Family Firm IN FOCUS

Hello, everyone.

Welcome again to our podcast, Family, Firm and

Focus.

I'm your host Mohsin Ebi.

And I am honoured today to welcome our

guest, respected Christian Stewart.

Welcome, Christian.

How are you?

Thank you very much, Mohsin, for having me.

And it's an honour to be here to

talk to you today.

So I'm really looking forward to this conversation

together.

Thank you.

Thank you, Christian.

Before we begin, although you're very popular, very

familiar, so many people around the world, those

who know you, those who have been into

the family firm space, they know you as

a very recognised advisor.

So I just want to briefly give some

introduction, although it's huge, I'm just going to

point out a few of the things.

Christian is a founder of Family Legacy Asia,

which was founded way back in 2008.

Christian is being awarded as an Interdisciplinary Award

by Family Firm Institute in 2000, if I'm

not wrong, 2021 Interdisciplinary Award.

21, yes.

And he's being recognised as the leading advisor

by Wealth Briefing Asia as well in 2017.

Christian is also teaching, co-teaching the module

of family governance and family governance model is

being taught by himself.

And it's an MS based programme in family

office and family businesses that's part of Hong

Kong University.

Oh, Hong Kong University of Science and Technology.

Hong Kong University of Science and Technology.

Christian has been privileged to have clients most

in part of Far East Asia, Hong Kong,

Singapore, Australia, Malaysia, Philippines, Indonesia and a few

others.

He has also got exposure in some of

the research based task in USA as well.

Yes.

He serves as a board of director with

the great Jay Hughes and for his foundation,

Jay Hughes Foundation, and he has been serving

there for about, I think, since inception or

how many years, Christian?

For a couple of years.

You've got me there.

I'm not sure.

So not since inception.

Maybe three or four years.

Great.

So Christian, before any further delay, let's begin

with some of the questions I was going

through your profile as well.

And the purpose behind this family focus is

that since I'm also part of Family Farm

Institute and we all advisors join together, we

learn from each other.

So from the perspective of Asia, we can

see and from people coming from West as

well as advisors, those who have got exposure

and there are a few questions which I'm

going to place and we can start a

conversation accordingly.

Regarding the interdisciplinary rules, which we can see

within the team of advisors, can you please

shed some light on this interdisciplinary rule from

the perspective of Asia, which is different as

compared to other part of the world, because

the cultural things are different.

There are some different legacies aligned to this

and you are much more aware of that.

What do you think about?

Yes.

Yeah.

So maybe there's two parts to answering that

question.

Maybe the first part is to tell you

what I think is an ideal working arrangement

as a consultant to a family.

Then I have to maybe think about what

does this mean in practice?

Is it easy to actually implement in practice?

So the first part is my concept of

the ideal.

So vast majority of my client base have

been overseas Chinese families.

I've had one engagement for six or seven

years with an Australian family, so a Western

family.

So that's really my counterpoint.

But to me, I come from a structuring

background.

I was originally a trust lawyer.

Then I moved into governance and it was

only since about 2016-17 that I've started

to get exposure to learning and development through

having clients that had coaches that were working

with them.

But I think about family governance or governance

for family business, and this is often said,

there's always a structural element to it and

there's a relational or culture element to it.

I've realized, almost by accident, by being sort

of forced by my clients to work with

people who are good on the relationships, good

on the culture, good on the coaching and

development side, that where your discipline of origin

is something like law, you're never really going

to be very good at the relationship piece

of it.

So it's almost quite obvious, but I think

governance work, whether it's family business or family

of wealth, it really requires an interdisciplinary team,

which is different from multidisciplinary.

And it's obvious, you need somebody who has

that sort of structural vision for the family,

someone who can help guide them, but as

a consultant, not as an expert, towards whatever

is the next step they need to take

on the governance side.

But the governance doesn't work unless it's aligned

with, or supported by the culture.

And so therefore you need a culture person,

and it could just be as simple as

a coach working together.

So to me, that's the ideal basic team,

and it is more of an interdisciplinary team.

So let me also come back to that.

However, you kind of need both to go

together, because the structural person or the governance

person needs to have an appreciation of and

support the work that's being done by the

culture person.

