As The Economist magazine poignantly wrote: “Inheritance is a process, not an event”.

According to Australian research, family businesses are ill prepared for succession planning, appointing a new CEO, or even a strategy for the future of the business.

The first consideration is whether anyone in the family even wants to take over the business – plenty of children have no interest. Then, decide if the current owner(s) want to hand it over. Any successful transition needs both of those things at the outset.

It might be better to either sell the business, or allowing a committed employee to take over rather than a disinterested and reluctant heir. If both generations are indeed willing, then significant planning is needed.

Articulating the long-term vision for the business, ensuring that younger family members are part of the process and have time to establish themselves as owner-managers within the business, and being ready to truly step away and allow the next generation autonomy to make changes are all essential.

Consider This: When did you start thinking about succession in your family business? If it was when your children became adults, is that 20 years too late? Original article: https://www.modoras.com/

[re-posted with permission]

Actionable Generational Wealth Succession:

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source https://davidwerdiger.com/2023/10/next-gen-strategy/

Consider this from two perspectives: the family and the individual. Do families demand that younger generations prove themselves in some way, perhaps before being allowed to join the family business or take some other role with respect to the family assets?

The other side is the view of the younger family member. Being born into wealth can be a lodestone, especially the way ‘privilege’ is a dirty word in some circles. The world loves a rags-to-riches story, but subsequent generations that don’t start with ‘rags’ are automatically ineligible.

That makes the story of Tamir Triguboff – great-nephew of the second richest man in Australia – an interesting one. Without a cent of family money, he developed an app, which he sold for AUD 85K. He’s using half of the proceeds from the sale to fund his next venture – “a social platform that enables young people to voice their opinions on social issues”.

Consider This: How do you (or would you) handle a request from a family member for funding their business idea? To what extent should family members need to prove themselves? Would you want to see their story on the front page of the local newspaper? Is this even newsworthy – while they may not have relied on family money for the venture, have they overly relied on surname for publicity?

Original article: http://www.smh.com.au/technology/smartphone-apps/my-parents-haven-t-given-me-a-single-cent-grandson-of-australia-s-second-richest-person-out-to-prove-himself-20171217-p4yxsl.html

Actionable Generational Wealth Succession

For more in-depth, thought-provoking discussion points and further commentary on family and business conflict resolution, access my Familosophy newsletter archives by signing into our newsletter https://DavidWerdiger.com. We will send you the archive links from there.

#familyoffice #wealthmanagement #conflictresolution #strategicmanagement

[reposted with permission]
Actionable Generational Wealth Succession

For more in-depth, thought-provoking discussion points and further commentary on family and business conflict resolution, access my Familosophy newsletter archives by signing into our newsletter https://DavidWerdiger.com. We will send you the archive links from there.

#familyoffice #wealthmanagement #conflictresolution #strategicmanagement
#nextgensuccession #intergenerationalwealth #governance #leadershipdevelopment
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The post How Do 3rd & 4th Generations in Your Family ‘Prove Themselves’? appeared first on David Werdiger.

source https://davidwerdiger.com/2023/10/3rd-4th-generation-privilege/

And does being ‘happy’ mean something different to those who have wealth and those who don’t? These are the questions considered in a recent research study.

Most anyone who has wealth would find it obvious that the answer to the first question is a resounding ‘no’, but it takes the rigour of an academic to first define happiness (life satisfaction and a set of distinct positive emotions), and then examine the correlation between them and wealth or social class.

So the answer to the second question is ‘yes’. But how are they different? For those of higher social class, happiness is reflected in self-oriented feelings like pride and contentment, which may reflect their desire for independence and self-sufficiency.

On the other hand, lower classes exhibit other-oriented feelings of compassion and love as their expression of happiness, which could help them cope with their more threatening environments.

Consider This: What makes you happy? How much of your happiness derives from wealth or consumption?

Original articles: from the LA Times http://www.latimes.com/science/sciencenow/la-sci-sn-happiness-rich-poor-20171219-story.html which is based on a research publication from the magazine Emotion http://www.apa.org/pubs/journals/releases/emo-emo0000387.pdf (a very dry read for those academically inclined).

[reposted with permission]

Actionable Generational Wealth Succession

For more in-depth, thought-provoking discussion points and further commentary on family and business conflict resolution, access my Familosophy newsletter archives by signing into our newsletter https://DavidWerdiger.com.

