit all. And regular updates, you know, what are the priorities, who's responsible for what by when, making sure that there's action and accountability within those teams as well. But I would usually start with, you know, who is actually on their advisory team, what roles and responsibilities are they fulfilling, whether it's to individuals or collectively as a family or broader enterprise. And sometimes you'll have families that for certain pieces, they have silo advisory teams.

And what I mean by that is they'll go to one particular advisor to actually fulfill something in particular, maybe it's to get their estate plan in place or put a trust in place or that type of thing. So I'm definitely more on the view of being more collaborative, you know, making sure that, you know, everyone understands, you know, what part they're playing, but also that there is something bigger potentially. Advisor summits would also be something that I recommend because being able to bring together those various disciplines of technical and soft skills, you know, can really help move families and family enterprises forward.

And sometimes you're really managing personality, sometimes it's ego, sometimes it's a livelihood based on compensation models. So taking that all into account, and sometimes having a team charter can be a good way to go because you want everyone's on the same page in terms of, you know, confidentiality and conduct and being able to share information and how everyone is actually compensated. I find that, you know, it's very broad in the sense of, you know, how we're actually serving families, but I would say collaborative and making sure that we're integrating and coordinating as much as possible is best practice.

R. Adam Smith: Yes, for sure. We talked a lot about collaboration on the show with some of your colleagues in the industry. For example, Phil Strassler, Elizabeth Bagger from Hippocampus. We discussed that, I think, also with Emily Bouchard and Jim Benedict at the time, Jim Grubman, this concept of collaboration. And then separately, in terms of the advisory summit, the advisory summit and bringing people together, we've also discussed that with some of the experts that bring more boutique-y services to large families recently with Richard Wolkowicz. We discussed that, and I think we also discussed that with Wendy Diamond and Angela Robles and Christina Wing.

So these are consistent themes. I think it's useful to talk a little bit more of the architecture of those summits, or let's say the intellectual capital gathering, and because you focus on intergenerational wealth and the continuity of that wealth, there's such a huge transfer of wealth happening, as we know. Gen Z, the millennial generation, the massive transfer of wealth is a big issue. So I'd love to hear your thoughts on a little bit more of constructing this intellectual capital around the family, and how do you help families uncover and align around their vision with these advisory resources? And then also talk about how you can blend and sort of gather different voices within the family.

Shelley Forsythe: I'd say that every family or enterprise is really a puzzle, and this is where you look to put together the different pieces, and I usually start with the edge pieces. You want to be able to understand the bigger picture and then be able to conduct a bit of a diagnostic to determine if or how you can be helpful as part of the advisory team. And, you know, sometimes this is, you know, where are you entering the system from a financial or non-financial perspective?

I would also say that, you know, sometimes you really want to understand, you know, over and above the advisory team, you know, who within the family are kind of the champions or the glue, because that can really help determine, you know, where to go next. So I always try to uncover as much information as possible. I'm a detail gal because I want to understand, you know, where are they on their journey, you know, what's their generation, you know, where are they starting from, where are they trying to get to, you know, who's on the advisory team, how are the family relationships, how are they staying connected, what's the purpose of the wealth, and also the family, and really what are the hopes, dreams, and aspirations individually, but also collectively from a family enterprise perspective. So I find, you know, being able to take a look at that bigger picture and really understanding what kind of governance structures are in place already is very helpful.

And then, you know, you can help them determine, you know, what else they might want to consider next. And I was actually at a conference in California just late last year, and it was actually wonderful to see the peer-to-peer connectivity as well. So over and above you have your advisory teams that are helping family enterprises, having families be able to educate themselves and be in a peer-to-peer learning environment. So it was so wonderful to see these families with different generations actually educating themselves and seeking assistance for their unique journey and priorities so that, you know, they can help their advisory team, help them move forward in general. And I would also say that, you know, from a continuity standpoint, it's going to be different as well based on what the enterprise actually looks like. Sometimes you'll have operating businesses, but if you actually sell the operating business and now it's more wealth, you know, how are you keeping everyone kind of bought in or opted in or out, you know, to stay engaged and focused on being together.

