What’s harder than building a successful family business? Handing it off to the next generation.
Passing on a successful family business is one of the most complex – and often avoided – transitions a family can face. In this episode of The Agent of Wealth Podcast, host Marc Bautis is joined by Doug Gray, PhD, a leadership coach, organizational psychologist, and author of The Success Playbook for Next Gen Family Business Leaders. Together, they explore the emotional, financial, and strategic challenges of family business succession.
In this episode, you will learn:
- Why succession is often mishandled – and how to avoid common pitfalls.
- How to identify and empower next-gen leaders with both financial and non-financial tools.
- The role of peer groups, leadership assessments, and intentional learning in successful transitions.
- How AI and personalized coaching tools are revolutionizing succession planning.
- And more!
Tune in to gain practical insights, expert strategies, and real-world examples that can help your family business thrive for generations to come.
Resources:
action-learning.com | The Success Playbook for Next Gen Family Business Leaders | Bautis Financial: 8 Hillside Ave, Suite LL1 Montclair, New Jersey 07042 (862) 205-5000 | Schedule an Introductory Call
Disclosure: The transcript below has been edited for clarity and content. It is not a direct transcription of the full episode, which can be listened to above.
Welcome back to The Agent of Wealth Podcast, this is your host Marc Bautis. Today we’re diving into a topic that impacts families – especially those working to preserve and grow generational wealth: succession in family businesses. It’s one thing to build a successful business, but passing it on to the next generation comes with its own set of challenges – both financial and personal.
I’m joined by a guest, Doug Gray, PhD, an expert in helping families navigate this exact transition. Doug is a seasoned leadership coach, organizational psychologist, and the author of The Success Playbook for Next Gen Family Business Leaders.
In today’s conversation, we’ll explore what successful family business succession really looks like, how to prepare the next generation to lead with confidence, and why it’s about more than just financial assets – it’s about transferring purpose, vision, and trust.
Doug, welcome to the show.
Thanks, Marc. Glad to be here.
Let’s get right into it. Why is it that family business succession is so often mishandled or avoided?
The Root of the Problem: Why Family Business Succession is Mishandled Today
Honestly, I think it’s because of the nonsense we see on HBO and television. Popular shows that portray these scenarios are just not accurate — they perpetuate fear. Shows like Succession, Landman, and Dallas — they all dramatize family business succession.
I think that the fear in the average viewer comes from not wanting to be embarrassed. Let me ask you a question, Marc: What percent of the U.S. GDP is family-owned or managed — 20, 40, 60, 80, or 100?
I’ll say 60.
Well, you’re right. Estimates vary, but it’s usually between 60 and 70 percent. So if family businesses have that large of an impact on our economy, it begs the question: why don’t we do a better job addressing the emotional aspects of succession?
Typically, it’s a quiet event — but that doesn’t make for good TV. It’s a world full of emotional complexity and material abundance, and that’s where I like to focus.
Is it because no one knows how to approach it? Or does it creep up on people and perpetuate until it’s too late to do it successfully?
It varies. There is no universal roadmap — anyone who says otherwise is either naïve or misinformed. There are common steps: usually some form of assessment, then discovery, and ongoing consulting.
But here’s the bigger issue: we’re dealing with two very different groups. The older generation — the matriarch and patriarch, if they’re still alive — and the next generation, who could be anywhere from their twenties to their fifties.
Those younger family members often don’t know how to demonstrate their capacity, and the older ones don’t know what to do if they give up control. How would they then spend their time? Golf? Philanthropy? Maybe. But are those activities as fulfilling as the legacy they built? No.
So we end up with competing interests, resulting in a dynamic where people just don’t know how to talk to one another. When it comes to performance feedback or communication, most people haven’t been taught how to navigate conflict.
I like to joke that playing hockey prepared me for this. I left a lot of games bloodied, and in some way it was good training for the emotional complexities of family succession. I don’t mean to make light of it, but sometimes you need an external facilitator — someone who can listen to all sides and offer guidance. We’re not truly objective, however — that’s a myth — but a good facilitator can help accelerate the process.
Furthermore, each person’s measure of success is different. For an elder, success might mean figuring out which child gets what percentage of ownership. They might want to do it this week, this year, or “someday” — a common issue is that they often don’t feel urgency.
On the other hand, the next generation usually does feel that urgency. They’re different in a lot of ways: digitally native, better educated, and on a path to live longer than their parents and grandparents did. These nuances raise questions: What will Dad do if he’s no longer part of the business? What about Mom if she’s not leading the family council or philanthropy?
