The Chicago Pritzker family, a dynasty that traces its good fortune to a Russian boy who came to the United States at the turn of the last century, is one of America’s immigrant-entrepreneur success stories. Four generations after Nicholas Pritzker taught himself to speak English by reading the Chicago Tribune, the family is said to be worth at least $15 billion. However, any semblance of harmony among the Pritzkers has dissolved in recent years.
Their troubles began to unfold five years ago, when Jay Pritzker, Nicholas’ grandson, died at age 76. During Jay’s life, the publicity-shy clan became one of the wealthiest families in the country through investments ranging from the Hyatt hotel chain to Royal Caribbean cruise lines.
The first sign of dissension within the ranks should have appeared during a 1995 meeting in which Jay advised 11 of his heirs how he wanted the family’s assets to be managed after his death. His expectations were clear: Thomas, Nicholas, and Penny Pritzker, cousins with careers rooted in the family businesses, were to administer the wealth for the benefit of the current and future heirs. The silence of those in attendance, the patriarch believed, indicated their acceptance. It did not.
After Jay’s death, some of the heirs who worked outside of the Pritzker empire declared that they wanted to control their portions of the assets. After a year of intense debate, Thomas, Nicholas, and Penny finally agreed to liquidate the majority of the family’s holdings and distribute the proceeds equally among the 11 heirs who attended that 1995 meeting.
In 2002, Liesel Pritzker, one of Jay’s nieces, filed a lawsuit alleging that she and her older brother Matthew were unfairly excluded from the arrangement to dispense as much as $1.3 billion in assets and $30 million in cash to each of 11 heirs. Although Liesel, a 20-year-old actress who performs under the name Liesel Matthews, and Matthew, a 21-year-old college student, are nearly 25 years younger than their three step-siblings (who were included in the payout plan), they are nonetheless members of the fourth generation. They claim that because of their age, they were wrongly grouped with the fifth generation—cousins who were frozen out of the deal. Liesel also claims that her father, Robert, looted her trust fund of some $1 billion. The case was still pending when the magazine went to press.
The Pritzkers are among the latest examples of a wealthy family divided because its members could not arrive at financial decisions that were agreeable to everyone. Their situation may have been avoidable, but it is nevertheless understandable. Even the strongest relationships can become strained when families are confronted with such issues as the division of family assets, charitable interests, or health care for aging parents. “Learning the skills to communicate is the most important thing a family can do,” says Lee Hausner, a psychologist in Los Angeles who works with wealthy families as a facilitator and group mediator.
To improve communication and establish processes for making decisions, including those that may have profound financial consequences, some families enlist the services of an impartial outsider such as Hausner. A family, she says, is like a business: In both, a group of individuals must work together despite personal agendas, insecurities, and control issues. “I’m a big proponent of dealing with the business of the family the same way as dealing with the business of business—and that is with meetings,” says Hausner.
A stranger possessing thorough knowledge of your family’s dealings and machinations may be a disconcerting prospect. However, loss of privacy might be an acceptable price if your family learns how to navigate sensitive issues successfully. “Communication is the glue that builds relationships,” says Hausner, who insists that most family problems are the result of a breakdown in communication. Too often, she says, families seek help only after they realize that they are in crisis.
Bayard Walker, 56, and his five siblings can attest to this. About 10 years ago, the members of this third-generation banking family were deadlocked on how to resolve a critical private issue. Although everyone’s intentions were noble, Walker says, the siblings were unable to govern themselves. “At the end of the first meeting,” he says, “something was said, and it led to raised voices and hurt feelings. In the next few years, we had varying degrees of success conducting meetings ourselves, and finally someone said we needed outside help.”
Once hired, a facilitator often consults privately with the person or persons who generated the wealth before meeting individually with the other family members. This provides an opportunity to learn about the family’s level of openness. The facilitator may discover, for example, that the person who created the wealth prefers that details concerning the family’s net worth and investments are shared with only select heirs.