I find sometimes giving them the options and the choices to consider is also important from a continuity perspective because sometimes they won't see dispersing capital by branch as unsuccessful because, you know, what is their view of what success actually is? So I remember dealing with a family where by generation three they had dispersed by branch, and so now you had generation four to six that was managing each separately by branch, but then they still had co-investment opportunities, but they still gathered and maintained the connection with the bigger, broader family through biannual family reunions. So they didn't actually look at that or the continuity part as being unsuccessful, but now they've just done it in a different way.

R. Adam Smith: That's fantastic. Thank you for that clarification, highlighting the importance of, let's say, elite external advice that can complement what the family knows and what their private bankers and wealth managers know. So that collaborative approach is really important, especially as these portfolios and the holdings get more extended across generations, they also get larger, and there's just a lot of wealth to be handled, especially when a company is sold.

Let's talk a bit about the liquidity situation when a lot of wealth is created, which I see often having been in emergent acquisitions and consulting families on preparation. You talked about this flexible roadmap when it comes to legacy planning. So there are trade-offs in creating a roadmap between being adaptable and having structure. I think it becomes particularly essential when there is a preparation for a major liquidity event. I'd love to talk about that with you.

Shelley Forsythe: To your point, it requires a different roadmap or a more flexible roadmap in general, because I always find that everyone is at a different journey in the sense of where they're actually at. Sometimes they have a really broad spectrum of how informal or formalized they are. Sometimes they have very little. Sometimes they're looking to add more formality as the family grows. And sometimes I would say that some families actually have too much governance in place or roadmap priorities based on how small or large their family is. So what I would say is reviewing regularly, assessing, is it still serving the objectives and the purpose? What's working? What's not working? Are there different options that should be considered or explored?

I always find as well that you're really having a good conversation about, are they keeping simple kind of people or do they mind adding a layer of complexity? And is there a cost benefit as well in the sense of how much they're looking to put in place from a structural standpoint? From an advisory team perspective, it's important to understand what's in place, why is it in place, make sure the family understands why it's in place, because then you can help them sort of take a step back and be able to assess, what do they really need at this time?

I had another example where I was working with a family that had their own single family office. They were looking for a facilitator for their family retreat for generations. And they had in the single family office, they had different roles for two of the generations because the other two really weren't involved at this point in time. So, they generally had good family relationships. But when I went through the interview process, it was actually interesting in that NextGen really didn't have a lot of recall on the previous work that they had done, because so much time had passed between meetings and when they had actually dealt with previous consultants as well. And so, what was interesting was getting them to now reassess, for example, their family charter. Well, is it really serving them? And again, they didn't have a lot of recall on it. So, it was now, let's take a look at what should your action plan be for the now plan? Maybe it makes sense to amend your family charter and have it become a little bit simpler for now, with the view that you could add the additional infrastructure in the future. So, I always find that every family is kind of a little bit different in terms of what they have from a foundational standpoint, but also where things have been customized specifically for them. And again, does it fit where they're at and where they're trying to go?

R. Adam Smith: Let's walk through a brief example. Theoretically, so let's say you have a billion-dollar family and with a billion-dollar company. And next year, they're going to sell that. And let's say there's a G1 or G2. So, in that case, most of the time, there is a single founder or a family of founders, and there's a G2. And G2 might be in the business or might not, but there's going to be some significant wealth created. That involves lawyers, that involves the accountants, of course, investment bankers, liquidity, trust in the state, and allocation issues. And then there's also the, as you said, the charter and what's going to happen with those funds. And that also triggers, of course, the sociological and psychological elements of that event happening. So, maybe just walk through that with us as a case study for a couple of minutes.