And I often say there can often be

a push and pull between those two sort

of advisory approaches.

And the culture person, so again, it could

just be a coach that I'm talking about,

they have to have experience or understand the

context of, we're working with a family business,

right?

So there may be two things about that.

One is, you don't want the coach, and

you hear this story a couple of times,

you don't want the coach to come in

and tell the family member and say, well,

it would be healthiest for you to individuate

and just leave your family.

That's kind of not the context.

The context is trying to figure out how

we get both together.

And that culture person or that coaching person,

they have to understand that there are different

roles, and they have to understand the role

context of the different individual family members.

Anyway, so that's the basic team.

But then in my approach, and this is

sort of very, but then there's two extra,

and they're off to the side.

And so what I learned from Jay Hughes

is it's really important to help grow the

human, intellectual, social, spiritual capital of the family.

And a big part of that is helping

the individual family members to know themselves.

And in practical terms, that means introducing different

assessments to the individual family members.

And so, for example, like the starting point

for me often, it would be a neogram

assessment.

So if I'm working with a sibling group

of like three or four siblings, I will

often, so ideally, it's myself and somebody who's

better on the relational side as a team.

And I'll introduce each of the siblings and

maybe their spouses to another coach or expert

who can do the enneagram assessment or do

another really good assessment is called the Pro

D assessment, which is sort of very good

vocation.

So there'll be people that I bring into

the assessments.

And I'll just finish up on this piece.

So again, the philosophy is like, how do

we grow the human capital of the family?

Well, you help the individual family members to

know themselves, so increase in self-knowledge.

So there's sort of a list of areas

that you can explore with individuals.

But then there's another side to the coin.

So this is my perfect engagement, ideal engagement,

if I have a magic wand.

The other side to the coin is that

we all have things that hold us back.

We all have limiting beliefs.

We all have, and a lot of the

things that hold us back, you know, we

think about them, but often they're unconscious and

often they're embodied.

So where I can, I will encourage, so

if I'm working with a sibling group of

like three or four different siblings, I will

encourage them to go and also do their

own sort of personal work with a somatic

healer that I like to work with.

Do it online, and they sort of do

one-on-one calls with this somatic healer.

And to me, that's like the perfect combination

for how you can help grow human capital,

basically, or kickstart that off.

So then if you sort of sit back

and think about it, and this can lead

into this idea of a chief learning officer,

is I guess you say like the basic

philosophy is that the growth of the human

capital, so the individual development in a family

business or family of wealth is important.

The getting better at collaborating together as a

team in a family business or family of

wealth is important.

So this development aspect is really important.

So to me, you cannot separate learning and

development from family governance.

Like the two have to go together, because

it's usually about how can we get the

family to be more effective together, as a

family and at the ownership level.

And to do that, therefore, again, you need

this sort of team where you can balance

structure and culture in the consulting.

And you need to be able to source

experts who can help family members with different

issues.

Like another quick obvious example might be, you

know, where you're dealing with significant inherited financial

capital, there could be like psychological issues around

the money.

So maybe you have to introduce like a

therapist who specializes in money issues, or a

consultant who can help with couples relationships.

So I think, yeah, so there's this idea

that you are the consultant, but you also

need to be a conductor and bring in

different kinds of specialists.

Sorry, that's a lot.

Yeah.

That's really a great point.

Especially when we talk as an advisor, you

have highlighted that is important need that, first

of all, the family has to be aligned

with the top tier of the main key

person of an advisor.

And then advisor has to get the team

aligned where it is required.

It could be with respect to the relationship

therapy could be relationship wealth therapy, they could

be and especially considering from the background and

from the country areas where we are coming

from.

There is a requirement of women.

My next question is also putting into the

women as well.

Women are getting more and more engaged now.

And it's really very important that they feel

more comfortable with the same gender of advisor

at times, coming from again, considering Muslim culture

and the culture where especially I belong to

Pakistan or such things.

So women are getting involved now.

They are getting education, they are getting into

the business, they're getting more and more involved

in family businesses, as they are getting more

awareness and idea for the rights, how to

protect the rights, how to get into the

business, be aware of what's going on, what's

happening, what could be the inheritance law and

all such things.

So what's your takeaway with respect to this?