However, says one facilitator, the person who controls or is responsible for the wealth rarely recognizes when there are problems within his or her family. “Typically, it’s the next generation or two down that perceives that there are issues that need to be resolved while the matriarch and patriarch are still alive,” says James Hughes, a family consultant with a doctorate in counseling psychology and the author of Family Wealth: Keeping It in the Family (Hughes and Whitaker, 1997).
One of the facilitator’s first tasks may be to establish a protocol. Defining the ground rules, such as prohibiting interruptions and discouraging participants from passing judgments on one another, helps put people at ease and lets them know what to expect from future meetings. Facilitators may also declare that they expect participants to treat others with respect, arrive with open minds, and be prepared to work. Hausner forbids anyone from leaving a meeting in anger, and in Hughes’ meetings, when a family member who feels as though he or she is being attacked says “ouch,” the offender is prohibited from speaking until granted permission to rejoin the conversation.
To break the ice and allow people an opportunity to refine their communication skills, a facilitator may suggest discussing such innocuous topics as a fond family memory or the meaning of family. A facilitator can also stimulate communication without inciting conflict by asking each person to share a personal fact that a friend knows, but the family does not. “I often say that the first meeting isn’t the first meeting; it’s just trying to get to the beginning,” says Hughes. “That relaxes people, and they realize they don’t have to solve everything in one meeting.”
Once participants understand what to expect from the meetings and have established some degree of comfort with each other, the work begins in earnest. A family’s first task could be to identify its most pressing issues. The facilitator may guide a dialogue on prioritizing each of these topics and then help determine a reasonable deadline for resolutions. If one objective is to diversify the family’s investments, the facilitator might set a goal of contacting a financial adviser by a certain date.
The facilitator sometimes must play the role of referee, separating the combatants and sending them to neutral corners. If a discussion becomes too heated, the facilitator may suggest a 10-minute break so that everyone can regain his or her composure. Participants will then be taught how to rephrase their comments so that they can convey their opinions without offending anyone. Again, Hausner likens a family to a business: When relatives conduct themselves as they would in a business setting, meetings are usually more productive.
When the Walkers were unable to conduct themselves as business associates, they sought help from Hughes. “Jay brought a wonderful philosophy and gentle spirit to the meetings,” says Bayard Walker. “It improved the quality of our meetings by giving us focus and helping us keep on track.”
Families should understand that not all of their problems will be solved overnight—that developing the skills to discuss issues with parents, children, siblings, or cousins may be an ongoing process. The frequency of family meetings will depend on the topics that need to be discussed and their complexity, Hausner says. For some families, once a year is sufficient, but others may meet quarterly if they have a full agenda. Certain issues, too, such as an investment’s performance, may require meeting more often for a period of time. Larger families sometimes retain an adviser indefinitely, because the number of participants grows sufficiently from year to year to necessitate a professional’s ongoing tutelage.
The Walkers meet at least annually with a facilitator who is also a professional wealth adviser. (Hughes has retired.) In two years, Bayard and his siblings have developed investment strategies and created philanthropic ventures. They have also sold property and started to mentor the fourth generation. “Without help, our meetings would have been less objective,” says Walker. “We needed someone ultimately to be the parent.”
Although many families conduct fruitful meetings on their own, Hughes says, most could benefit from a facilitator’s expertise during three pivotal periods: when the second generation realizes that the first generation is aging, when the family business is being sold, and when a family member marries someone of more modest financial means. “Families are made up of transitions—little births,” Hughes says. “And often a family finds itself in a transition that is going to change its character. Families are made up of linked transitions, not transactions.”
A facilitator may not have helped the Pritzkers resolve their issues, but perhaps he or she could have cautioned them about the potential consequences of being unable to communicate with each other. An impartial counselor may have assisted Thomas, Nicholas, and Penny by explaining Jay’s vision to the younger generations while also helping the triumvirate understand the needs of the other heirs. Now, many of the family members do not speak to each other, and nearly every Pritzker peccadillo is reported in the financial sheets or in the social columns—from Matthew Pritzker’s filing his own lawsuit alleging mismanagement of his trust funds to Liesel’s conflict with their father over her acting career. Says Hausner, “I tell clients that by having family meetings you don’t end up in the headlines.”