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The post Will Money Buy Happiness? appeared first on David Werdiger.

source https://davidwerdiger.com/2023/10/will-happiness-buy-money/

The 1992 book Men Are from Mars, Women Are from Venus asserted fundamental psychological differences between the sexes. These differences are also reflected in the approach to finance, business and succession.

Women talk and think about money very different to men. They tend to be more focused on the impact of money, and how wealth can help bring the family together. They find it easier than men to talk about money with their families. They think longer term – across generations, seek to invest wealth in a manner aligned with their personal values, and skew conservative in investing when the market sentiment is bad. Legacy often means more than passing wealth down to the next generation; it also means being capable of positively impacting the lives of others.

It is therefore no surprise that while nearly 90% of the world’s billionaires might be men, many turn to females in investment banks, investment firms, and hedge funds when it comes to managing their money.

Women are under-represented in finance and family enterprise leadership, yet we’d all likely be better off if more women took on these roles.

Three key factors strongly influenced women’s paths to leadership: early exposure to the business, communication of inclusion as a family value and strong female role models in the family. How we tell our family’s origin story is important. While Grandpa may have been brilliant entrepreneur, how did Grandma’s support contribute to his success at work?

Consider This: How are women and men treated within your family? Are they given similar opportunities? When telling your family’s story, what are the relative roles of men and women? Who are the role models in your family and how have they influenced you?

Further reading: https://www.cnbc.com/2023/03/10/women-have-very-different-ideas-to-men-about-passing-wealth-on-to-kids.html, https://www.wealthmanagement.com/high-net-worth/creating-inclusive-pathways-next-gen-women-leaders-family-businesses, https://www.psychologytoday.com/us/blog/theory-practice/202210/invisible-daughters-in-family-businesses, https://www.businessinsider.com/sergey-brin-wealth-management-jeff-bezos-family-offices-women-cios-2022-8, https://www.forbes.com/sites/forbesfinancecouncil/2022/04/11/family-office-services-for-women-what-female-executives-and-business-owners-should-expect/?sh=3c2ffa685dd5, https://www.forbes.com/sites/avivahwittenbergcox/2020/10/25/building-back-a-workplace-with-generational-balance/?sh=2734e2781937

Actionable Generational Wealth Succession: 

For more in-depth, thought-provoking discussion points and further commentary on family and business conflict resolution, access my Familosophy newsletter archives by signing into our newsletter https://DavidWerdiger.com.

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source https://davidwerdiger.com/2023/09/financial-mars-venus/

The post Interview – Family & Business appeared first on David Werdiger.

source https://davidwerdiger.com/2023/09/interview-family-business/

In most places today, people have both a given (or first) name and a family name, but the order of those names is culturally based. Some Asian countries like Japan, China and Korea, as well as several European countries put the family name first. When a son is named after his father (and this predominately happens with males), he might take on a Jr or a Roman numeral as a suffix, and royals and popes are known by a first name and a numeric suffix.

These different ways of naming and using names are reflections of the relative importance of the given vs the family names. Having a well-known family name can be a double-edged sword. It immediately identifies you to others as part of something larger, something that preceded you (and will likely succeed you), and all the ‘baggage’ that comes with that: family reputation, history and expectations.

The family name can open doors that would be closed to others, and also give you respect (or notoriety) that may have little to do with you personally. People may rush to assumptions and prejudices about you because of your family. They may invite you to participate in something with ulterior motives, or not take the time to get to know you as an individual.

Most of us are both individuals and part of a family. Having a name like John Smith IV can often be an impediment to discovering who you really are.

Consider This: To what extent do others make assumptions about you based on your surname? How do you deal with those assumptions? Has the decision to take a different surname (e.g. a married name) been influenced by the baggage of your birth family name? In your family, what is the relative importance of family vs individual?

Further reading: https://www.campdenfb.com/article/philippe-j-weil-complexity-being-born-wealth, https://www.tatler.com/article/uhnw-inheritance-educating-kids-money, https://www.seekerstime.com/the-family-dynamics-of-wealth/ https://www.fa-mag.com/news/some-parents-say-their-finances-are-none-of-their-kids–business-67185.html https://www.ft.com/content/8a7fcfe3-44c4-4888-b33d-440b7e60691d, https://www.fa-mag.com/news/3-misconceptions-about-wealth-52854.html

For more in-depth, thought-provoking discussion points and further commentary on family and business conflict resolution, access my Familosophy newsletter archives by signing into our newsletter https://DavidWerdiger.com.