Do you think, I agree with this, that

yes, women are getting more involved and awareness

is increasing?

Yeah.

There's a couple of points around this.

But maybe I'll just, I will.

So again, most of my clients have been

overseas, ethnic Chinese.

I have to say that the most powerful

person I've ever dealt with is a woman

who leads her sibling partnerships, leads the sibling

partnership, and was always the natural leader within

the family.

And there's something about, if you have all

male sibling partnerships, they can be pretty rowdy.

So it's almost like a strength for the

family.

If you have a couple of daughters in

the family, it's a strength because the sibling

groups with females are better functioning.

But with the overseas Chinese families, they have

a traditional inheritance rule.

So I've been in Hong Kong for 30

years, and I think I've seen it change

over that time.

And it's called the Equal Inheritance Rule.

And it was a principle that, so the

overseas Chinese families can be very hierarchical.

So you have a patriarch, you can have

a matriarch in a sibling group.

The siblings are usually very hierarchical as well,

though there's a lot of variation around that.

But the Equal Inheritance Rule is that if

you have four siblings and three are males,

then traditionally it meant that all three males

got an equal inheritance, equal ownership of the

shares in the family business.

And traditionally, the daughters didn't.

And then I think over my time, you've

seen the daughters starting to get part shares

was kind of the first step in the

family business, maybe half the share that each

of the sons get.

Whereas today, I think it's very much a

case of equal ownership.

So today, I see daughters in the overseas

Chinese families having equal ownership rights to the

sons.

I guess the way I'm thinking about it

is, but you still might see the daughters

being assigned, the sons are in the business

or operations, and the son and the daughters

are running the family office or running the

family foundations on the same task.

Yes.

So definitely women have the right to be

at the table with the overseas Chinese families

today.

So think about the four-room model as

a family business consultant.

So any family business, we have a family

room, we have an owner room, we have

a boardroom, we have management.

And the thing about that model is to

say that, well, actually all four of these

rooms are important.

And we have to look at the functioning

or effectiveness of all four of these rooms.

And the model tells you that succession for

a family business is about, it's not just

about the management succession, which is the way

the older generation tends to think.

So how can we get the right people?

There's multiple opportunities to participate in the succession.

So the female family members, of course, they'll

have a role in the family room, as

I said, maybe family office, family foundation is

a common scenario.

But the key room that is underdeveloped with

the ethnic Chinese families, overseas Chinese families is

the ownership room.

And so it might be that you can

have one or two of the sons in

management roles.

And in a lot of families to start

with, if they haven't looked at their family

governance or family business governance, they don't think

about the ownership role.

And they don't think about accountability to the

owners.

And the ownership is actually more important for

the business continuity than the management role.

So to me, it's maybe that's the key

thing to me as a consultant is let's

build up the ownership room and let's work

out what are the decisions that have to

be approved by the ownership room or made

by the ownership room.

And so even if the daughters are not

in the management role, today with the equal

inheritance rule, they're in the ownership room.

So that's where the family have to learn

to have this accountability and equal voice to

daughters as part of that ownership room.

I have another client family where if you

look at the third generation, it's the daughters

who all the, it's the daughters, girls, cousins,

female cousins, who are the smart ones in

that family.

So it's definitely changed for the time I've

been in Hong Kong.

What happens if there are no son and

only let's say a person having only daughters?

And how usually the Chinese family do the

inheritance in that case?

There are examples in Hong Kong.

So as I started with, I've seen this

one family where the most powerful figure is

the daughter.

There are Hong Kong families, I haven't worked

with them where it is only daughters.

Then they inherit, they operate it, they run

it.

If there are no sons, that's it.

There is a very famous old Hong Kong

shipping family, which is going back before my

time, where the patriarch was quite famous for

having four daughters.

In that particular case, I think he split

the empire into four different, if anybody's listening

to this and they're from Hong Kong, they'll

know what family I'm talking about.

He split the empire into four shares, divided

it one for each of the four family

branches, but effectively the sons-in-law then

took over the management role in that particular

case.

So that's an old Hong Kong example.

So lots of variety.

In fact, this leads to another debate, but

that's not a part of this, but there

are certain constraints where people think that there

should not be any in-laws involving in

this.