So, timelines vary. Measures of success vary. Emotional stress can even be amplified by trigger events. A classic example financial advisors see is liquidity. If a family sells one of their four business divisions, or offloads a major asset, they suddenly have liquidity. The next generation looks around and says, “That property just sold for $10 million. What are we going to do with that money?”
Then, the siblings or cousins start eyeing each other, but often it’s not wise for them to try to navigate that alone. They need expertise. That’s what led us to develop the peer groups and the Success Playbook for next-gen family business leaders — because people need to know what to do.
So when is the right time for the elder or owner to actually start this process?
Explaining Timing, Transition, and Finding the Right Successor with Practical Examples
Yesterday. And I don’t mean to be flip. There’s nothing more important than examining how your assets will be transferred. We’ve been hearing for decades about the “great wealth transfer,” right? It’s now estimated at $85 trillion and growing.
But why hasn’t it happened yet? A lot of wealth advisors are holding their breath, hoping to land the top 1% or 0.1% as clients, and that’s understandable. But we don’t talk about succession planning much — because we don’t celebrate it.
I was with a group in Dallas on Friday, and one business owner stood up and said, “I’m here to announce that we finally sold our operations to another family business,” and everyone clapped. That is worth celebrating. Because as you probably know — and I hope your listeners know as well — is that Main Street drives GDP, not Wall Street. When we talk about succession, it’s critically important that Main Street business owners — whether dentists or construction professionals — retain ownership.
I know you most likely see it out in practice — these owners are being targeted. M&A firms, private equity, venture capital — they all look at small and mid-sized businesses and think, “We can extract value from this.” That’s why so many have been bought out over the past decade.
But I think that’s a problem. In towns of every size — including Montclair, where you are — you probably know people who’ve lost their businesses. When you were a kid, maybe you went to that dentist or financial advisor down the street.
Now those advisors are encouraged to sell their book or be acquired by a big firm like Raymond James. But will they really serve more clients or sell more products that way? Maybe. But the larger question is: Are we protecting American capitalism by keeping these businesses in private hands?
So the first part of the playbook — the assessment — really only works if there’s someone in the family willing and capable of taking over. If there is not, the situation is pretty straightforward.
But let’s say there is someone identified. What’s the next step? Because, as you said, this is a moving target, and things change all the time. It reminds me of building a financial plan — you create one, and six months later it’s outdated. You have to revisit and adjust. How does it work on the succession side?
Definitely, it’s terrifying sometimes, right? Trying to make predictions that’ll still be useful 10 years — or even 10 weeks — from now. There will always be external variables we can’t control. One of my clients in Vancouver — a brilliant third-generation business owner — told me, “Doug, I can’t participate in the next-gen peer groups anymore. These tariffs are killing our business.” And I get that.
When there’s that much change happening externally, I tend to focus on the internal. In psychology, we call it the “agency.” What can I control? In reality, it’s not much — about an arm’s reach. A few examples are my mood, my response to good or bad news — and sometimes, that’s enough.
Now, your question assumes that the next successor will be a family member — and that may be the case. But what if the current owners identify a non-family member as the ideal person to lead? Believe it or not, that can actually be the best decision.
A non-family CEO may have the right expertise. The family can retain ownership, and can create all kinds of new options. Especially as you move into fourth or fifth-generation ownership with a wide network of cousins, the question becomes: what do we do with the lake house? The mountain house? Or access to something like a Delaware statutory wellbeing trust, designed to fund education or advisor relationships — people like you or others who help accelerate learning and keep the family on track.
Peer groups are growing. Donor-advised funds are growing. And next-gens are driving a lot of that shift because they want to invest in things they care about.
Building Legacy Through Trusts and Long-Term Vision
I’d imagine that with Delaware statutory wellbeing trusts, we’re now seeing a shift toward families investing more intentionally in the wellbeing of their kids, grandkids, and even great-grandkids.
A classic example is when someone takes a life insurance policy and designates a portion of it to fund something like this upon death. It’s not only a progressive move legally — especially in Delaware — but it’s also a commitment to preserving and enhancing the family’s reputation, whether that’s the Bautis family, the Gray family, or any other.
Turning the page a little, I feel we don’t talk often enough about ways to capitalize on that reputation, and I think that’s a mistake. Imagine if, instead of just funding your kids’ 529s, you started thinking about your great-grandkids’ education — or even about their ability to hire someone like you, Marc, to help with their financial needs 50 years from now. You and I will be pretty old by then, but our successors will still be filling that role. And ideally, they’ll be doing it in even more collaborative ways.
There’s a growing trend toward multidisciplinary teams of advisors supporting clients, which has long been the standard for high-net-worth families. If you don’t have great healthcare, strong state laws, skilled wealth advisors, and psychologists who can facilitate the succession process, you’re at a disadvantage.