Shelley Forsythe: Yes, the elusive sale of a business and the emotional impact that can have on the founder, as an example. And are they ready to actually go through that journey? Because have they really thought about things from how that's going to change things from a personal, but also from a financial perspective, but also the bigger, broader family? And have they done some deeper thinking around that? And so, I always find, you know, helping them think about these things well in advance, like even before you get to the point of thinking about selling the business, you know, so that they can really think about what would that diversification look like? What do I need to be thinking about to prepare myself, but also how do I prepare my family? You know, what other advisory team members need to be thought about? Because over and above, it's great to get the best tax result and, you know, have your legal team, you know, preparing the legal documentation and what have you. But there's that emotional component that goes along with it and getting everyone prepared and on the same page in terms of what this could actually look like and what could it actually mean. And it's a process. It's a journey. And it's more of an art than a science when you're actually thinking about potential shared responsibility in the future for what this could look like for the family.

R. Adam Smith: Yeah, totally agreed about that blend of soft and hard power and issues and helping the founder navigate the preparation and also their children. And, you know, when the company is sold, are they going to want to stay in that company or try to stay in the company or just move on with the next stage of life? And that's a big change for everyone, especially the, you know, 20, 30-year-olds where the identity is really tied to their to their company and their parents' company or their grandparents' company. So there's an emotional detachment there. It's tricky. And there's also the confidential side of, you know, just discovering with the family conversations, you know, what is behind the scenes and what are some of those areas that elite advisors like yourselves in the private banker role, the wealth manager role, the wealthy relationship manager role, what are some of these discovery areas that bring up these hidden dynamics or misperceptions, you know, around the experience? Just, you know, nothing confidential, but just what are some of the hot topics that come up and how do you address them and incorporate them into the advisory role?

Shelley Forsythe: Yeah, what you're referring to there is, you know, what kind of discovery process are we looking to have with the different family members to kind of get a temperature check on what's on everyone's minds? Because to your point, like the founder is going through their own emotional journey, but over and above that, you know, what is everybody else thinking about? Was that a legacy asset? Were they, was there any feedback asked for? So I find that by at least going through the process of starting with questionnaires and then also having interviews to be able to get them to, you know, dig a little deeper in terms of how they actually answered the questions and, you know, this discovery process, I mean, it really requires acute learning or listening to understand and not really to respond. And, you know, have those follow-up questions so that you can really determine, you know, how they're feeling about things and get them to have a voice in a very safe environment versus in front of others.

Because sometimes they're afraid to bring things up in front of others to, you know, cause issues that weren't intended. So having them be able to share their perspectives, you know, sometimes this is where unresolved issues can surface, or maybe there's unmet needs or expectations. Sometimes they're sharing that their family or the business, you know, has, have tried consultants or therapists or counsellors in the past to deal with specific issues. And this is usually where, you know, families, they don't really want to advertise that. So sometimes by going through that confidential discovery process, it can kind of bring forward, you know, further insights into what's kind of really going on.

I'll give you another example of, you know, a family that, you know, it looked fairly straightforward on the surface from, you know, a financial and a family background perspective. There was no operating business, so it was really just wealth at this point in time. And, you know, the family wanted family governance. So going through that chemistry meeting, it was online to start with, to kind of understand a little bit more about what they were looking for and, you know, understand the purpose of the wealth and, you know, thinking about what were the different ways that we could look to assist. And so by going through that process, they wanted to go through the interview process, which was great. But by going through that interview process, they've uncovered many unresolved issues. You know, the family had tried family therapy in the past. You know, there was a lot of different dynamics at play. There was addiction issues. So it was definitely more than what I was going to be able to assist with on my own. And this is where you have to be able to look to reinforcements, you know, who could actually help them deal with some of these unresolved issues to see what that path might look like going forward. So I find by, you know, getting curious, help them think about how to have conversations can also be an important thing to think about. And I find that there's usually an acute curiosity as well that they want to get educated and they want to hear stories about what other families are doing because they often don't know what they don't know.

R. Adam Smith: So succession is also framed as a leadership issue, not just a event issue. And you've discussed that it's equally about being aware, having emotional awareness, but also team building. Let's talk about how you help families assess and prepare successors, not just for the roles practically, but also the responsibilities that come with that growth ahead.

