Rich people problems! 

But when there’s billions at stake, decisions on family wealth and legacy are anything but trivial. 

Dealing with them efficiently and delicately requires expert third-party advice, often from several independent experts from diverse backgrounds.

This week we spoke to Dr. Charles Eckhart from ultra-high-net-worth family governance and engagement consulting company, Cathexis Group. 

“The first half of my career I spent working as a Clinical Psychologist both in private practice and academia. In my clinical practice I worked long term with patients, many of whom were navigating the mess of being human with the added jet fuel of wealth.” 

He’s also the seventh Charles Eckhart. Coming from an enterprising family that founded a carriage company that eventually evolved into an automotive entity, he knows the challenges of multi-generational wealth first-hand. 

“It’s been over 100 years since the company was sold and the capital was invested outside of the auto industry, but the original legacy and entrepreneurial spirit formed a backdrop that continues to influence our family today.”

Given this background, and experience accumulated in my clinical practice, Eckhart has had an ongoing curiosity on the complexity of wealth, legacy and ambition, both individually and for families as a whole. 

He formally entered the family governance advisory field when he co-founded Cathexis in 2022. 

“Cathexis Group provides strategic guidance to multi-generational families who seek to advance their legacy, impact, and connection, and prepare their future leaders for exceptional stewardship and purposeful lives.” 

With more at stake, there’s usually more drama, and one could expect many dramatic meltdowns when helping UHNW families make legacy decisions. 

But Eckhart says the most common challenges he faces are when families navigate the balance between interdependence and independence.

“This may play out in the breakdown in decision making between three siblings who disagree on the sale of a legacy asset, the misalignment in philanthropic mission between one generation and the next, the growing pains of a founder stepping back to make room for their adult children to take a more involved role in the family office, or much more.” 

He says it could be something like the first prenup for the next generation, which can trigger the need for financial disclosure, and lead to values-oriented conversations; or first-time grantors choosing trustees and needing to communicate their preferred outcome of the trust. 

“Families seek our guidance during times of major transition, where changes to the family and its members' identities and responsibilities are adjusting.” 

Cathexis works mostly with first- to third-generation families, those that are in the early stages of establishing their family culture, mission, and governance structures. And those dealing with significant next generation decisions for the first time.

“These families are often wrestling with: how should we discuss wealth and transfer wealth to the next generation, and how much should we give and when? How involved should our young adult children be in our philanthropy? And, how do we balance the need for involvement with the importance that they have their own lives outside of our family constellation?”  

His firm is frequently hired by advisors and family offices, who usually approach him when a family they serve has had a breakdown in decision making.

“We often find families willing to open up to us in ways they may not be willing with their family office team, given our role as outsiders. As generalists, family office advisors have so many layered responsibilities and expertise. They are usually relieved to pass off some of the qualitative and relationship difficulties to specialists, freeing up time for them to move on to the next task at hand. 

The Cathexis psychology element is unique compared to most family wealth advisory firms, with  each team member holding a doctorate in psychology, with background in both clinical practice and academia.

Dr. Eckhart says this provides them a nuanced understanding of client families, with more agile approaches to solve problems and help families adapt. 

“Our backgrounds allow us to consider the developmental stages and transitions of its members, their varied temperaments and personality structures, their style of conflict and communication, how power is shared or concentrated, the homeostasis of the family system, and much more.” 

“Up close, every family is different, but from afar, most are navigating similar challenges. Our backgrounds as psychologists allow us a lot of skills and theoretical frameworks to understand the nuance of each family while also helping them grow through the challenges all families face.”  

Where they provide the most value he finds is when families are in the initial stages of trying to wrap their heads around how to purposefully transfer wealth to the next generation, wrangling with values, competencies, and capital.

“They are like unfinished wood for us– we get to collaborate and craft beautiful furniture together. Far less ‘un-doing’ than families who have more entrenched, long standing legacies with worn out hinges and warped wood.” 

Dr. Eckhart believes that to set up a truly effective family governance and engagement strategy, every family needs either a visionary member or strong culture, with a willingness to make time.

UHNW families are usually busy, between managing operating companies and investments, working philanthropically or traveling and vacationing, so this isn’t always easy.

“I sometimes joke that our biggest competition is Fiji–does a family want to spend a few days in family meetings with us, or add a few days to their Fiji trip? We are not nearly as exciting as the next vacation.” 

“But jokes aside, while finding time for work that is time consuming is often a challenge, our families work with us because their future generations depend on them having proactive and thoughtful plans to support their development, steward their assets, and transmit their values.”

The most common mistake he sees in his work is an obvious one: people simply avoid talking about it. 

“There’s something very human about avoiding a topic if it scares us. But avoiding talking about the elephant in the room does not make it any less obvious.”

“I have yet to meet a family that has truly never considered their succession plans, but I have worked with many who have never talked about it together, developed a plan, and have a timeline.” 

With his unique background, he also firmly believes that family governance has much room for innovation, saying the field is in its early innings, and that he expects to see significant adoption in the coming decades. 

“Numerous Global Family Office reports indicate generational families have persistent concerns about family cohesion and governance, yet the offerings are in their infancy and the field remains small. We need to advance in our training process, standards of practice, and ethics, but we also are a multi-disciplinary field and we need to remain so.” 

It’s a field that is challenging, but does provide tangible rewards when seeing results in action.

“The most personally rewarding is watching family members truly understand one another after long periods of misunderstanding and conflict. Most people are well intentioned and care about others, but mutual understanding can be hard to come by. Sometimes that looks like a wealth leader getting out of the way so their adult children can take over a project and show some of their growing competency and agency. Other times it’s watching beneficiaries who may resent the lack of transparency, come to understand the conundrum their grantors faced.” 

Aside from this reward, Eckhart is driven by a mission to help families understand each other better, and to cultivate purposeful and responsive lives together.

“Shared understanding, and the alignment that can occur as a result - even when divergent viewpoints exist - is a superpower for legacy families.”

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