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The post Surname, First Name appeared first on David Werdiger.

source https://davidwerdiger.com/2023/09/surname-first-name/

This is the conundrum of wealth creator parents: they want to raise children to value the hard work that helped them create wealth, but at the same time pass them wealth that means they never need to work. Talk about mixed messages! 

In order to actually do this, one would have to live well below one’s means, and/or withhold access for children to the family wealth so that they can live it ‘tough’ for a period of time until they were deemed ‘ready’ for the wealth. This is not just difficult, it can have serious unwanted negative side effects.

Instead, it might be better to seek to instil the value of ‘stewardship’ within the family: that the family is blessed with wealth, and what comes hand-in-hand is the need for responsible and conscientious management of the family wealth towards a higher purpose than consumption.

One cannot start early enough with the right kind of messaging as attitudes to money and spending are formed as early as age five. Children are often aware of the family’s spending, but don’t always have a view of how much the family saves, invests, and gives back. We can prepare children for a successful relationship with money by telling family stories and talking about values.

Consider This: When did you find out your family was wealthy? How did you find out? Was that experience positive or negative? How does your family talk about wealth or answer questions from children about it?

Original articles: https://bigthink.com/the-present/ultra-wealthy-parenting-paradox/, https://www.fa-mag.com/news/helping-the-heirs-of-super-rich-families-become-global-stewards-69108.html, https://www.jdsupra.com/legalnews/are-you-living-in-the-shadow-of-wealth-6126950/, https://www.morganstanley.com/articles/family-wealth-planning-meaning-of-wealth, https://www.dmagazine.com/sponsored/2022/04/dollars-and-cents-having-the-talk-with-your-children/, https://www.wealthmanagement.com/estate-planning/whose-money-part-1-prepare-heirs

Actionable Generational Wealth Succession: 

For more in-depth, thought-provoking discussion points and further commentary on family and business conflict resolution, access my Familosophy newsletter archives by signing into our newsletter https://DavidWerdiger.com.

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The post Raising Responsible Heirs appeared first on David Werdiger.

source https://davidwerdiger.com/2023/09/raising-responsible-heirs/

Family philanthropy is the act of a collective rather than an individual. It is rooted in the values of a family, carrying forward its name and legacy, and engaging its members.

That makes it about a lot more than just writing cheques. It needs people from multiple generations working together, and that needs to be driven by a purpose and strategy.

Two important surveys indicate that this is not happening effectively. According to a global study, only 30% of family offices have documented strategies to deploy wealth in a truly meaningful way. In another study, 76% of respondents said they are likely to give to different causes and non-profits than their parents, but 82 percent of parents believe that they and their children share the same philanthropic goals!

Sometimes philanthropic priorities are driven by “wealth guilt”, for example fossil fuel dynasties where the rising generation are committed to climate change and sustainability. For some families, their giving can even be a form of reckoning with the source of their wealth. Seeing philanthropy as a rejection of their ancestors’ legacy is very negative.

There are signs of potential conflict and confusion within families over giving priorities. It’s important to get ahead of this by having family discussions about purpose and values, and using this to articulate a philanthropy strategy.

Consider This: What is your family’s philanthropic mission and strategy? How is it communicated within the family? If you don’t have one, how can you get the process happening? 

Further reading: https://www.campdenfb.com/article/multigenerational-philanthropy-aligning-family-values-impact, https://www.philanthropy.com/article/wealthy-donors-want-their-giving-to-be-different-than-their-parents-new-study-says, https://www.wealthmanagement.com/high-net-worth/four-lessons-patagonia-founder-yvon-chouinard-giving-away-company, https://ssir.org/articles/entry/the_future_of_family_philanthropy, https://www.jta.org/2022/07/25/united-states/their-fortunes-come-from-oil-heres-how-these-jewish-philanthropies-deal-with-climate-change

Actionable Generational Wealth Succession: 

For more in-depth, thought-provoking discussion points and further commentary on family and business conflict resolution, access my Familosophy newsletter archives by signing into our newsletter https://DavidWerdiger.com. We will send you the archive links from there.

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source https://davidwerdiger.com/2023/09/act-of-family-philanthropy/

Most families have them, and all families need them. The trusted non-family members who have worked within the family enterprise for many years. In addition to their formal roles, they might be confidantes for family members,  and informal mediators and channels for tricky conversations. They know everything important that is happening within the family. They can also serve as a bridge between the family and rank-and-file employees within the family enterprise.