Shelley Forsythe: Yeah, with succession, really, it's not a one and done conversation. It's a series of conversations. And it could actually be over years. And it really is more of a process, more of an art than a science. It's definitely a shared responsibility. There's a lot of steps in the process that need to be sort of thought about and being able to kind of assemble that team to co-create plans and help with that preparation. Because anytime we're looking at different roles and responsibilities, and is it management? Is it ownership? What does that actually look like? Because it might require different team members being brought to the table to assist. And if I go back to what steps might look like in the process, well, what's the vision for the future? What does the business need if there is an operating business? Or what does the enterprise need? But also individually, what does everyone need? And being able to help them go through a bit of a, I call it a SWOT analysis to look at strengths, weaknesses, opportunities, and threats.

And I would say succession often comes up in those SWOT analysis. If it's not already been identified, it's important for them to be able to kind of name it and then also be able to think about, well, what could primary and supporting roles actually look like? And when we're thinking about different generations, and let's say it's the next looking to kind of step up into potential roles, then what kind of mentoring and training would be involved? What kind of skill sets? What kind of mindsets? What kind of education? What kind of experience? Who's going to have oversight over that process as well? So again, it could be over a number of years.

And we talked a little bit about founders as an example, and really thinking about what that next chapter looks like. Because if they put their heart and soul into a business, that endeavor has been with them for many, many years. So it's going to take some time and adjustment. And this is where specialists can really help to really uncover a bit more about what that next chapter might look like. What could new purpose look like? And they often have to think about what their new identity or brand might kind of look like as well. So I find that it takes a village to sometimes help families progress and move forward on the various steps that might need to be taken to even think about succession, transition, what could continuity look like, but also contingency planning is often important.

R. Adam Smith: And you see a lot of data points there covering hundreds and hundreds of families in North America said top 10 depository institution in North America, it's a massive platform. So you're seeing a lot of data points. I'm curious about the next gen these days, talking about succession, some portion of the next gen is not a fit or not equipped or doesn't want to stay in the family business. I've seen situations where the founders, the parents want the children to stay involved and run the business, take over the business, but they may not be equipped or they may not have the interest or they don't want to continue to work for their parents. And of course a sale will accelerate that issue, but just in terms of the ongoing business, what's happening out there with the next gen in those two directions. One is how many are equipped and want to stay in the business to take it over and run and how much are sort of transitioning out into their own lifestyles. I'm talking particularly about the mid-20-year-old to 30-year-old, so the early Gen Z and the late millennials.

Shelley Forsythe: Next gen can be, to your point, 20-year-olds, it could be 30-year-olds, it could be 40-year-olds, it could be 60-year-olds when we're really thinking about it. But if we are looking at sort of those younger ones in their sort of 20s and 30s, I mean, really, what are they good at? What are they passionate about? What are their strengths? Because to your point, the family business may not be a good fit, but maybe there's other roles that they could look to be involved with. Is it philanthropy? Is there a real estate portfolio that maybe there's something different that they could be thinking about? There could be investment portfolios. So I find being able to have each individual be able to really understand what it is that they want to be doing and what they're really good at, and then helping them really carve out, is that in the business or isn't it? And could it be part of the broader enterprise or is it something completely different? But they definitely want to be engaged in the process to understand if there could be opportunities, but then it's more a matter of determining what each of the entities might actually need. And could they be part of a committee, as an example? Could be an easier way because not everybody's meant to be leaders. So I find that being able to help them get engaged in what they're really good at, empower them to find their voice, and then being really thoughtful and intentional in terms of where everyone could actually fit as part of the broader enterprise.

R. Adam Smith: Thank you for that. So we'll move on to some final comments. You said yourself personally that majority of the time, nine times out of 10, when asked what families wish they were better at, the answer is communication. It's a massive issue. So let's talk a bit about the methods that you've seen work for families to enhance communication and factoring in trust and vulnerability and these external advisors and breakout sessions and creating the environments for conversation. What have you seen work to, let's say, move from a more demure or withdrawn state into more real dialogue?