There are some families, those who said that

no in-laws policies as well.

Yes, yes.

So when I talk to my friends, colleagues

in the US, in-laws definitely have a

full seat at the table, definitely in the

family governance.

When I look at this Australian family, a

Western family that I had worked for, it

was still a bit mixed.

There were some governance activities which were only

for the male sons, but generally a lot

of participation by the predominantly female in-laws

in that case in other governance forums.

So I noticed with the clients that I

work with, if they're ethnic Chinese families, then

if you say who should come to the

family meeting, a family council or an owner's

council, no, they don't include the in-laws.

It's more normal that they will not include

in-laws in the family governance except to

say, maybe once a year we're going to

have a family, once or twice a year

we'll have a family assembly meeting.

But the family assembly will largely be for

social purposes.

It won't have any real teeth or voting.

So I do try as a consultant to

figure out ways to get the in-laws

included in a family meeting, for example.

So I worked for six years with one

family where there are three siblings, all sons,

all working in executive roles.

We would typically see them for a two

-day family meeting to work on part of

their family constitutions or family policies or communication.

Lunch on the second day.

So we would often have dinner with the

whole family the first night or the second

night.

Lunch on the second day, we always brought

in their spouses and later on would spend

the second day afternoon doing some kind of

mini workshop on a topic that was good

and fun for their relationships, which included the

sons and their wives, and then bring in

the parents at the very end of the

day for a wrap-up.

So it was a safe way to let

them know we're having family meetings, to include

them in some kind of activity part of

the family meetings, and eventually to give them

a high-level briefing of what had been

agreed on in the family meetings.

But they weren't given a full seat at

the table for the whole duration of the

meetings.

Great.

And Christian, your specialty is facilitated communication among

the family members.

And while structuring the whole governance structure, it

plays a very important role when you are

dealing with them.

You're setting up the meeting, you're setting up

the family council.

How crucial it is, especially for the families,

those who are listening, how crucial it is

to set up this important role of communication

among the family members and among the advisors

and the families, those who are members as

well.

Yes.

Maybe I'm thinking there's three sort of parts

or points to this.

But the first point, and this was an

old rule of thumb or principle I was

taught or heard from a family business consultant

many, many years back, which was that in

certain parts of Asia, there was a lot

of interest in the family constitution.

I remember listening to this very experienced advisor

at the time saying, if you can't listen

to each other with empathy, you can't have

a family constitution.

And I think that's a really good principle.

So to me, the whole purpose of family

meetings is to have a place where the

family can have better communication than normal.

That's the starting point.

So if you are starting a governance assignment

with a family, I think the first step

is to think about how can we make

communication in the family explicit.

So getting the family members to do a

survey that sort of rates how effective they

are at communicating is probably a very good

starting point when you're in an assessment process

or phase with working with a family.

And that could be pen and paper, or

it could be online.

There's this thing called the circumplex model, which

has an aspect of family communication and family

flexibility.

So making that topic of communication explicit is

important.

If you are working with a family, then

you're likely to have them help put in

place family meeting rules, asking them to reflect

on what does good communication mean.

And then discuss that based on their own

experience and codify it.

But then I guess there's a question of,

okay, when you're a consultant or facilitator working

with a family, facilitating a family meeting, using

that as a forum for improving communication is

good.

But then the next question is, okay, what

about when you're not around anymore?

What does the family do when they don't

have a facilitator present?

So when the facilitator is present, I can

answer that because that's easier.

One thing is, I like to do my

family meetings using the philosophy or the structure

of a lady called Nancy Klein.

Her first book is called Time to Think.

She wrote another book called More Time to

Think, and I think she has another one

after that.

And she's well known for this idea of

the thinking environment and thinking pairs and partnerships.

So she recommends practices like starting meetings with

a round where everybody just has a chance

to become present and download what's on their

mind, and finishing meetings with a round of

gratitude and some great gratefulness for what's happened

in the meeting.

So I like to bring in her principles

of thinking rules.

I like to set up things like have

a row of chairs in a line so

they're not facing each other, put everybody in

the chairs, and one person can speak at

a time without interruption from the others.

And so when you're dealing with a hierarchical

family, I've had cases where the youngest son

has said to me,