Money & Generations: Turning Financial Disputes into Connection
* This article was originally published as an FFI Practitioner piece and is available here.
“Family members rarely fight about numbers or money alone;
they fight about what it means to them.”
Families often pressure advisors to rush to provide a technical fix to their perceived money problems—dividends, valuations, debt structures. Suppose families could slow down enough to consider the question, “What point are you trying to get across through this financial decision—and what does money mean to your family?” A discussion around this question or similar framing can open up the space for meaningful conversation about the underlying values and goals.
Listening Beyond the Numbers
Advisors to enterprising families are often asked to weigh in on technical questions: How much should we distribute in dividends? How should family member compensation be structured? Should we take on debt or remain conservative?
Too often, the focus is on finding the “right” answer. But what makes these decisions so complex is not the math. It is what money represents: security, freedom, recognition, or legacy. The complexity comes from the emotions that the notion of money elicits within individual family members—perceived injustices, favoritism, or manipulation. Family members rarely fight about numbers or money alone; they fight about what it means to them.
Advisors and researchers frequently observe how underlying beliefs about money shape financial decisions. These beliefs can remain hidden until a pivotal moment, for example, when a cousin objects to an investment or a sibling questions dividend fairness. Helping families bring these beliefs to the surface is often more important than solving the technical problem.(1)
Surfacing Family Money Scripts
Imagine this: Tensions run high at the annual family shareholder meeting. Two factions face off. One side argues, “We should be getting much more—it’s our right as owners to be rewarded for our investment.” The other faction responds, “We have a legacy to preserve: the business is not here to support your lavish lifestyle.”
What looks like a straightforward dispute over distributions is, in reality, a clash between short-term consumption and long-term stewardship, and a reflection of individuals’ money scripts—the unconscious beliefs that shape how people perceive and relate to money. In this example, one group views the enterprise primarily as a financial asset designed to generate income. At the same time, the other group views it as a legacy to be safeguarded for future generations, even if that means sacrificing today.
Money scripts, a well-established concept in financial psychology, can take many forms: “I don’t deserve what I have because I didn’t create it” (money avoidance), “I feel ashamed of our wealth and don’t want anyone to know” (money vigilance), “Money solves most problems” (money worship), or “My life is better if I have more money” (money status), to name a few.2
Such deeply held orientations inevitably shape financial decisions for a family enterprise, whether setting compensation, approving distributions, or taking on external debt. Even in close-knit families with shared values and histories, individual money scripts can diverge significantly, leading to dramatically different views on what is “responsible” or “fair.” Left unspoken and unknown, these scripts fuel judgment, mistrust, and conflict.
Key Tips for Advisors
Surface money scripts: Use reflective tools such as questionnaires, conversations, or facilitated exercises to clarify individual money beliefs.
Storytelling: Encourage family clients to share how money was discussed in their household growing up. These stories can open pathways to understanding.
Reframe conflicts: Often, family conflicts are not ultimately “about dividends” or “about salaries,” but stem from underlying concerns about fairness, recognition, or belonging.
Mitigating Role Confusion
Imagine this: At a board meeting, a family director opposes the CEO’s executive compensation package. His arguments appear sound on paper: the proposed pay seems to exceed benchmarks for similar companies. A long-serving independent director steps in, reminding the board that this family had a longstanding pattern of underpaying family executives. The rationale was always the same: “They are also shareholders—paying them full market salaries would be double dipping.”
What seems like a disagreement about pay levels is, in reality, a case of role confusion. In family enterprises, individuals often occupy multiple roles simultaneously: they may be shareholders, board members, and employees. Without clarity, responsibilities and rewards get blurred. The “double dipping” argument illustrates a common misunderstanding—that one role (ownership) should offset another (employment). In practice, however, shareholder returns and executive compensation serve different purposes: a return on invested family capital and payment for professional labor.
When families conflate these roles, resentment can build. Family executives feel undervalued compared to outside talent, while non-executive shareholders fear what appears to be preferential treatment or excess. Left unresolved, such confusion undermines both fairness and competitiveness.
Key Tips for Advisors
Clarify roles and rights: Reinforce that being a shareholder, director, and employee are distinct roles, each with responsibilities and rewards.
Establish clear compensation policies: Define how family executives are paid relative to market benchmarks and separate this from dividend or ownership policies.
Educate on governance basics: Help families understand why separating roles strengthens accountability and avoids mistrust.
Embrace Trade-Offs
Imagine this: The Miller family, owners of a third-generation pizza business, faces a once-in-a-lifetime opportunity to acquire their most significant competitor. The founder-CEO urges the family to approve the bold expansion as part of the business strategy. His daughter fears losing the dividends she’s been relying on to pay her mortgage and support her lifestyle. His son argues passionately: “Without this acquisition, there will be no dividends in five years.”
This debate illustrates a dilemma that is all too familiar to many family enterprise advisors: How do you explain to family owners that they cannot have it all simultaneously?
In this scenario, the family owners must decide whether resources should be invested in growth or distributed to shareholders. One tool that can be used is the reservoir analogy. Imagine three interconnected reservoirs: growth, liquidity, and control. Filling one reservoir drains the others. For example, more dividends (liquidity) may limit resources for growth, while more growth investment may require external funding, which dilutes family control.
Key Tips for Advisors
Use visual tools like the reservoir model to help families see interdependencies.
Frame dividends, debt, and reinvestment choices as not isolated decisions but linked trade-offs.
Facilitate integrated goal-setting sessions: align family lifestyle expectations with business reinvestment needs.
Five Guiding Practices
Below are five practices to help advisors support their family clients more effectively in having productive conversations about wealth:
Start with values: Ask clients: “What role do you want money to play in your family’s life and legacy?”
Educate owners: Ensure all shareholders—active or passive—understand finance basics.
Differentiate roles: Prevent role confusion by clarifying the rights of owners, directors, and employees.
Visualize trade-offs: Use tools like the reservoir model to make financial interdependencies tangible.
Review regularly: Encourage families to revisit financial policies as ownership grows and generations shift.
“Even in close-knit families with shared values and histories, individual money scripts can diverge significantly, leading to dramatically different views on what is ‘responsible’ or ‘fair.’”
Conclusion: From Conflict to Connection
Money will always spark strong feelings in families. It can fuel conflict, but it can also deepen connection with the right tools. By surfacing money scripts, aligning policies with values, and building ownership competence, advisors can help families turn financial challenges into opportunities for unity and resilience. For advisors, the invitation is clear: look beyond the numbers. Listen closely to understand what money represents to each of the family members. In doing so, you are not only empowering the family to preserve its financial wealth but nurturing the relational capital that allows families to thrive across generations.
References
The authors of this article explore these and other related issues in detail in their book Money & Generations: A Guide for Enterprising Families and Their Advisors
Klontz, Bradley, Sonya L. Britt, Jennifer Mentzer, and Ted Klontz. (2011). “Money Beliefs and Financial Behaviors: Development of the Klontz Money Script Inventory.” Journal of Financial Therapy 2 no. 1, 1 (2011): https://doi.org/10.4148/jft.v2i1.451