Bringing families and finance together

JR Gondeck stresses that effective family planning and communication are crucial for managing wealth across generations.  As partner at The Lerner Group, he’s tackling some of the sector’s most challenging issues with his book, "Family Value at Risk."

"The goal of the book was really to build an understanding beyond just the money," he says. “So many families focus only on the money, which is an important factor when you're discussing planning. Our experience over the years would be that people pass away and there wasn't effective communication between generations - there was just a lot of unnecessary tax or hurt feelings.”

Delving into the difficult topic of fair versus equal distribution of wealth among children, Gondeck believes that prudent planning and foresight are key to helping not only maintain friendly relationships but also to executing wills effectively.

“If you have three children, do you give them each a third, or if one is doing better than the other two, do you give one a little less and the other two a little bit more? These are all challenging issues for families to work through, but it's better to communicate those while you're living [rather than] your children or grandchildren finding these out once you leave this earth.”

And these high stress situations are nothing new to Gondeck and his team – who often mediate complex family financial fallouts.

"We typically sit in the middle, so depending on what information family members want to share, we can help navigate some of those conversations," he says. “If we understand the financial picture of each generation, we can help navigate some of those conversations. I do think there's a hesitation of successful children to potentially share how successful they are.”

Another common issue Gondeck addresses is the lack of communication about financial gifts.

"A grandchild is born, and either parents or grandparents want to give some money. Parents, having a newborn, are in the midst of figuring out how to navigate just having a new child, and families will give a few thousand dollars without long-term planning.”

He also tackles the divide-and-conquer approach many families take, where one spouse handles finances and the other manages planning. Here, Gondeck advocates for joint involvement.

“We always encourage bringing both parties up to speed so that they are aware of what’s happening within both sides." This leads to better outcomes over time as both spouses are aligned on financial and planning matters.

In portfolio management, Gondeck starts by understanding the client's or family's needs.

"We start kind of big picture—what’s going on in the overall world and the economy, and then bring it back to building the portfolios," he explains. “Our approach is always that the client needs the outlook. Now, within that outlook, what sectors do we think are more favorable or less favorable given the outlook? Then we adjust along the way to bring it back to the shift within the markets. Our philosophy has always been you can't time the market, but timing within the market is very effective if you're up to speed as to which way that the overall economic outlook is going.”

On the topic of market outlooks, Gondeck is cautious about concentration risks, especially with the recent outperformance of large-cap stocks.

"There’s been such excitement around large-cap stocks, leading to concentration risk," he warns. “That’s naturally led to overweights for many investors in these categories. Our approach has been, you know, with the trends unfolding, going back to our economic outlook, this is likely to continue a little bit. So you want to lean into the opportunities or momentum of what's working in the markets. On the other hand, you got to be mindful of taking profits along the way.”

Gondeck also addresses inefficiencies in college planning.

"There tends to be a lot of duplication. If you're not communicating effectively to your kids or grandkids, we find there's a lot of duplication of planning as well, and it's just not efficient overall," he notes.

And, regarding the largest wealth transfer in history, Gondeck stresses the importance of education and preparation.

“The transfer of wealth is very large now and is only going to grow. Are my children prepared? Are they educated to handle the level of wealth that's likely going to transfer down to them? If you have locations that dictate a much higher retention, say $250,000, we try to bring that retention down for other locations. I always say that I don't want the minority to impact the majority.”