That’s always been true — just like concierge doctors offer better care, top wealth advisors provide better strategies. Those with more assets have more choices. With the rise of AI, we’ll see even more tools that help identify phases of planning, possible investments, and ways to reduce risk while preserving the family name.
Preparing the Next Generation Beyond the Balance Sheet
You mentioned the financial assets that owners pass down. But what about the non-financial side — how do they prepare the next generation to actually lead?
To me, the non-financial elements are even more important. I’m not a wealth advisor; I’m a psychologist. And one of the most helpful ways to understand this is by thinking in terms of two concentric circles: the individual and the organization or family.
As parents, you raise your kids to figure out how they fit into the family, school, town, country — the broader systems around them. In psychology, we call that industrial-organizational or social psychology.
Succession planning follows a similar path. How does this individual plug into the family system, the business system, and the ownership system?
Think of it like a Venn diagram with three rooms. That model’s been used in places like Asia for decades. But we’re often missing a fourth room: the learning system.
Every single client I work with has a high-growth mindset. Peter Senge would call that a “learning organization.” The more curious someone is — the more they ask questions — the better their chances of success. So non-financial assets, like a family culture of learning and curiosity, are vital. The financial assets just enable those conversations to happen. But if you want your kids to be active learners, you have to encourage questions.
Curiosity is the currency of learning. Unfortunately I didn’t come up with that line, but it’s a great one.
How Peer Groups and 360 Feedback Fuel Succession
You mentioned peer groups earlier. How do those play into succession planning?
Honestly, peer groups are a sacred space. I don’t use that term lightly. Next generation individuals need both anonymity and confidentiality — but they often don’t know where to find it. That’s why they benefit from being around other smart people at similar stages of life who can help them clarify their goals. Peer groups are the best way, I’ve found, to accelerate learning.
They are something I started about two years ago, and we’ve seen incredible participation. We host monthly seminars where people can learn more about the process. It all evolved from a 360-degree assessment we created specifically for family business leaders.
You may know that 360s are one of the most valid assessment tools for leaders. At big companies like Merrill, they often use them to evaluate high-potential employees. But here’s the issue: in many corporate environments, HR and upper leadership get the results — not the employee. That’s unethical in my view.
I’ve coached hundreds of executives. Imagine if I had a bad 360 review at 25 — opinionated, maybe even reckless — and that stuck with me into my 50s. Later on, if I’m still at Merrill, someone could dust off that old 360 and use it to block me from becoming a VP. That happens more often than you’d think, but it shouldn’t. The person being assessed should own that data.
That’s the foundation of our validated 360 process. It includes seven different rater groups: owners, managers, peers, direct reports, family members, and family friends — compared against the individual’s self-ratings across 50 specific behaviors.
We use this now with leadership teams. If a client wants assessments for eight members — some family, some not — we can compare the results between the two groups. I provide that feedback, and it accelerates succession. Most people never get that kind of insight during their careers. I never did. Did you, Mark.
It’s funny that you mention it, because I actually worked for Merrill.
Did you get a 360 there?
Yes.
And do you still have the data?
No.
See? That’s my point. Hopefully it didn’t limit your career. But when people do get their data, they can recognize both gaps and hidden strengths. If I think I’m doing great on behavior #43 — but others disagree — that’s a growth area. And if I underrate myself in another area but others see strength — that’s a hidden asset to build on.
After developing this with my partner Kent Rhodes at Pepperdine, one of the patriarchs I worked with asked if I’d create a peer group for his son. I, of course, said yes, and then in 2024 we had two amazing, diverse groups — and we’re always open to adding the right people.
Ideally, they’re second-generation to fourth-generation family members. Their issues are very different from others who may be seventh or eighth-generation.
Eventually, they asked if I could turn all this into a book. It was already on a digital platform, so I wrote The Success Playbook for Next Gen Family Business Leaders. It outlines the top ten behaviors across those five systems I mentioned earlier: individual, family, business, ownership, and learning.
Is there a specific type of business — by size or industry — that this works best for?
I used to think so, but I don’t anymore. Right now, many of my clients are in construction, but I’ve worked with every type: retail, finance, tech, professional services — you name it. I’ve been doing this since 1995. Construction and manufacturing tend to be more recession-resistant, and they do have a higher number of family-owned businesses, but in short, these concepts apply across the board.
The Promise — and Caution — of AI in Succession Planning
You mentioned AI earlier. How do you see AI either impacting the business directly or influencing succession planning?