They are not blood or married-ins, but in their own way they are considered “part of the family”. That has implications for how they are monitored, managed and rewarded. Their high level of trust is a double-edged sword – if the relationship with them ever soured, that could pose a huge risk for the family. They may not ever be rewarded with equity, but for some roles shadow-equity or profit share might be appropriate, as well as the opportunity to co-invest with the family. Understanding their motivation to be “part of” the family is essential in creating a suitable package.

Their role within the family should also be acknowledged by giving them a seat at legacy discussions such as strategy and succession. They can provide very valuable input as an external and can say things at the table that some family members may find hard to say, but that need to be heard.

Consider This: Who are the trusted non-family members within your family group? What distinguishes them from other employees? How are they rewarded for their roles? 

Original articles: https://www.forbes.com/sites/forbesbusinesscouncil/2022/10/06/involving-your-non-family-executives-in-succession-planning/, https://www.campdenfb.com/article/considerations-family-businesses-recruiting-non-executive-director, https://chiefexecutive.net/for-family-run-businesses-heres-the-key-to-competitive-recruiting/

Actionable Generational Wealth Succession: 

For more in-depth, thought-provoking discussion points and further commentary on family and business conflict resolution, access my Familosophy newsletter archives by signing into our newsletter https://DavidWerdiger.com. We will send you the archive links from there.

#familyoffice #wealthmanagement #conflictresolution #strategicmanagement #nextgensuccession #intergenerationalwealth #governance #leadershipdevelopment
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The post Non-Family Member Roles appeared first on David Werdiger.

source https://davidwerdiger.com/2023/09/non-family-members/

Research indicates that more than 70% of heirs will fire or change wealth advisors after they inherit. Clearly this poses a huge risk to advisors, but it says a lot about how advisors are currently dealing with family groups. It’s also worth considering the risks of this situation to families themselves.

A significant proportion of wealth advisors to family groups do not appear to be engaging with the rising generation, and certainly not taking the holistic and family-wide perspective of wealth that families need. When the wealth is a family and legacy asset, the client isn’t just the incumbent, but the whole family. If the advisor (and their firm) wants to stay in their role for a long time, they need to engage with multiple generations, and be relevant to them and listen to the concerns and needs of multiple stakeholders.

From the family’s perspective, changing wealth advisors can be disruptive and risky. If the rising generation are not part of (and on board with) the family’s long-term investment strategy, they may have a long learning curve when it’s their time to take the reins. Any shift in strategy should happen at the appropriate time rather than be triggered by a change in control. So it’s also in the family’s interest to have a wealth manager that is engaged across multiple generations.

Consider This: What is the involvement of rising generation family members in the family’s investment goals and strategies? What relationship do they have with the family’s investment advisors and/or family office professionals? What would happen to any of these relationships in case of the sudden death of a key family member? 

Further reading: https://www.advisor.ca/my-practice/conversations/advisors-must-improve-how-they-work-with-wealthy-families/, https://www.bizjournals.com/albany/news/2022/08/18/what-makes-a-good-intergenerational-wealth-managem.html, https://gulfbusiness.com/how-wealth-advisory-must-be-customised-for-the-new-generation/, https://www.wealthprofessional.ca/news/industry-news/why-advisors-must-work-with-next-generation-of-business-owners/363811, https://www.internationalinvestment.net/news/4034632/financial-advisers-warned-most-heirs-change-inheriting-wealth, https://www.nasdaq.com/articles/help-clients-on-their-life-journey-youll-both-win-2021-01-15, https://www.prnewswire.com/news-releases/64-in-jcf-study-point-to-nextgen-inheritors-lack-of-knowledge-about-their-own-family-wealth-as-major-obstacle-301178504.html, https://www.ftadviser.com/investments/2019/02/05/how-advisers-are-missing-out-on-billions/

Actionable Generational Wealth Succession: 

For more in-depth, thought-provoking discussion points and further commentary on family and business conflict resolution, access my Familosophy newsletter archives by signing into our newsletter https://DavidWerdiger.com. We will send you the archive links from there.

#familyoffice #wealthmanagement #conflictresolution #strategicmanagement #nextgensuccession #intergenerationalwealth #governance #leadershipdevelopment
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The post My Parent’s Advisor? appeared first on David Werdiger.

source https://davidwerdiger.com/2023/09/parents-advisor/