Shelley Forsythe: Yeah, communication, really, it's a very broad term, but it is a very important aspect when we're thinking about fostering wealth transition success, so to speak. And I find that when I get questionnaires back where that's what they indicate they wish their family was better at, sometimes you're having to be able to dig in and ask some different questions to really determine what does that really mean? Is it more the concepts behind communication? Is it communication styles? Is it the strategies? How are they dealing with disagreements? So sometimes being able to find out a little bit more what they actually mean, because there's different ways we communicate. There's different forms. There's different styles. And each generation may have slightly different ways of going about it.

And what I mean by that is you take a look at the young ones. If I think about my kids, they're very text savvy. They love to text, and that's where they're comfortable communicating. But then I take a look at my mother, and she still writes Christmas cards. But she's gradually adapted over time to become more text savvy where we have her on WhatsApp, being able to communicate with us in a different way. But the other thing with communication too is they want to understand what the plan is, especially next gen. What can they do to prepare and get educated? And so being able to ask them what topics are of interest to them or what questions do they have so that then you can kind of bring the broader family back together to take a look at everyone being able to find their voice and be able to share their perspectives and being able to have some good quality conversations.

But you usually have to start with the foundational pieces. A, are they really getting along? Or do they need some more assistance with going deeper in terms of really understanding how to improve their communication? And this takes practice. It's not a one and done. And that would be something else I would say as well is sometimes I see families where they've done assessments, and they've gone through personality testing. But if they don't continue practicing what they kind of learned from a self-awareness perspective, but also how to engage with others for everyone to be able to be their best self when they're coming to these discussions and dialogues. So it's kind of an ongoing thing where you need to continue that practicing. But also sometimes there's fears or obstacles that are preventing different generations from coming to the table. So sometimes you have to get to the root of why conversations aren't occurring to be able to really help them move forward and create a path where everyone is going to get a bit more comfortable being uncomfortable with the different conversations.

R. Adam Smith: Wonderful. That's really helpful. Thank you. Okay, we're going to wrap up now. I think first it'd be interesting for people to hear your view about the Canadian market and maybe in particular think about a large family-held business like a family enterprise that could be public or private that you admire out there in Canada that have done a good job, you know, building the scale, building legacy and involving their family as the company grows. What's one that comes to mind in the market to you?

Shelley Forsythe: Good question. I guess it would depend on what sector because I would say that in Canada there's a lot of real estate families where, you know, that might be kind of their mainstay but then they've diversified into other things to be able to allow, you know, their family to kind of expand and diversify, you know, how they're actually managing the overall enterprise. So I don't know that I could say that there's one.

R. Adam Smith: There's many.

Shelley Forsythe: But I would definitely say that there's a lot of them out there that are doing great things. They're finding ways to work towards the strengths of everyone in their family. You know, often they're very involved in their communities or from a charitable perspective. So, you know, there's a lot of really great stories out there that both in Canada but also in the U.S., you know, that are really success stories where, you know, they've taken the time to put the infrastructure in place to, you know, look to succeed as a family moving forward.

R. Adam Smith: Yes. And the relationship between Canada and the U.S. is super important and very robust. And it's important for all of us, I think, to respect and appreciate that going forward, regardless of the winds of political change. It's, you know, neighboring brethren and a powerful, large country with tons of resources and a wonderful neighbor. So it's great to involve you in this conversation. And I've worked with many Canadians, both M&A and family offices, that I've enjoyed working with them. So it's great to have you today. I hope you enjoyed the podcast. Where would you like people to reach out to you in case they want to discuss BMO and the Wealth Management side?

Shelley Forsythe: They can reach out to me on Linkedin and then happy to carry on the conversation.

R. Adam Smith: That sounds good. I hope that those interested in the conversation today and BMO and its expanding resources can reach out to Shelley. It's great to have you on the show.

I’d like to thank you personally, Shelly Forsyth, joining today, as well as our guests in the Family Business Audiocast. This is R. Adam Smith signing off. Stay tuned for the next episode of the Family Business Audiocast on LinkedIn.

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