I think it’s a marvelous opportunity — if we’re careful. Let me share two stories. Two weeks ago, I spoke at the spring conference for the Attorneys for Family-Held Enterprises. Going in, I thought a room full of lawyers might be resistant to AI or even the title of my talk: How Do I Use AI in My Legal Business? But I was wrong — they were eager to learn. They loved the demo I gave.
Here’s the second example. There are safe ways to use AI in closed environments — like using a private, smaller language model instead of relying on a large, open one that’s prone to hallucinations.
For example, I uploaded my books, dissertation, and other documents into a private model I call “Gray Matters.” I share it with clients so they can interact with it securely. They can ask questions like, “What’s a phased succession plan for a construction company?” and get answers that stay within that system — nothing is shared with public models.
Fifteen years ago, I was asked if I could build a digital executive coach — one that would provide expert feedback and accelerate someone’s career. Back then, the tools weren’t ready. Today, however, with platforms like ChatGPT, Claude, and others, it’s possible. So I built a tool specifically for family business leaders and wealth advisors.
It’s called JITCoach.com — JIT stands for Just-In-Time. You log in, choose a role-play scenario — something like dealing with sibling rivalry, asset transfer, or succession planning — then select an avatar and tone: friendly, skeptical, blunt, or whatever you may need.
The setup is relatively straightforward, and is as follows:
- Start a conversation
- Pause when needed
- Return when ready
- Receive a full analysis once complete
The tool scores your competencies and provides coaching feedback on how you handled the situation. Sales teams that use similar tools see up to a 24% increase in performance. That’s a huge number. Most traditional leadership development programs are ineffective — people drop out or don’t see value. This tool is different: It’s practical, flexible, and personalized.
AI as a Learning Tool for Families and Future Leaders
That’s impressive. How easy is it for someone — say a business owner — to tailor this tool to the needs of the next generation?
Very easy. I work with a retired Fortune 50 learning and development expert who’s helped me customize over 20 role plays already. If your firm wanted to offer this to all your clients, you could license it today. It’s not expensive. The goal is to help people who want to learn these skills and grow faster.
And does it include a coaching component too? I imagine without a framework or some guidance, people might struggle to know what to do with the insights.
Yes, it’s both. For example, my daughter used it on a Sunday to prepare for a big work challenge and did so completely privately. But, if she wants, she can share the recording — with me, with a coach, or even with a manager. It’s secure, and only the user controls access.
Think about how we’ve traditionally learned. We read a book, listened to someone, maybe absorbed some of it — but we didn’t really practice. That’s why I think it’s so odd: doctors practice medicine, attorneys practice law, but what about leadership? We don’t get to practice it unless we use tools like this.
That’s where deliberate mastery comes in. You reinforce specific behaviors over time. I’m both a behavioral psychologist and a humanist, and I believe we can all get better if we’re intentional. So when the goals are clearly defined, it’s not hard to help someone grow.
Let’s say you have a wealth advisor who deeply understands traditional products and strategies but struggles to convey empathy to clients. If they go through these role plays and receive feedback on tone, body language, and language choice, they can develop that skill.
Empathy is coachable. It’s actually the biggest predictor of emotional intelligence, and it matters — especially during succession, when most clients are considering whether to stick with or switch advisors. This tool helps close that gap.
Making Leadership Practice Accessible—and Personal
If I’m the owner of a company and want to use this tool to help grow the next generation in line to succeed me, can it reflect my values or leadership style?
Absolutely. The tool is easy to personalize. Whether you’re looking to shape leadership in a particular way or provide structure around succession, it can be built to match your model. And again, it can be used immediately — either privately or in conjunction with a coach or peer advisor.
And you’re saying this tool could actually be offered to clients as well?
Yes. A firm could license it and make it part of their service offering. If clients don’t know what skills they need or how to practice them, this gives them a hands-on way to build those skills quickly and effectively.
That sounds like a fantastic asset to have. Alright, Doug, that’s all the questions I have for you today. Thank you for sharing your expertise — there was a lot to learn. Before you go, where can listeners find out more about what you do, get a copy of your book, or connect with you?
Probably the easiest place is action-learning.com. I have eight or nine websites, but they’re all linked there. It’s the mothership. And the book’s available everywhere — print, digital, audio — because I know other people sound better on audio than I do.
Great, we will include all of that information in the resources section of the show notes. Thanks again, Doug. And thank you to everyone who tuned into today’s episode. Until next time… Don’t forget to follow The Agent of Wealth on the platform you listen from and leave us a review of the show. We are currently accepting new clients, if you’d like to schedule a 1-on-1 consultation with our advisors, please do so below.
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